Anyone in Germany owing income tax as a freelancer, self-employed business owner, landlord or investor doesn't pay it once a year — they pay it quarterly. The tax office sets four prepayments per year under §37 EStG. The tax prepayment calculator shows your number — and whether it's worth filing an adjustment — in under a minute.

Why prepayments exist

Employees have wage tax withheld every month — clean, automatic, no gaps. Self-employed taxpayers, landlords and pensioners do not. To prevent the state from waiting twelve months for its money, §37 EStG requires a prepayment in instalments — a down payment on the annual tax.

Mechanically the prepayment is no extra tax — it's a pre-settlement. The annual assessment reconciles: overpaid means refund, underpaid means top-up.

Who pays — and who doesn't?

You become liable for prepayments once your expected residual annual liability (annual tax minus credited wage tax) reaches at least €400 per year or €100 per quarter (§37 Abs. 5 EStG). Below that, no prepayment is set.

  • Employees only: no prepayments — wage tax handles it.
  • Self-employed and freelancers: typically from the first profitable year onward.
  • Landlords: when rental income produces taxable surplus — see the rental income tax calculator.
  • Retirees with side income: when pensions plus rents exceed the basic allowance.
  • Employees with extra income: e.g. consulting fees or rents on top of the wage-taxed salary.

Due dates: Mar 10, Jun 10, Sep 10, Dec 10

Prepayments are due on four fixed dates per year (§37 Abs. 1 EStG):

  • March 10 (Q1)
  • June 10 (Q2)
  • September 10 (Q3)
  • December 10 (Q4)

If any of these falls on a weekend or public holiday, it shifts to the next business day. Late-payment surcharge under §240 AO is 1 % per month, rounded to multiples of €50 of the outstanding amount.

The math, step by step

Step 1 — taxable income (zvE)

zvE = expected income − work / business expenses − special expenses

Example freelancer: €70,000 annual revenue, €12,000 business expenses, €4,000 special expenses (insurance, donations) → zvE €54,000.

Step 2 — income tax under §32a EStG

The tariff for 2026 has a basic allowance of €12,096, a top rate of 42 % from €68,480 and a 45 % rate from €277,825. Married couples filing jointly use splitting: the joint zvE is halved, the tariff applied, then the result doubled — the well-known splitting advantage. The income tax calculator shows the precise tariff amount.

Example zvE €54,000 (single) → about €11,620 income tax.

Step 3 — Soli and church tax

The solidarity surcharge (Soli) has been suspended for most taxpayers since 2021 — it kicks in only above €18,130 income tax (single) / €36,260 (joint). In the softening zone above the threshold the rate is 11.9 % of the difference; far above, a flat 5.5 % of the income tax.

The church tax rate is 8 % in Bavaria and Baden-Württemberg, 9 % in the other federal states. Leaving the church removes the line item — the mechanics are in the church tax calculator.

Step 4 — credit and quarterly instalment

Annual prepayment = annual tax − credited wage tax
Quarterly instalment = annual prepayment / 4

If you have a regular employment job alongside self-employment, wage tax already covers most of the burden — prepayment only kicks in for the surplus.

Adjustment request (§37 Abs. 3 EStG)

Prepayments are based on your most recent known tax assessment — usually last year's. When your income changes, you can (and should) file an adjustment request:

  • Income drops: request a reduction — informally, with a current projection. The tax office lowers the instalments, in hardship cases to zero.
  • Income rises: voluntary upward adjustment — useful to avoid a large final bill. Otherwise the difference falls due only with the assessment.

The tax office may adjust retroactively for the current year and often for the previous one (up to 15 months after the end of the assessment period, §37 Abs. 3 sentence 3 EStG). If you spot in May that your March instalment was too high, the difference comes back after adjustment.

Three example profiles

1. Solo freelancer — €60,000 profit

  • zvE €56,770 (− €1,230 work-expense lump sum, − €2,000 special expenses)
  • Income tax ≈ €12,500, no Soli, no church tax
  • Annual prepayment: €12,500
  • Quarterly instalment: €3,125

2. Employee with rental property — €75,000 salary + €8,000 rent

  • Wage tax already withheld on €75,000 (≈ €17,000)
  • Additional tax on €8,000 rental income ≈ €3,360 (42 % marginal rate)
  • Quarterly instalment: €840

3. Pensioner with Riester & rental — €24,000 pension, €6,000 rent

  • zvE after deductions ≈ €22,000
  • Income tax ≈ €1,900, full prepayment liability
  • Quarterly instalment: €475

What is included — and what isn't

The prepayment covers only income tax plus Soli plus church tax. Not included:

  • VAT — separate VAT return cycle, monthly or quarterly (see sales tax calculator).
  • Trade tax (Gewerbesteuer) — separate prepayments due Feb 15, May 15, Aug 15, Nov 15. See the trade tax calculator.
  • Capital-gains tax — withheld at source as a final tax, not part of income-tax prepayments.

Common mistakes

  1. Estimate too optimistic: Underestimating the first profitable year risks a five-figure top-up. Plan generously — refunds don't hurt.
  2. No adjustment filed: paying old instalments after revenue dropped is an interest-free loan to the tax office. Adjustment requests cost nothing.
  3. No reserves: prepayments hit like clockwork. Rule of thumb: keep 30–40 % of profit aside in a separate account.
  4. Missed dates: late-payment surcharge starts the next day — set up SEPA direct debit with the tax office and the problem disappears.

Tax strategy: actively shape your prepayments

Prepayments aren't fate — they're a lever:

  • Pull investments forward: buying business assets reduces profit (immediate write-off, low-value asset limit €800) — prepayment drops with it.
  • Increase Rürup contributions: deductible up to the cap (§10 Abs. 1 Nr. 2 EStG). See the Rürup pension calculator.
  • Optimise special expenses: insurance, donations — adjustment of prepayments only takes effect after assessment, but long-term tax burden falls.

Notice and bill

Prepayments are set in the prepayment notice (Vorauszahlungsbescheid) — a separate administrative act, distinct from the annual assessment. You receive it after the first or second filing. The notice lists each due date and the tax office's bank details. SEPA direct debit is available and recommended.

Bottom line

Tax prepayments bridge the gap between annual income tax and monthly cash flow — mandatory for the self-employed, landlords and investors. Estimate taxable income realistically, subtract credited wage tax, check the €400 floor and you know your quarter. When income changes, adjustments are almost always worth it — they cost nothing and keep liquidity intact. The tax prepayment calculator gives you the quarterly figure in seconds; the income tax calculator shows the full annual tax it's based on.