Freelancing in Germany is a diverse and flexible path that can be the perfect solution for those who value freedom of choice, autonomy and control over their work schedule. However, each step towards freelancing is a personal choice that depends on many factors: your character, professional skills, and the current situation in the labor market.

Some people like to work alone, take responsibility for projects, and manage time on their own. Others need a more stable schedule and a guaranteed flow of tasks from regular customers. It is important to understand that freelancing is not just freedom from office routines, but also responsibility for all aspects of running your own business: from finding clients and concluding contracts to complying with tax and legal regulations.

Freelancing in Germany is subject to certain rules, whether it is registering as a freelancer (Freie Berufe) or as an entrepreneur (Gewerbetreibende). Each of these paths has its own characteristics and bureaucratic nuances that require attention. This transition can be both inspiring and challenging, especially if you are not prepared for the complexity of administrative processes, tax obligations, and constant self-management.

However, with the right approach and proper preparation, freelancing in Germany can be the key to professional freedom and development. This is a path that opens up new opportunities for growth, but requires a clear understanding of all its aspects and a willingness to constantly improve yourself.

“Do I need it at all?” – you think in the pauses between orders. After all, every German accountant is so happy to help you fill out a declaration for a modest 200 euros per hour (yes, as if you don’t have any!). And when the client says that he would like to “pause for a month with payment”, you suddenly realize: all these risks now lie with you. No sick leaves, vacations or 13th salary. Just you, your computer, and… your taxes.

So, do you need it? If you like adventure, the German language and bureaucracy – yes, of course! And if not, then maybe it is worth reconsidering dreams of freedom and staying in a comfortable role as a full-time employee.

About The Author

Hi! My name is Ilya Fedotov and I have been living in Germany for more than six years, where I have been working full-time freelancer in the IT field for the past two years. With more than 20 years of experience as a Microsoft Solution Architect, I have been involved in major IT infrastructure migration and implementation projects for international companies such as Deutsche Bank, Fujitsu Services and Infosys. From registration to annual report and customer search. My information is based on my experience as a freelancer in Germany and will help you avoid common mistakes on your way to independence. But I warn you right away: I am not a financial guru or an accountant, so everything you do based on this text is at your own risk. Well, you know, the standard “I warned you”. 😊

I will make a reservation right away: this text will not contain long explanations about obtaining a freelancer visa. You need to go through this step yourself before you can register as a freelancer in Germany. And yes, this is just the beginning of the fun!

I will be glad to hear your comments and wishes about this manual. You can always contact me by email fedotov.ilya (at) gmail.com or via LinkedIn https://www.linkedin.com/in/fedotovi/.

Changelog

Name of the change	Page	Date	Comments	Author
European Small Business Scheme с 2025	32	08.01.2025	Innovations 2025	Ilya
E-invoicing obligation	42	08.01.2025	Innovations 2025	Ilya
New small business regulation 2025	Full document	08.01.2025	Innovations 2025	Ilya
Relief for the 2025 VAT return	Full document	08.01.2025	Innovations 2025	Ilya
Increase in the basic tax-free allowance	Full document	08.01.2025	Innovations 2025	Ilya
Document update, revision 4	Full document	19.01.2025		Ilya
Document update, revision 2	Full document	19.09.2024		Ilya
Document update, revision 2	Full document	15.09.2024		Ilya
Document Update, Revision 1	Full document	13.09.2024		Ilya
Creating a Document	Full document	10.09.2024		Ilya

Chapter 1. Introduction

The general scheme of the registration process looks something like this:

Who are the freelancers and owners of Gewerbe in Germany?

In Germany, any activity must be clearly defined and classified, even if it is a matter of independent work. There are two main categories in this system: freelancers (Freiberufler) and Gewerbe owners. Each of these categories has its own unique features and requirements governed by German law.

Фрилансер (Freiberufler)

A freelancer in Germany is a specialist who provides professional services that are not related to trade or commerce. The main requirement is that the activity must be intellectual and require special knowledge. Such professions include doctors, lawyers, consultants, programmers and other specialists. However, not every independent job falls under the category of freelancer. The activity must be sufficiently intellectual for German law to recognize it as such. For example, simply fixing computers does not belong here.

