Going freelance in Germany

Going freelance in Germany

Freelancers (Freiberufler) are self-employed entrepreneurs who work simultaneously for multiple clients and employers. Unlike tradespeople (Gewerbetreibende), they usually operate under their own name rather than a company name and do not have to register with the trade office or pay trade tax. Freelancing in Germany is therefore a flexible occupation open to both Germans and expats alike.

How to become a freelancer in Germany

In comparison with registering as a tradesperson, there are relatively few administrative issues involved with becoming a freelancer in Germany. There are, however, a few bureaucratic hurdles to overcome before you can start working for yourself.

Definition of a freelancer (Freiberufler) vs tradesperson (Gewerbetreibende)

Before you can go about setting yourself up as a freelancer in Germany, you need to make sure that you qualify as one according to German law. Legally, there is a distinction in Germany between freelancers (Freiberufler) and tradespeople (Gewerbetreibenden). This distinction has important implications for business registration and tax purposes.

Freelancers in Germany are defined as those who work in so-called “Liberal Professions” (freie Berufe), including:

Anyone else is not considered a freelancer but a tradesperson, and must subsequently register their business with the trade office and pay trade tax. You can find out more about this process on our How to start a business page.

Ultimately, the final decision as to whether a profession is considered freelance or trade rests with the tax office (Finanzamt), which evaluates professions on a case by case basis. If you are unsure, consult with your local tax office.

Residence permit

Before you can start working as a freelancer, you need to make sure that you are entitled to live and work in Germany. Citizens from the EU, EEA and Switzerland are free to undertake freelance work in Germany without restriction.

Nationals of other countries need to have the appropriate residence permit that allows you to work in a self-employed capacity. Freelancers in their visa and residence permit applications need to prove that they already have clients set up in Germany. This can be demonstrated with letters of intent from companies wishing to hire you or invoices for businesses you have already worked with.   

How to go freelance in Germany: Register with the tax office

To register as a freelancer in Germany, you need to fill in a “Fragenbogen zur steuerliche Erfassung” (Questionnaire for Taxation) and submit it to your local tax office. You can either download, fill out the form and submit a physical copy, or complete it online via ELSTER. You must complete the form in German.

If you have any queries or concerns, it is recommended to get in touch with a tax advisor, who can make sure all information is submitted correctly. There are also a number of online services, for instance Sorted, that can handle your freelancer registration with the tax office and even take care of submitting your tax reports.

If you choose to contact the tax office yourself, you will need to provide the following details:

  • Tax ID
  • Description of your freelance activity
  • Details of your German bank accounts (both personal and business, if you have one)
  • Estimated business revenue and expenses
  • Estimated profit
  • Whether you wish to charge VAT (see below)

The tax office will determine on the basis of your answers whether you qualify as a freelancer. They will then issue you with a tax number (different from a tax ID), a unique identifier given to you as a business entity which needs to be quoted on all invoices and on your tax return. You will also receive a VAT number, if you requested one.

German business taxes

You will also receive a payment plan from the tax office, laying out the taxes you must pay, on the basis of your turnover predictions. Depending on your estimated income, you may be required to pay income tax and VAT monthly, quarterly or yearly via an annual tax return. Learn more about the types of taxes freelancers in Germany have to pay on our Business taxes page

Freelance administration

Freelancers in Germany need to keep their business affairs in impeccable order. An accountant or a tax advisor can help you with this. If you are audited, the tax office can request records going back 10 years.

Correctly formatting invoices

Make sure that all your invoices are correctly formatted and contain the following information:

  • Your full name and address
  • The full name and address of the recipient
  • Date of invoice
  • Your tax number and VAT number (if applicable)
  • Unique invoice number, assigned by you
  • Description of work undertaken or service provided
  • Net amount
  • VAT / USt (if applicable)

Fictitious self-employment (Scheinselbständigkeit)

As a freelancer, you need to make sure you don’t fall foul of German laws regarding “fictitious self-employment” (Scheinselbständigkeit), which occurs when someone who is ostensibly a freelance worker is deemed to be an employee (Angestellter). This might arise if you have had only one client over an extended period of time, or generate too much income from a single client.

The tax authorities may decide that you were, in fact, employed, and therefore owe social security contributions and income taxes for as long as you worked with the employer.

Insurance & Pensions for freelancers

As freelancers are not subject to compulsory social security contributions, you will need to take care of your own insurance cover.

Health insurance for freelancers

Having health insurance is mandatory in Germany. Being covered by statutory health insurance automatically qualifies you for long-term care insurance and sickness benefit. The scheme also provides cover for your dependent family members. Freelance workers can voluntarily contribute to a statutory health insurance scheme, although bear in mind that you will usually need to cover the whole contribution (around 14,6% of your income) yourself.

The only exception to this is certain artistic professions, such as PR workers, artists and writers, who can apply to the Künstlersozialkasse (KSK) for a 50% contribution towards health and pension insurance.

For many freelance workers, private health insurance may work out cheaper, as the premiums are based on your relative risk factor (i.e. your age and general health), rather than a proportion of your salary. If you opt for a private scheme, you need to make sure you are also covered for long-term care and in the event of your inability to work due to sickness.

Freelancers’ pensions

Freelance workers are often obliged to continue making contributions to a statutory pension insurance plan. This is true for anyone working in the following fields:

  • Healthcare
  • Architecture
  • Engineering
  • Law
  • Accountancy
  • Teaching
  • Art
  • Writing

Other freelance workers can choose to make voluntary contributions to a state pension. You will need to inform your pension fund. The main benefit of being voluntarily-insured is that you can determine the exact level of your contributions, as long as they exceed the minimum contribution level of 18,6% of your income.

As a freelancer, this 18,6% burden is paid by you in its entirety. If you are a member, the Künstlersozialkasse (KSK) will cover 50% of your contributions. Alternatively, you can apply for a 50% reduction to your contributions for the first three calendar years after you become self-employed, to help you support yourself during your development phase. Your local branch of the Deutsche Rentenversicherung will advise you as to whether you are eligible for this reduction.

If you do not work in one of the professions that are obliged to contribute, and you do not wish to voluntarily contribute, you can choose to take out a private pension plan, such as a Rürup pension.

Unemployment insurance

In order to safeguard against any potential disruption to your business in the future, it would also be wise to make voluntary contributions to the statutory unemployment insurance scheme. This will make sure you qualify for unemployment benefit, should you ever need it.

Occupational accident insurance

You can choose to take out voluntary accident insurance for yourself (and your spouse, if they work with you). If you have any employees, you will be obliged to make contributions to the scheme on their behalf.

Start-up grants for unemployed

If you have lost your job and are considering freelance work as an alternative to unemployment benefit, you may be entitled to a start-up grant to help get your new business up on its feet.

Read also