German business profits are subject to two taxes

All businesses are subject to trade tax regardless of their legal form. The basis of
assessment is the taxable income derived from the before tax accounting profit
under rules applicable throughout Germany. This basis is determined centrally
by the tax office responsible for the company’s German taxation (the place of
German management). The tax office then allocates this basis over the various
local authorities where the company has business establishments, generally in
proportion to the total wages paid to the employees in each.

Special rules apply to German permanent establishments without employees, such as pipelines
passing through Germany, but operated and controlled from abroad. Each local
authority then issues its own notice of assessment to the taxpayer, that is, it
charges its share of the overall basis of assessment to trade tax at its own local
rate. The local authorities are also responsible for collection.