Freelancers are exempt from registration in the Handelsregister and from mandatory membership in the Chamber of Industry and Commerce (IHK), which greatly simplifies bureaucratic procedures. However, it should be borne in mind that not every activity can be recognized as freelancing. If you want to find out if you can become a Freiberufler, check the requirements on the IHK website: https://www.ihk.de/emden/recht/gewerberecht/abgrenzung-gewerbe-und-freier-beruf-2353148

Gewerbe (Own Business Owners)

If your activity does not fall under the category of “intellectual” according to government standards, then you become the owner of Gewerbe. Imagine a classic scenario: you open a store, start selling goods or provide services such as repairing equipment, and thereby become an entrepreneur. This sounds impressive, but it requires additional effort: you need to register with the trade register, pay trade tax, and be prepared to interact with the German bureaucracy.

Gewerbe owners have their advantages. First, you have the opportunity to expand your operations, hire employees, and even attract investments. However, by choosing this path, you become an entrepreneur and not a “freelance artist” as is the case with a freelancer. If your goal is to scale your business and achieve serious growth, then the Gewerbe owner journey is for you.

So who to be? If you’re looking for freedom and flexibility (with certain tax obligations), freelancing status may be the perfect choice. However, if you have ambitions to build and grow your business, then the world of Gewerbe can open up new opportunities for you.

Main Differences Between Freelancer and Gewerbe Owner

One of the key differences is, of course, taxation. The owner of a Gewerbe is required to pay a trade tax (Gewerbesteuer), which adds its share of bureaucratic responsibilities and financial obligations. While freelancers are exempt from paying this tax. It seems that the legislator said: “Okay, here is at least one relaxation for you, but do not relax!

The bureaucratic features do not end there. Freelancers get another advantage — a more simplified reporting and accounting system. They don’t have to spend long nights with a calculator and spreadsheets. Freelancers’ reports and tax returns in Germany say, “We’ll make it easy for you, but you still have to work hard.” This is a kind of “hardcore” mode of doing business.

It is important to remember that the Gewerbe registration process can vary significantly depending on the specifics of your business. Therefore, if you decide to immerse yourself in this world, you should carefully read the information and recommendations on this issue:

https://www.lexoffice.de/wissenswelt/selbstaendig-machen/gewerbe-anmelden/

https://www.ihk.de/karlsruhe/fachthemen/recht/gewerberecht/gewerbeanmeldung-4632354

So, if you’re looking for control and ready for the complexities of reporting, the world of Gewerbe may be your choice. And if you prefer an easier route, but with some “poignant” moments, freelancing is probably more suitable for you.

Elster Registration

!! One of the fundamental requirements for starting the whole process is access to the personal account of the financial service – Finanzamt. Through this account, you can apply for freelancing, officially communicate with Finanzamt, file tax returns, and also delegate access to Steuerberater. Detailed instructions are given below..!!

Go to the https://www.elster.de/eportal/registrierung-auswahl?locale=en_US
Click Next

Click Next

Select the Certificate file section and click Select

Выбираем For me ( and my parther) нажимаем Next

Выбираем With tax identification number

Enter your data in the Data Entry section and check the box at the bottom (I confirm), click Next

Заполнить Pre-filling the income tax return :

If you want to share the same account with your spouse or children, you can add their tax identification numbers here. Elster stores the details you provide on your tax return and automatically fills out basic forms for the following year, for example. If your data changes by then, you can of course edit it. Either way, it will save you time and allow you to see what data you have submitted in previous years. Now that you have entered all the required data, you can click on the “Check” button to review it again before sending.

Confirmation of registration

If you have entered all the data correctly (marked in gray), click the “Submit” button. After that, you will receive an email to confirm the entered data. Click on the activation link provided in the email. If you don’t receive the email, wait a while and check your spam folder as well. The link is valid for seven days. You will then receive another email with instructions on how to activate your account and an important identification number (Activation ID) that you need to keep.

