How to get started and become a freelancer in Germany

A little over 4 years ago, i decided to quit my job to become self-employed in Germany. After years spent in the cosy realm of full-time employment, i took a leap into completely uncharted territories for me. I was excited, i was motivated and with no regrets. Soon thereafter however, i was facing a little mountain called bureaucracy. To become a freelancer in Germany was not going to be easy but with my best efforts and a little help, i did go through that challenge unharmed. This guide is an attempt at transferring my experience to spare you some sweat, tears and stress.

How to become a freelancer in Germany

Disclaimer: Please note that this is an attempt at covering an excessively broad topic. You might want to prepare a cup of tea before diving in. It’s a whale of a read.

The difference between freelancer & self-employed: which one are you?

Before worrying about documents, registration, taxes and so on, you will need to understand the difference between being a freelancer and being self-employed in Germany. Although it does sound similar, there are pretty substantial differences between the two. Self-employment can be divided into 2 broad categories:

  • Freiberuflich or freelancer: it is one specific type of self-employment that is limited to only a certain number of liberal occupations. Those professions are often linked to some sort of scholar, academic or creative service, as defined in income tax law here (EStG § 18). Those can range from dancers to doctors, from architects to journalists, from lawyers to programmers. Freelancing in Germany does not require to register a business which involves less paperwork.
  • Gewerbetreibende or tradesman/business: this is linked to all other kinds of occupations that don’t qualify for the official freelancer definition. Any other sort of commercial entreprise usually falls under the classification of business in Germany. Most often than not, it is about building, trading or selling physical stuff. In this case, you will need to register a business (Gewerbe), which explains why the term “Gewerbetreibende” is used to differentiate this category.

Registration for freelancers in Germany
Everything around registration

In that part, i will assume all that you have already cleared the following things:

If not, just click on the link for each topic. It will redirect you to another guide on this blog.

Registering as a freelancer in Germany

Registering as a freelancer in Germany is a fairly straightforward process as it doesn’t involve registering a corporation or getting trade permits. However, please hold in mind that some occupations will require a specific degree to be able to do freelancing in that field.

All you need to do is to:

  • Fill in this form (Fragebogen zur steuerliche Erfassung). It’s a small questionnaire to let your Finanzamt know that you plan to become a freelancer in Germany. You can fill-it online, save it or print it when you are done. If your German is a bit sketchy, you can use this little guide or get help from a German friend.
  • Bring it to your local Finanzamt. If unsure, which one is yours, you can check this here.
  • Receive your new tax-ID (Steuernummer), which you will put on all your bills from now on.

Registering as self-employed in Germany (Gewerbetreibende)

As the name suggests, you will need to register a Gewerbe (a business) at your local Gewerbeamt (Trade office). Please note that in this case, you will need to register your Gewerbe before going to your Finanzamt. The process at the Finanzamt is then the same as mentioned above for freelancers. This is also fairly easy, especially if your status is going to be Einzelunternehmer (Sole proprietorship). You will need to bring the following with you at the Gewerbeamt:

  • A valid ID document or passport
  • Your Meldebescheinigung (adress registration certificate)
  • The filled-out Gewerbe-Anmeldung form available on your city’s local platform. (Links for BerlinHamburgMunichFrankfurt)
  • Between ten and forty euros for the registration fee

Additional pieces could be health or regulatory permits (for opening a café for example), certificate from trade offices if you are going into a particular skilled craft sector or if working with children, a certificate that you don’t have a criminal record. If you are unsure about this, get in touch with your local Industrie- und Handelskammer – IHK (Chamber of commerce); they will tell you about all the permits you need for your activity.

I’m not covering here other business structures such as UG, GmbH or GbR as this post is aiming at one-man businesses and at how to become a freelancer in Germany. It usually requires to go in front of a lawyer to establish the corporation, and registration at the local IHK first (Handelsregister).

