Working as a Freelancer in Germany from A to Z
In the 21st century, freelancing is becoming every day and more the way many people are choosing to exercise their profession, instead of getting a traditional full or half-time job or even a remote job.
The reasons why freelancing is becoming so popular, in particular among millennials, is because it gives people more control over their lives, the time they want to spend working and the volume of work they want to do. They aren’t forced to work with the people they do not want to and do things they do not like or go against their principles, so they do not lose their job.
In Germany, freelancing is also a way of professional functioning on the rise. The country has updated its laws and created new rules so that freelancers would also be included and calculated in country’s work system, and that no one could misuse the laws by finding loopholes in absence of rules.
Moreover, the country has opened its doors to foreigners that want to move to Germany temporarily (at first) and work as freelancers. However, while freelancing is very simple as a way of working, in order for one to move to Germany to work as a freelancer he or she must meet the rules of the German Federation, which are not the simplest to understand.
Definition of Freelancing in Germany
In Germany, a freelancer is defined as a person who exercises one of the free professions independently (list of these professions given below), without functioning as a business, a partnership, or being employed with a full-time, part-time or remote contract.
List of Liberal Professions that Qualify as Freelancing Work
According to the German Income Tax Act and in the Partnership Companies Act, the following liberal professions are categorized as freelancing work, under the sole conditions that the freelancer is acting on his/her own expertise and acting independently:
- teacher and educators
- patent attorneys
- trade chemists
- tax advisers
- advisory bodies and business economists
- certified accountants
- tax representatives
- image reporters
Other similar jobs may also qualify as freelancing work, if they meet the condition given above. However, even a person that exercises one of the liberal professions but he or she uses the help of technically trained workers, that work is no longer recognized as freelancing but rather as self-employment.
Difference Between Freelancers and Tradespersons/Self-Employed in Germany
Those wishing to work as freelancers in Germany, should make sure that their work not instead fall under the ‘self-employed/trade’ category. Sometimes there is a very thin line between self-employment and freelancing.
While both indicate that you are not an employee of anyone, but rather you are the sole decision maker for the services you provide, there are still quite some differences between them.
The main difference is that while freelancers work in their name, self-employed people conduct business under a brand name. In addition, while some professions may categorize as freelancing even if they are not listed as liberal professions,
In terms of compulsory legal procedures, the difference is that while freelancers do not need to register with the Business Registration Authority in Germany (Gewerbeamt), those categorized as self-employed cannot operate without registering there.
As a conclusion, freelancers are also required to pay less taxes than self-employed/tradespersons as explained below in this article.
Foreigners that Qualify to Work as Freelancers in Germany
All foreigners that meet the legal requirements can work in Germany as freelancers, though most of world citizens would need a visa to do so.
The main criteria for a person to move to Germany and work as a freelancer are:
- The profession a person wants to exercise as a freelancer in Germany, must be listed as a liberal profession, or at least be a similar one that the German Tax Office may consider to be okay for freelancing.
- There must be an economic interest or a regional need for the type of work the freelancer intends to do in Germany.
- The freelancer must have the capacity to support himself/herself while in Germany.
Germany Visa for Freelancers
Passport holders of the European Union, Norway, Switzerland, Iceland and Liechtenstein do not need any visa or residence permit to move to Germany to work as freelancers. They will however, need to register with the Foreigner’s Office nearest their place of stay in Germany and follow the other legal requirement as getting an identification number, in order for their working to be legal.
On the other hand, nationals of Australia, Canada, Israel, Japan, New Zealand, United States of America and South Korea can also move to Germany without any visa, but they will need to get a Residence Permit upon arrival. They will also need to register with the Foreigner’s Office nearest their place of stay in Germany and follow the other legal requirement as getting an identification number, in order for their work to be legal.
As for the nationals of other world countries, they will need to get a German Freelance Visa first, and then follow the rest of the steps to work as freelancers in Germany.