Elster Online Registration

As soon as you receive an email with your second personal activation code, follow the next steps of registration. The letter should arrive within 14 days. If you do not receive it, please contact ELSTER customer service.

In the future, to access your personal account, you will need a certificate that you saved during registration + login and password

An important prerequisite before starting the registration process is to have a separate account/IBAN that you will use to generate income, pay taxes, and all possible expenses related to self-employment. Section 6. Banks

Freelancer Quick Check-In

!! Not an advertisement for Getsorted!!

Register on https://en.getsorted.de
On the main page, click Start registration

Fill out the standard Personal Details questionnaire. Be sure to indicate your profession.
Fill in the Business Info. It is important to specify your profession here so that the system correctly determines whether you are a Freiberufler or a Gewerbe.

Tax Setup section. In the Profit determination method item , you will most likely choose Single entry bookkeeping. If your revenue exceeds 800 thousand euros per year, then the second option is chosen.
Tax Estimation section. Here you need to indicate your situation with freelancing, as well as the expected income for the current and next year. I deliberately do not give details, since everyone has different life situations.
Review and Submit section. In this section, you need to specify the Finanzamt office of the region where you live and click Submit to the Finanzamt.

Detailed registration

Detailed registration requires that you log in to your Elster account and fill out the online form “Fragebogen zur steuerlichen Erfassung“.

I can recommend two detailed videos on filling out the form:

In Russian by Tupa Germania:

https://www.youtube.com/watch?v=S9eyTPUcp1s

In German by Steuerfit:

https://www.youtube.com/watch?v=Uqe_tQvaILg&t=1s

Gewerbe registration video (in German)

For Bayern

For Berlin

Depending on your place of residence and the speed of processing documents, in 2-9 weeks you will receive a confirmation of registration as a freelancer for the specified type of activity, as well as a tax number.

2. About taxes

Taxes are like a mandatory “quest” on the way of any freelancer or business owner in Germany. Although it is not the most exciting, it is certainly necessary, because without passing it, you will face “unpleasant surprises” in the form of fines or questions from the tax service (and it is better not to joke with it!). In this chapter, we will understand the main types of taxes that both freelancers and Gewerbe owners need to pay in order to work legally and sleep peacefully at night.

Types of taxes for freelancers/geverbbe

1. Income tax

Freelancers and Gewerbe owners, like all taxpayers, are required to pay income tax. This tax is calculated on the basis of net income – the difference between total income and expenses related to doing business. The income tax rate is progressive and depends on the amount of income:

Up to 12,096 euros per year (in 2025) – 0% tax rate.
Income between €12,096 and €17,005 is taxed at 14%.
For incomes between €17,006 and €66,760, the rate increases progressively to 42%.
For income from 66,761 to 277,825 euros — 42%.
Income over €277,826 is taxed at 45%.

For example, with an income of 80,000 euros, the tax will not be 42%, as it may seem at the rate for the upper range, but will be around 30-35%. This is because only a portion of income above a certain threshold is taxed at a higher rate. To find out exactly what percentage of tax is on all income, the average effective tax rate is used, which will always be below the highest marginal rate.

https://www.bmf-steuerrechner.de/ekst/eingabeformekst.xhtml

Calculation example:

2. Value Added Tax (VAT) or Umsatzsteuer

Most freelancers and Gewerbe owners are required to pay value-added tax (Mehrwertsteuer, or Umsatzsteuer). The general VAT rate in Germany is 19%, but for some goods and services, such as books and most food, there is a reduced rate of 7%. Exceptions are small entrepreneurs (Kleinunternehmer) whose annual turnover does not exceed 25,000 euros (from 2025) – they may be exempt from VAT.