Health insurance self-employment in Germany

Everything around health insurance

A big concern when becoming a freelancer in Germany is to be able to understand the system & pick the right health insurance. You probably know that you can either go with private or public companies. If you need to refresh your knowledge on the matter, have a look at this post on this blog that explains how it all works. In a nutshell though;

  • Going with public companies (Gesetzlichen Krankenkasse) means that yours fees for health insurance will be based on your income at around 15% of what you earn, with a legal minimum monthly fee of about 350€. This option is more costly, especially in the beginning when you don’t earn anything, but it does cover kids and spouse with you.
  • Going with a private scheme (Private Krankenversicherung) means that the rate is based on your health profile and risks. Consequently, if you are young and fit in your twenties, you might have plans as cheap as 150€ per month. However, as years go by and your health is more fragile, it can quickly increase to 500€ or even more if you are in your fifties. Kids and spouse are not covered. Pick your provider carefully since they each have unique plans and different coverage at different prices. The offer is way more diverse than in the public system. It is recommended to meet a broker or use comparison platforms such as Tarifcheck or Preisvergleich.de to find the best fit and the best price.

Good to know

Artists & performers can have half of their fees covered by the KSK (Künstlersozialkasse) when they stay in the public scheme.

People currently out of a job and registered at the Arbeitsagentur can apply for a Gründerzuschuss. It is a little grant which helps you pay your health insurance in the early days of your self-employment in Germany.

Taxes as a freelancer in Germany

Everything around taxes

Let me first introduce the main actors involved in this story:

Umsatzsteuer or Mehrwertsteuer (V.A.T)

As pretty much anywhere, a value-added tax paid by businesses (19% or 7% in Germany). Here, you can deduct the amount of V.A.T you paid on good or services you bought from the amount of V.A.T you added to your own bills. If you paid more than you received, the Finanzamt will refund the difference. This is paid monthly to the Finanzamt during the first 2 years and quarterly after this if you don’t collect so much V.A.T through your activity.

Freelancers and other self-employed people earning less than 17.500€ per year can choose to avoid this scheme altogether by adopting the “Kleinunternehmerregelung” (Small business rule). This means that there is no V.A.T on your bills, but you can’t deduct V.A.T on things you bought either. This rule makes sense for smaller operations with little investment: less strain on the cash flow. Above this limit, it’s compulsory to bill V.A.T as well. You also need to register for an EU V.A.T ID if you plan to do business with clients outside of Germany.

You can apply for a V.A.T ID at registration or after registration, if your plan changes. If it’s after registration, go here and choose the form on the right hand menu “Vergabe einer USt-ID”. The right form will open. Choose the right Bundesland where you are located, and the right Finanzamt, insert your Steuernummer as well and the legal form of your activity (Einzelunternehmer or Freiberufler). The form will be processed automatically when you send it and you should receive your number by mail a few days after.

Einkommensteuer (Income tax)

For freelancers and self-employed people, the income tax will apply to everything you earn with your small business. In Germany, there is a threshold under which the income is always tax free. In 2016, this amount was 8 652€ per year, i.e; any euro above this is taxed.  The tax is due every year to the Finanzamt and should be declared before the 31st May of the following year. It is a part of your Steuererklärung. For the second or third year of operations, the Finanzamt usually decides to set quarterly installments instead, based on previous statements. This means that instead of paying the whole amount at once every year, you need to transfer a part of it every quarter. This has the advantage to be safer/smoother on your cash flow.

Gewerbesteuer (Trade tax)

This trade tax only applies to Gewerbetreibende. It’s an additional tax that applies on your overall turnover for the year. You are not required to pay if your turnover is below 24 500€ per year. It is due yearly to the Finanzamt and should also be part of your Steuererklärung, sent in before the 31st May of the following year. For high-earners, you can also expect quarterly installments too.

