How sustainable is the current trade tax law? On June 16 Dr. Daniel Dürrschmidt addressed this question and presented his thoughts on the territoriality principle applicable here and its scope as part of the lecture series “Future Issues in Tax Law”.
Criticism of the current structure of trade tax continues unabated. This is because its complexity and the additional tax burden on business taxpayers also have an impact on Germany's attractiveness as a business location. Unfortunately, the legislature has not yet taken up any reform efforts, according to Dürrschmidt.
Dr. Daniel Dürrschmidt is a private lecturer in German, European, and International Tax Law and Public Law at Ludwig Maximilian University in Munich (LMU). In his presentation at the MPI, he examined the future viability of trade tax law. Using the example of the territoriality principle in trade tax law, he took stock of the current situation and outlined the resulting need for action, not least for state politics.
The example of two so-called “municipality-free areas” clearly shows where legislative improvements are needed: The Sachsenwald in Schleswig-Holstein and the Ebersberger Forest in Bavaria have attracted a significant amount of media attention in this context. Up to twenty commercial enterprises were based in wooden huts in the forest – apparently an attractive tax-saving model. According to Dürrschmidt, however, these cases can already be resolved under general rules, as the actual registered offices of the businesses are located elsewhere.
Finally, the regulatory authorization in § 4 Abs. 2 GewStG is interesting, according to which state governments can determine by statutory order who levies trade tax in an unincorporated area. Dürrschmidt emphasizes that it is therefore important to structure trade tax in such a way that the interests of all parties involved are better protected in the future. “It is important that the legislature keeps in mind what trade tax is for, namely to provide municipalities with a solid financial basis – but at the same time, it is also a location factor for companies,” Dürrschmidt concluded at the end of the evening.
July 2025