3. Trade tax

Freelancers are exempt from paying trade tax, which is levied on businesses that conduct commercial activities (Gewerbe). However, Gewerbe owners are required to pay this tax if their annual profit exceeds a certain threshold (about 24,500 euros). Trade tax is calculated on the basis of profits and depends on the rate set by the local authorities. (approximately in the range of 0 to 7%)

4. Cooperative and corporate taxes

Freelancers are not required to pay corporate tax (Körperschaftsteuer), which only applies to capital investments such as GmbH, AG or UG. This allows them to save on taxation, compared to company owners.

VAT (Umsatzsteuer) and peculiarities of its payment

Value added tax (Umsatzsteuer) is levied on most goods and services provided in Germany. It is important to know the specifics of its payment and understand the differences between the two main methods of calculating VAT: Soll-Versteuerung and Ist-Versteuerung.

1. Debit taxation (tax on invoice)

With this method, the freelancer is required to pay VAT at the time of invoicing the client, regardless of whether the invoice has been paid or not. This can lead to situations where taxes have to be paid before the actual money is credited to the account. Soll-Versteuerung is recommended for companies and businesses with high liquidity.

2. Ist-Versteuerung (Taxation upon Receipt of Payment)

With this method, VAT is paid only when the customer has actually paid the invoice. This method helps freelancers better manage their liquidity and reduces the risk of cash gaps. In order to use the Ist-Versteuerung, you must meet certain criteria, including an annual turnover of less than 800,000 euros (from 01.01.2025).

3. Provisional tax returns

Freelancers and Gewerbe owners are required to file provisional VAT returns (Umsatzsteuer-Voranmeldung) every month, quarter or year, depending on the amount of taxes paid for the previous year:

If the taxes paid exceed 7,500 (9000 from 2025) euros per year, the declaration is submitted monthly.
If the taxes paid are from 2,001 to 9000 euros, the declaration is submitted quarterly.
If the taxes are less than 2,000 euros, the declaration is submitted once a year.

The declaration must be submitted by the 10th day of the month following the accounting period.

4. Advance tax payments

Freelancers and Gewerbe owners are required to make advance tax payments (Vorauszahlungen) to avoid a large lump sum at the end of the tax year. Advance payments are determined based on an estimate of estimated revenue reported at enrollment or based on last year’s earnings.

1. How are down payments calculated?

After registering with the tax office, the freelancer or Gewerbe owner must enter their projected income for the year ( Einkommensteuervorauszahlung ). Based on this data, the tax office calculates advance income tax payments. Advance payments are made quarterly on the following dates:

10 march,
10 June,
10 September,
December 10.

Freelancers or Gewerbe owners will find out how much income tax they will need to pay only at the end of the year. To avoid having to pay a large amount of tax in a lump sum, they make advance payments throughout the year. If your projected income changes during the year, you can request an adjustment to the amount of advance payments from the IRS.

2. Recalculation and final payment of taxes

At the end of the year, a final tax return is submitted, on the basis of which the exact amount of tax is determined. If your advance payments exceed the actual tax liability, the tax administration will refund you the overpaid taxes. It is recommended to set aside money for these payments in advance so that they do not become an unexpected surprise.

If the taxes were underpaid, you will have to pay the remaining amount within a month after receiving the tax notice.

Tax optimization and restrictions for freelancers

Optimizing the tax burden is an important aspect for any freelancer looking to reduce their costs. In Germany, there are several legal ways to optimize taxes, but it is important to understand that any deviation from the law can lead to fines and additional inspections by the tax authorities. The basic principle is that everything related to professional activities and has documentary evidence can be deducted from the tax base. It is important to monitor the safety of all accounts and documents, as well as take into account the deadlines for filing tax returns.

As a freelancer, it is important to know what expenses can be deducted from taxes in order to reduce the tax base and pay less taxes. However, not all expenses can be written off completely, and some of them are subject to restrictions. In this article, we will look at what expenses a freelancer can write off and how to do it correctly in order to optimize tax deductions and avoid problems with the tax office.

What is expense write-off?

Expense write-off is the process of reducing the tax base (the amount on which taxes are calculated) by taking into account the expenses that were made for your professional activities. For example, if you bought a computer for work, its cost can be deducted from income. Writing off expenses helps reduce the amount of taxes you will need to pay.