Here you can find a full and detailed guide on the steps of application, criteria and requirements one needs to meet in order to get a Freelance Visa for Germany.
Registering the New Home Address at Foreigner’s Office
Within the first 90 days of arrival in Germany every freelancer, no matter their nationality (even EU passport holders) must register their home address at the German Foreigner’s Office closest to their new place.
The required documents to bring are: a rental contract signed by the freelancer and their landlord, a fully completed registration form which can be found at the office, and the passport or National ID of the freelancer.
Getting Health Insurance in Germany
Health Insurance is mandatory for every person moving to Germany, including freelancers. Before their trip to Germany, freelancers can purchase health insurance that will cover them for the period needed. Freelancers can also come to Germany with travel health insurance that covers them in the first few days or weeks, and before its expiration, to purchase health insurance from a provider in Germany.
If you are looking for great coverage for a good price, then your health insurance awaits here!
Those that have insurance from a provider of their home country, that also covers Germany, do not need to switch it for another, only if they want to.
Opening a Bank Account as a Freelancer
A bank account number is compulsory in order to complete several other steps, including getting a residence permit, for foreigners in Germany. You also need it to get paid by your clients, so it is best to open one as soon as you register your address.
Most banks in Germany have English speaking representatives. They also have special bank offers for freelancers, so you can check with them and find the one most suitable for you.
Germany Residence Permit for Freelancers
Every freelancer, after they register their home address, get health insurance and open their bank account, must proceed with the other steps in order for their stay in the country to be legal.
Applying for a residence permit is next in the list. Because of its importance, it seems as a huge deal and a difficult process, but in fact it isn’t. It is way easier than getting a visa for those that need to. Freelancers need to set an appointment with the local immigration office nearest their home.
There are some documents required for application and a few rules that every freelancer needs to obey. Check here to learn all you need to know to apply for a residence permit in Germany.
Registering as a Freelancer in Germany
Within about ten days of registering their address at the Foreigner’s Office, every freelancer automatically receives a letter with their personal tax ID. The ID contains the tax identification number which is necessary to get the tax number as a freelancer (please do not mix these two as in German the first is known as Identifikationsnummer and the second as Steuernummer)
You can get this number by only completing the relevant form called Fragebogen zur steuerlichenErfassung, and submitting it at the right office – Finanzamt – in the German city where you live.
Paying Taxes as a Freelancer
While freelancers are exempt from paying Trade Taxes in Germany, they are still subject to the Income Tax and the Value Added Tax, as explained below:
Income Tax. Germany has a base rate of 14% of income tax, which can go up to 42%. A solidarity surcharge of 5.5% is also included in this tax. Freelancers will need to pay this tax on a quarterly basis. Those making less than €9,169 are exempt from the income tax.
Value Added Tax. Freelancers need to prepare VAT declarations periodically, declaring their revenue. According to the service the freelancer usually pays 19% but depending on the service he or she offers, the tax could be as low as 7%. The VAT can be paid online through the official portal of Germany the Elster Portal.
German Terminology for Freelancers
For those wishing to live and work as freelancers in Germany knowing the German language is an asset. However, few people can learn a new language within a short period. Those wishing to work as freelancers in Germany are highly recommended to learn the basics of the language, as introducing themselves, and saying ‘hello’ and ‘thank you’. In addition, freelancers should look up and learn the words they will need more while following the procedures to become a legal freelancer in Germany. These words are:
- Freiberuflich – freelancer
- Gewerbetreibende – tradesperson
- Anmeldung – procedure of registering the home address at the Foreigner’s Office
- Bürgeramt – Foreigner’s Office
- Finanzamt – tax office
- Einkommensteuergesetz – German income tax law
- Identifikationsnummer – tax identification number
- Steuernummer – tax number
- Fragebogen zur steuerliche Erfassung – application form getting the tax number as a freelancer
- Mehrwertsteuer – Value Added Tax