So to sum it up:

Tax typeWho pays it?When?How?
UmsatzsteuerFreelancer – Gewerbetreibende (except if Kleinunternehmer rule applies)Monthly until the 10th of next month, then every quarter if you don’t collect a lot of V.A.T.Fill in form: “Ust-VA”

 

(Umsatzsteuer Voranmeldung)

EinkommensteuerFreelancer – GewerbetreibendeEvery year until 31st July (for the year prior) or quarterly installments instead.With your Steuererklärung

 

Fill in form: “Est 1 A”

GewerbesteuerGewerbetreibendeEvery year until 31st July (for the year prior) or quarterly installments instead.With your Steuererklärung

 

Fill in form

“GewSt”

How do i communicate with the Finanzamt?

It is highly required to use the government’s issued ELSTER tool to communicate with the Finanzamt. This software has all the forms required to be able to declare what’s relevant and do your tax return.

What does the process for the yearly tax return (Steuererklärung) look like?

I have made detailed guide about this topic this way. It has a lot more details and i will avoid making this post longer than it already is.

Which expenses can I put off in taxes?

Being successful as a freelancer in Germany is just as much about increasing your income as it is about decreasing your taxable income. There are a certain number of expenses that can be accounted for to reduce your total taxable income. This is why you need to make sure to keep during 7 years all bills related to:

  • Stationery
  • Office space and equipment, also if working from home.
  • Work-related trips
  • The services of an accountant
  • Half of your phone bills
  • Cost of childcare
  • Business lunch or dinner
  • Health, pension and other insurance contributions.

You can find a more detailed list this way. How to properly account them for, i will cover them in the part about book keeping later on in this article.

Banking for freelancers in Germany

About banking

Do i need a special business bank account?

Becoming a freelancer in Germany (or simply self-employed for that matter) comes with simplified management, and that’s true for your bank account too.  You can simply use your personal bank account if you already have one to support all your expenses and incoming payments for your operation. This comes with the risk of using your personal funds to support your professional life though. Make sure to separate both to avoid cash flow issues, especially if you decide to pay V.A.T as well.

You can of course decide to open a second bank account dedicated to your professional life. If you need help on how to open a bank account in Germany, i have already made a dedicated guide this way.

Bookkeeping self employment in Germany

Around invoices, bookkeeping & billing

Bookkeeping obligations

All Gewerbe that reach 60K€ of profit or 600K€ of revenue 2 years in a row will be requested to switch from a simple entry accounting record (Einfache Buchführung: via an EÜR – Einkommen Überschuss Rechnung) to a double entry system (Doppelte Buchführung: Bilanzierung). Below these limits, simple entry system is enough.

Freiberuflich people can stick to a simple entry accounting system, no matter their level of income or revenue.

Deep dive into this double entry system topic on this page and on the simple entry system on this page. (in German)

Doing invoices right

Now that you are a proper business, make sure that your bills are also as professional as your business cards. They need to include all the following items to be valid:

  1. Your full name and address
  2. Full name and adress of your customer
  3. Location, date and unique ID of invoice
  4. Your tax number (Steuernummer)
  5. Description of goods/services, time of delivery & when payment is due
  6. Net price & discounts if applicable
  7. Added tax if applicable (If not; mention the Kleinunternehmer rule § 19 UStG Paragraph 1)
  8. Total price

You can find a pretty nice excel template on this website. You can then edit them to fit your situation and your looks.

Keeping your books clean

I don’t need to tell you that one of the challenges becoming a freelancer in Germany is to be able to keep an eye on your finances, your ingoing and outgoing bills. A lot of self-employed people in Germany have failed their projects or lost a lot of money because of bad accounting. I know i know; it is sometimes frustrating to be almost spending more time being an accountant than doing your actual job. Why is this important:

Rigorous accounting has 3 long-term advantages

  1. At some point or other, you will get audited by the Finanzamt. This means they can ask questions on anything. Keeping the records straight will avoid headaches and conflicts, especially if it’s about 5 year old items.
  2. Every year until the 31st May, you will need to do your tax return (Steuererklärung) and communicates how much in total you earned during last year, this can be done in minutes if things are kept clean, not hours.
  3. You can account for all small expenses you had during the year, which will add up to a lot to reduce your taxable income for your tax return to. This requires properly recording and filing each bill you received, physical or not.