What expenses can be written off in full?

A full write-off means that you can take into account 100% of the expenses to reduce your taxable profit. Such expenses include office rent, office supplies, insurance policies, professional advice, and some travel expenses. These expenses are directly related to your professional activities and are fully recognized as production expenses.

Examples of fully write-off expenses:

Office rental (Büromiete): If you rent a separate room for work, these costs can be written off in full.
Office supplies (Bürobedarf): Purchases of paper, pens, folders and other materials for work are also 100% charged.
Insurance (Versicherungen): Professional insurances such as business liability insurance and attorney’s insurance, business liability section are completely written off.
Accounting services (Beratungskosten): Advice on taxation and accounting, as well as other legal services.

What expenses are partially written off?

Partial expenses are those expenses that can only be written off in a certain percentage, as they can have both professional and personal use. For example, if you host business dinners with clients, tax laws only allow you to write off 70% of such expenses, since 30% is considered to be related to the personal element.

Examples of partially write-off expenses:

Entertainment expenses (Bewirtungskosten): You can only write off 70% of the net amount, but VAT on these expenses can be refunded in full. For example, if you organize a business dinner meeting with a client, only 70% of the cost of this dinner can be written off as production expenses.
Use of a personal car for work: If you use your personal car for work, then you can only write off the part that corresponds to work trips. Other expenses related to personal use are not written off.

Which expenses are deducted only for VAT (VAT) Abzug nur der MwSt?

Some purchases, such as equipment or vehicles, can be deducted against the VAT you paid at the time of purchase. However, the cost of the equipment itself may not be written off immediately, but in installments through depreciation (Abschreibung, AfA). This is especially important for large purchases, such as a computer or car, which are used in business.

Restrictions on tax write-offs

There are certain expenses that cannot be written off completely or that have limits. For example:

Gifts to customers (Geschenke an Kunden): If the value of the gift exceeds 50 euros, such gifts cannot be deducted from taxes.
Business trip meals: These costs can only be deducted within the limits set by the tax office. In Germany, the daily allowance is €14 per day for trips lasting between 8 and 24 hours within the country, and €28 for longer trips.

How to optimize tax deductions?

Keep track of all expenses. Keep all receipts and receipts related to your professional activities to easily confirm expenses before the tax office.
Use Cushioning for Large Purchases (AFA Tabelle)

Reference to tables https://www.bundesfinanzministerium.de/Web/DE/Themen/Steuern/Steuerverwaltungu-Steuerrecht/Betriebspruefung/AfA_Tabellen/afa_tabellen.html

If you bought expensive equipment, such as a computer or printer, you can write off its cost in installments over several years. This will reduce the tax base for a long time.

Separate personal and work expenses. If you use a car, phone, or computer for both work and personal needs, keep a record of how much time or resources are used for professional activities. This will help avoid problems during tax audits.
Consult an accountant. A professional accountant or tax consultant will help you allocate costs correctly and take advantage of all the opportunities for tax optimization.

Expense table

Below is a table that shows which expenses can be written off in full, and which allow only VAT to be written off:

Business Expenses Deduction Overview (English Translation)

Type of Expenses	Full Deduction	VAT Deduction Only
Office Expenses	Yes (Ja)	–
Office Rent	Yes (Ja)	–
Office Furniture	Yes (Ja)	–
Office Supplies	Yes (Ja)	–
Virtual Office	Yes (Ja)	–
Technical Equipment	Yes (Ja)	Only VAT, if subject to depreciation
Computers	Partially (according to depreciation/AfA)	Yes (on purchase)
Software	Yes (Ja)	–
Transport Costs	–	Yes (VAT on transport costs)
Personal Vehicles for Work Purposes	Partially (according to depreciation/AfA)	Yes (if VAT was paid at purchase)
Travel Tickets	Yes (Ja)	–
Business Travel Expenses	Yes (Ja)	–
Meals on Business Trips	Partially (according to flat-rate rules)	–
Work Materials	Yes (Ja)	–
Office Supplies (again)	Yes (Ja)	–
Professional Literature	Yes (Ja)	–
Representation Expenses	Partially (70%)	Yes (full VAT)
Gifts to Clients	Not deductible if over €50	–
Depreciation (AfA)	Partially (according to depreciation/AfA)	–
Business Insurance	Yes (Ja)	–
Accounting and Consulting Services	Yes (Ja)	–
Marketing Services	Yes (Ja)	–

