Tax prepayments for the self-employed in Germany: dates, amount and reduction

What are tax prepayments and why do they exist?

For employees, the employer deducts payroll tax from their salary every month. The self-employed have no employer, so the tax office demands income tax in four instalments during the year – the income tax prepayments under § 37 EStG. After the end of the year you file your income tax return; the assessment calculates the actual tax and deducts the prepayments made. You then receive a refund or pay the difference.

Prepayments are not an additional tax, just an earlier payment of the same tax. For traders the same principle applies to trade tax: the municipality sets prepayments under § 19 GewStG. Advance VAT returns (Umsatzsteuer-Voranmeldungen) are something else – there you report the actual VAT yourself monthly or quarterly, see VAT (Umsatzsteuer) for the self-employed.

Dates: when are prepayments due?

The dates are fixed by law and apply nationwide. If a date falls on a weekend or public holiday, it moves to the next working day. With a bank transfer, a payment only counts as made when the money reaches the account of the tax office’s cash office or the municipality; with a SEPA direct debit mandate the due date counts – this reliably avoids late payment surcharges.

How does the tax office calculate the amount?

The basis is the income tax that resulted in the last assessment after crediting tax deductions (§ 37 Abs. 3 EStG). The tax office therefore assumes that your profit stays the same and divides the annual tax by four. If your last assessment showed, for example, €9,200 income tax, you will pay €2,300 per quarter in future, plus solidarity surcharge and church tax if applicable.

Prepayments are only set if they amount to at least €400 a year and €100 per date (§ 37 Abs. 5 EStG). For trade tax the tax office sets a tax base amount for prepayment purposes, which the municipality multiplies by its Hebesatz; prepayments below €50 are not charged. How trade tax is made up is explained in the guide calculating trade tax.

The tax office can adjust the prepayments until the end of the 15th calendar month after the tax year – for 2026, until the end of March 2028. If it subsequently increases them for the current year, the increase is due within one month of the assessment (§ 37 Abs. 4 EStG).

How high are the prepayments at which profit?

The following table shows roughly what income tax prepayments you should expect in 2026 if your profit stays the same. It assumes a single freelancer without church tax whose taxable income is 80% of profit because of health and pension insurance. How income tax arises exactly is explained in the guide income tax for the self-employed.

For traders, the trade tax prepayment is added as soon as profit exceeds the €24,500 allowance. With €60,000 profit and a 400% Hebesatz that is €4,970 a year, i.e. €1,242.50 per quarter to the municipality. Because trade tax is credited against income tax in the assessment, the income tax prepayments fall by a similar amount – so in total you pay hardly more, but in two places and on eight dates a year.

Prepayments in the year of founding

In the first year there is no tax assessment yet. That’s why the tax registration form (Fragebogen zur steuerlichen Erfassung) asks for your expected turnover and profit for the year of founding and the following year. From these estimates the tax office sets initial prepayments – or none at all if the estimated profit is low or you have other income on which payroll tax is already paid.

This is exactly where the typical problem arises: many founders estimate cautiously low, pay nothing in the first year and then earn more than expected. A realistic estimate is no disadvantage – it just spreads the tax burden more evenly. If your business changes significantly, you can correct the estimate with the tax office at any time.

Special case of a side business: if you are also employed, payroll tax only covers your salary. Tax on the profit from self-employment is due at your personal marginal tax rate – often 30% or more. If the tax office does not set prepayments, set this share aside yourself. Details in the guide self-employed on the side. For married couples with joint assessment the prepayments apply to both together; if one partner’s income changes, this affects the joint assessment.

The back payment shock after the first year – a worked example

A typical case shows how it happens: a translator (freelancer, single, no church tax) starts her business in January 2025. In the registration form she estimates €15,000 profit, so the tax office sets no prepayments. In fact she makes a profit of €45,000 in 2025; after €9,000 of pension and insurance expenses, €36,000 taxable income remains. In June 2026 she files the 2025 return, and in September 2026 the assessment arrives for around €5,971 income tax (2026 tax scale applied in simplified form).

With the assessment the tax office also sets prepayments for 2026 and the following years: €5,971 a year, i.e. around €1,493 per quarter. Because the March, June and September 2026 dates have already passed, the increase for these three quarters is due within one month.

• Back payment of income tax 2025: €5,971, due around mid-October 2026.
• Subsequent 2026 prepayments for three quarters: €4,478, also due around mid-October 2026.
• Regular prepayment on 10 December 2026: €1,493.
• Total within three months: around €11,942 – without reserves a real liquidity problem.
• From 2027 then regularly €1,493 on 10 March, 10 June, 10 September and 10 December – plus, for traders, the trade tax prepayments.

How to avoid the back payment shock

The solution is not a trick but planning. If you put a fixed share of your income into a separate account from your first invoice, you will have the money when the assessment arrives. Which percentage makes sense is shown in the guide tax reserves for the self-employed.

• Estimate realistically: state the profit you really expect in the registration form – not the most cautious figure.
• Increase voluntarily: if business is better than estimated, you can apply to the tax office for higher prepayments. This saves interest on back payments later.
• File your return early: the earlier the assessment arrives, the fewer quarters are demanded at once.
• Set money aside monthly: plan tax like a fixed expense, not as what is left at the end of the year.
• Keep an eye on profit: ongoing bookkeeping shows you as early as summer where your annual profit will end up.

Applying for a reduction of prepayments

If your profit falls – for example due to fewer orders, parental leave, illness or high investments – you don’t have to wait for the next assessment. You can submit an informal application to reduce your prepayments (Herabsetzung), most easily in Mein ELSTER (form “Antrag auf Anpassung der Vorauszahlungen” or another message to the tax office).

The tax office wants to be able to understand the lower profit. So attach a profit forecast: the EÜR of the current year so far, a projection to December and a short justification. Example: by the end of June 2026 you have €14,000 profit; because of planned parental leave you only expect €22,000 for the whole year. With €4,000 of pension and insurance expenses this would give around €18,000 taxable income and only about €1,100 income tax – instead of €5,971.

For trade tax you also submit the application to the tax office, which changes the tax base amount for prepayment purposes; the municipality then adjusts the prepayments. Important: until a decision is made, the amounts set remain due. If you estimate too low and your profit turns out higher after all, you pay the difference later – with interest if applicable.

Interest on back payments under § 233a AO

Tax back payments and refunds bear interest, but only after a grace period: interest starts 15 months after the end of the tax year. For tax year 2025, therefore, from 1 April 2027. The interest rate is 0.15% per full month, i.e. 1.8% a year.

Example: if the 2025 assessment in October 2027 results in a back payment of €6,000, interest of €6,000 × 0.15% × 6 = €54 is due for six full months (April to September 2027). If you file your return on time by 31 July, you usually pay no interest at all. You receive refund interest at the same rate – but it is taxable as investment income. Check in the tax assessment whether the interest calculation is correct and all prepayments made have been credited. Interest is not to be confused with the late filing surcharge for a late return or the late payment surcharge of 1% per month for late payment – more in the guide late filing and late payment surcharges.

Keeping track of prepayments with KontoVexa

KontoVexa continuously shows you income, expenses and the provisional profit of your EÜR – the basis for a realistic estimate in the registration form or a well-founded reduction application. You record trade tax prepayments paid and tax liabilities from assessments under Tax payments and see what is still due; KontoVexa reminds you of upcoming filing deadlines. At the end of the year, in the Business and Pro plans, you send the Anlage EÜR directly via ELSTER so that the assessment arrives early. More on the page EÜR with KontoVexa; all dates at a glance in the guide tax deadlines for the self-employed.

Frequently asked questions