For this, a simple excel sheet will do if you have patience and you are rigorous. This page has a pretty neat Excel template (especially for Gewerbetreibende). This involves a manual entry for each item in a table divided by month. It’s also hard to keep a copy of each bill when you have expenses.

However it doesn’t have to be that way. Nowadays, there are free or reasonably priced apps that allow to keep control of all movements during the year and facilitate the work of a Steuerberater if you have one. This is a little selection of bookkeeping software for freelancers in Germany:

  • Lexware: Consistently awarded by “Praxis Tests”, trusted by Steuerberatern and used by thousands of small business owners and freelancers. It is a reference in Germany and covers all of your accounting, invoicing and tax returning. (From 10€ per month – Interface in German only).
  • Debitoor: Also, a trusted name in the German market and internationally and my personal favorite. Debitoor offers the same broad array of services as Lexware but it seems to be a bit more open to a new economy use by integrating third party partners or API to make it easy to accept payments through PayPal, use Izettle or connect your online shop. (From 12€ per month – Interface in English, German or 7 other languages – Free test)
  • FastBill: A great contender on this list, FastBill is great at keeping an overview of the current affairs in a slick interface. You can also use different ways to receive your money and manages international business too.  (From 9€ per month – Interface in English – Free trial month)
  • Reviso: Formely know as e-economic, it’s also making a name for itself with its KPMG-certified software. Unlike its competitors, the different prices and plans don’t limit features but simply the amount of entries. (From 10€ per month – Interface in English & 6 other languages – Free trial month).
  • Zervant: A simple to use tool to manage your invoicing. It only does that but it does this well and most of all: it’s for free.

Remember if you pick one of the paid options: this would count as an expense you can put it off in taxes too! It’s money well invested.

Using a Steuerberater

You may have worked with a Steuerberater before to optimize your tax return as an employee, but if you become a freelancer in Germany, they can do much more than this. Although the name “Tax advisor” only suggests proficiency in tax related issues, they can help freelancers for the following issues:

  • Bookkeeping & Accounting
  • Professional law
  • Help with with V.A.T, Income & Tade Tax (calculating and filing when it’s due.)
  • Help with the annual tax return (+ EÜR & Gewerbe tax for Gewerbetreibende)
  • Representative duty (communicating with the Finanzamt in your stead.)
  • General legal counselling

Using a Steuerberater can appear costly but it’s often worth it when you are starting to earn well. The bet is that the benefits/return will off-set the expenses. Their fees are usually paid monthly if they are involved with the daily accounting business and/or yearly, if you only need help for the tax return until the 31st of May.

The costs of hiring Steuerberater is often well worth-it as it will optimize your expenses & maximize your tax return.

You can often greatly reduce their monthly fee by using one of the bookkeeping programs mentioned above. This is because it’s much less work for the Steuerberater to collect and process information through an export function than to process an excel sheet. Those software usually have a special access for Steuerberater made especially for that.

If you don’t know where to start to look for one, you can use platforms like Ageras which connects freelancers to English-speaking Steuerberater all across Germany for free. More info on how to find an English-speaking Steuerberater in Berlin here.

Resources for self-employment

Other resources to consider when becoming a freelancer in Germany

  • Make it in Germany: A government-owned website for skilled-workers wanting to move to Germany. It has information on setting up your own business.
  • Existenzgründer: Another great government-owned website that gives a lot of details on how to become a freelancer in Germany. It works for each profile of self-employment. It’s available in other languages but it is most complete in its German version.

FAQ

Can i combine a normal day-time job together with self-employment?

Yes, it is possible, provided you don’t do more than 18 hours on top of your full-time job. If you are very successful and can somehow earn more with your side sig than with your job, keep in mind that you will have to start to pay your Krankenkasse contributions yourself then. In turn, your net salary should increase, since your employer doesn’t pay those contributions anymore.

Good luck!

Ps: please note that despite all my best intentions, some of this information can be inaccurate or missing details. I urge you to talk to a professional coach, especially if you are preparing your freelance visa from abroad. Let me know in the comments if you spot something unclear that needs improvement or if i should cover something more.