A car for work

When freelancers or other self-employed people use a company car for personal purposes, it is considered a monetary benefit (geldwerter Vorteil) that must be taxed. The German tax office allows two main methods to calculate the private use of a car: the waybill method (Fahrtenbuchmethode) and the 1% method (1-Prozent-Methode). Here’s a detailed explanation of how these methods work and what factors to consider when choosing them.

Vorsteuer with car expenses

If you are entitled to a Vorsteuerabzug, you can fully deduct VAT from car costs such as fuel, repairs and maintenance.
For example, if the total costs are €9,450 including VAT (which corresponds to approximately €7,941 excluding VAT and €1,509 VAT), you can refund these €1,509 within the Vorsteuer.

VAT on private use

When the share of private use is calculated, VAT must be paid on it. For example, in the case of a waybill:
- €1,928 (private use) = net amount.
- 1,928 * 19% = €366.32 (VAT on private use), which must be returned to the state.

1. Waybill Method

This method requires freelancers to record each work-related trip with the following details:

Date of travel.
Starting and ending points of the trip.
Odometer readings at the start and end of the trip.
The purpose of the trip and, if applicable, the name of the customer or partner.

Advantages of the waybill method

Suitable for those who rarely use the car for personal purposes, since the calculation of private use will be minimal.
If the car is old or has already been written off, keeping a waybill is often more profitable than the 1% method.

Disadvantages

Careful and regular record keeping is required. Any errors or gaps can lead to the refusal of the tax service to recognize this method as valid.
Manual waybilling can be time-consuming, but there are electronic solutions such as GPS devices and waybill apps that make the process easier.

2. Метод 1% (1-Prozent Method)

This method allows the freelancer to calculate the private use of the car based on 1% of the gross sheet value of the car (Brutto-Listenpreis) per month. There are also variations of this method for electric vehicles, where 0.5% or 0.25% is used.

Advantages of the 1% method

The method is easy to use and does not require the maintenance of waybills.
Convenient if the car is often used for personal purposes, or if the car is new and has a high sheet value.

Disadvantages

If the car is old, this method may be less profitable, as the calculation is based on the original cost of the car and not its current market value.
Higher personal use tax, especially if the car is rarely used for personal travel.

Calculation example

Example of calculation using the waybill maintenance method

Let’s say the total cost of the car was 9,450 euros per year. You drove 24,500 km, of which 19,500 km were related to business trips and 5,000 km were private trips.

€9,450 * (5,000 km / 24,500 km) = €1,928 is the amount taxable for private use.

Example of calculation using the 1% method

Let’s assume that the gross sheet value of the car is €35,000. With the 1% method, your private expense will be:

€35,000 * 1% * 12 months = €4,200 is the amount for private use of the car.

3. Adjustments: commuting (trip to the first permanent establishment)

If you use a car to commute (e.g. from home to office), you need to add 0.03% of the gross sheet value for each kilometer traveled. For example, with a distance of 10 km and the cost of the car is 35,000 euros, you add:

0.03% * 10 km * 12 months = €1,260.

This amount is added to private expenses, but you can also deduct compensation for commuting (Pendlerpauschale) at €0.30 per kilometre.

4. Tax Incentives for Electric Vehicles

There are various tax incentives for electric cars and hybrids. For example, for cars purchased from 2019 onwards, 0.25% of the gross leaf value can be used if the car has zero CO2 emissions and its price does not exceed 60,000 euros.

Example of calculation for an electric car:

Let’s say your electric car costs €52,000 and was purchased in 2020. Using the 0.25% method, your private expenses will be:

(€52,000 * 0.25%) * 12 months = €1,560.