Sources: 1, 2

240 Comments

  • Reply Shane Starling 31/03/2020 at 19:11

    Hi Bastien,

    I’ve been freelancing in Berlin since November 2018 but didn’t register as a freelancer. I’m completing my Fragebogen zur steuerlichen Erfassung now before I complete my tax declaration. It asks when I started freelancing. What should I say?

    Love your site btw.

    Cheers,

    Shane

    • Reply Bastien - Settle in Berlin 03/04/2020 at 20:54

      Hey Shane. That’s for you to answer. In my opinion, you don’t exist in the eyes of the Finanzamt as a freelancer unless you have registered as such. So in theory, you havent started yet.

  • Reply Joe 29/03/2020 at 20:12

    Hi Bastien, do you know how the situation works with public HI for freelancers who also have a mini job on the side? I make most of my earnings freelancing but I also have a mini job on the side. WiIl I have to pay the same insurance on my mini job (ie 14.6% HI and 3.3% care insurance)? These percentages are taken from my total earnings, right? The mini job isn’t exempt?

    • Reply Bastien - Settle in Berlin 29/03/2020 at 21:11

      Hey Joe. That is a great question, i think that would not be the case, if i understood this post correctly.

      • Reply Joe 30/03/2020 at 00:23

        Thanks for getting back to me My German’s not great but the translation seemed to say that the minijob income would be exempt from HI etc: “The mini job is also insurance-free with regard to health, nursing and unemployment insurance”. This is at odds with what TK told me over the phone, however.

  • Reply Alex 22/02/2020 at 17:15

    Hey Bastien,

    Thanks for all the amazing content.

    I am EU citizen registered in Berlin and want to rent a space and teach yoga.

    Would I just need to become a freelancer, or do you think it’s more complicated given my activity?

    Couldn’t really figure this out online until now.

    Thanks in advance!

    • Reply Bastien - Settle in Berlin 24/02/2020 at 18:20

      Hey Alex. There aren’t any safety or hygiene certifications required to be able to rent a room as a yoga teacher. Probably make sure you have the right kind of insurance in case you or one of your pupils damage something in the said space.

    • Reply Joe 29/03/2020 at 22:40

      Thanks for getting back to me 🙂 My German’s not great but the translation seemed to say that the minijob income would be exempt from HI etc: “The mini job is also insurance-free with regard to health, nursing and unemployment insurance”. This is at odds with what TK told me over the phone, however.

    • Reply Joe 30/03/2020 at 00:23

      Whoops, commented on the wrong post

  • Reply Tammy Kovacs 20/02/2020 at 10:26

    Wondering if I could use a few of your references on my personal blog https://two50plusmovingtogermany.com as I have found the information immensely helpful in my freelance endevours. All references will be specified to your site.

    Thanks,

    Tam

    • Reply Bastien - Settle in Berlin 24/02/2020 at 17:56

      Hey Tammy. Sure. Please use the full URL and name of the post when referencing it.

  • Reply aiden 10/02/2020 at 03:09

    If I work full time for a company in the US can I apply for the freelance visa in Berlin to work remotely? Then one in Berlin try to also find freelance work?

    • Reply Bastien - Settle in Berlin 12/02/2020 at 09:42

      Hey Aiden. Applying for a freelance visa in Germany usually requires to work for local clients, with letters of intent to prove it. Full guide this way.

    • Reply Claire Geiger 28/02/2020 at 08:53

      Hi Aiden, I’m in a similar situation, working full time for a company in the US, but from Germany since my husband has a German contract. I want to set it up so I’m paying taxes in Germany. How did you go about doing this? Any insight?
      Thanks so much!
      Claire

  • Reply Claire 05/02/2020 at 19:12

    Hi Bastien,
    Firstly thank you very much for this helpful and very complete post!
    I have two questions:
    1. If I understand correctly, as a Graphic Designer selling services (logos, website design etc), I would register as Freiberuflich (or freelancer) not Gewerbetreibende?
    2. I am currently receiving Arbeitslosengeld 1, and while I want, and am looking for, a permanent position, I have the opportunity of doing a bit of freelance work here and there in the meantime (quite irregular, small sums, but I don’t want to go freelance full-time).
    Is registering as a freelancer compatible with receiving the Arbeitslosengeld? Arbeitslosengeld is obviously not for ‘setting-up your business’ so I don’t want to give the impression that I am launching my freelancing business, when in fact I am just taking advantage of the opportunity of making a bit of money with freelancing once in a while.
    Thanks for your help!

  • Reply Ike Muna 05/02/2020 at 19:07

    Bastien,
    Thanks for this article it was very thorough. My question is I applied for my freelance visa as artist mgmt, event coordinator and social media but my freelance contract with my past employee ended in January. I am currently looking for a new job but I am curious if I need to look in the Freelance field or I can apply for anything? Also, can I work at places like a bar or cafe? just to make some side money?

    • Reply Bastien - Settle in Berlin 08/02/2020 at 09:33

      Hey Ike, i can’t really help on visa related matters because it’s almost on a case by case basis. You have to look at what your visa permits or not.

  • Reply Corey 04/02/2020 at 22:44

    Hi Bastien, great article. I already own a small business (single-proprietor LLC) in the US. Do I need to register a new business in Germany or can I just claim foreign income? Right now I don’t have any EU clients, just US clients. Or would it make more sense to register as a freelancer and claim my US business income as freelance income?

    • Reply Bastien - Settle in Berlin 08/02/2020 at 09:32

      Hey Corey. I can’t really tell because this touches many other aspects like income tax or corporation tax, and it’s always extra complicated with the US. You have to investigate what makes most sense from that perspective. My humble opinion is that if you are going to be a German resident indefinitely, probably best open a company here.

  • Reply Borbala 04/02/2020 at 12:41

    Hi,

    Your website has saved my life many times. Thank you so much for helping us.
    I would like to ask you about the EU VAT-ID. I would need one, but I don’t know this part of your article is about to obtain online a EU VAT-ID or the German VAT-ID.

    “You can apply for a V.A.T ID at registration or after registration if your plan changes. If it’s after registration, go here and choose the form on the right-hand menu “Vergabe einer USt-ID”. The right form will open. Choose the right Bundesland …”

    Many thanks!

    • Reply Bastien - Settle in Berlin 08/02/2020 at 09:28

      Hey Borbala. Glad i can be of help. Yes, you will get an EU one via this form.

  • Reply Viktoria 30/01/2020 at 12:09

    Hi Bastien,

    Firstly, thanks a lot for this compilation of resources on how to get started as a freelancer in Germany – it is for sure a complicated process… I’ve been using it as a guide & support for the past 4 months as I’ve gone through the process myself.

    Context: I’ve registered as a freelancer (kleine unternehmen) beginning of 2020 to be able to invoice project work I do sporadically/side-business. I don’t plan to earn more than 17.5k/year hence (most probably less than 8k as well) so I’m applying the VAT exemption rule on my services (Kleinunternehmer rule § 19 UStG Paragraph 1). My clients are located in Germany and other EU countries.

    Question: do I need to acquire an EU VAT to invoice the clients outside of Germany?

    Thank you so so much for putting all this content up!

    All good vibes,
    Viktoria

    • Reply Bastien - Settle in Berlin 03/02/2020 at 21:18

      Hey Viktoria. Glad it could be helpful. The sad answer is: it depends. Check this article out for more info, and use Gtranslate if needed.

  • Reply Alekhya Narravula 28/01/2020 at 09:29

    Hi
    I registered as a freelancer and got a tax Id but I did not have a single client and did not make any money. Would I still need to pay a tax based on the estimate I submitted when I filled out the form to get a new ID? Now I actually got a new job and will go back to working for an employer.

    • Reply Bastien - Settle in Berlin 29/01/2020 at 15:21

      Hey Alekhya. You still need to submit a tax declaration at the end of the year but you probably won’t need to pay anything no.

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