Conclusion: How to choose between Fahrtenbuch and 1-Prozent-Methode?

Keeping a waybill is beneficial if you have few private trips or the car is old.
The 1% method is convenient for those who often use the car for personal needs or if the car is new with a high sheet value.

Each situation is individual, and the choice of method depends on many factors. It is recommended to consult with an accountant or tax consultant in order to choose the most profitable option and not to make mistakes in the calculations.

Personal car for work

Freelancers in Germany can use personal cars for work needs and still have the associated costs deducted from taxes. This can significantly reduce tax liabilities if all the nuances are properly taken into account. In this article, we will look at how a freelancer can competently use a personal car for work and what tax benefits can be obtained in this case.

1. Legal basis for writing off expenses

When a freelancer uses a personal car to perform work tasks, such trips may be recognized as professional, and the costs associated with them can be taken into account as business expenses. However, it is important to separate business and personal travel, as the tax authorities require accurate accounting. In case of incorrect accounting, the freelancer may be denied to write off part of the expenses.

2. How to Separate Personal and Professional Car Use

To separate work and personal trips, you need to keep a travel log (Fahrtenbuch). This is a mandatory requirement if you plan to write off actual expenses. The following data should be recorded in the log:

Date of travel
Purpose of the trip
Destination
Distance traveled (in kilometers)
Travel time

This journal serves as evidence of the share of official use of the car and is used to calculate the proportional part of the expenses that can be written off from taxes.

3. Methods of accounting for expenses

There are two main methods for writing off car expenses:

Actual costs. This method requires you to record all the real costs of the car that are associated with its operation: fuel, maintenance, insurance, vehicle tax, depreciation, and even parking. These costs are then divided proportionally between personal and work use based on the trip log.
Fixed rate per kilometer. If you find it difficult to keep track of all expenses, you can use the simplified method of writing off 30 cents for each kilometer traveled for work purposes. To do this, you will also need to keep a trip log, but accounting for individual car costs is not necessary.

4. Registration of the car in the name of the company

If the car is registered to a company, all expenses for its operation, including purchase, insurance and maintenance, can be taken into account as corporate expenses. However, it is important to understand that the car becomes an asset of the company, which imposes certain obligations. For example, you will have to take into account the depreciation of the car and correctly calculate its use for personal needs.

In addition, if you use the car for both business and personal purposes, the tax authorities may consider the use of the car for personal needs as an additional remuneration that is also subject to taxation.

5. Depreciation and Cost Reduction

Car depreciation is the process of gradually writing off its value over several years. Depending on the value of the car and its estimated lifespan, the freelancer may charge part of the cost annually. This method is especially useful if you bought a car specifically for business or use it primarily for work purposes.

Calculation example

Let’s say a freelancer uses a personal car that is used for both personal and work purposes. A freelancer keeps a trip log and determines that 60% of the car’s mileage is related to business trips. Let’s consider two scenarios: calculation based on actual costs and a flat rate per kilometer.

Total car costs per year:
- Fuel: 1500 euros
- Insurance: €600
- Maintenance: €300
- Other costs: 200 euros
- Total: 2600 euros
Actual cost method:
Of the total expenses, 60% is related to business trips, so you can write off:
2600×0.60=1560 euros
Fixed rate method:
A freelancer has traveled 8000 km in a year for work purposes. Taking into account a fixed rate of 30 cents per kilometer:
8000×0.30 = 2400 euros

As you can see from the example, the fixed rate method allows you to write off more funds, but depending on the situation with actual expenses, this method may not always be profitable. A freelancer should analyze his costs and choose the most suitable option.

Kinderfreibetrag: Tax relief for parents

Raising children is not only a joy, but also a significant financial cost. In order to support parents, the state provides tax deductions, one of which is the Kinderfreibetrag – a child deduction provided for in accordance with § 32 Einkommensteuergesetz (EStG). This deduction reduces the tax base, which leads to a lower tax burden for parents.

Highlights about Kinderfreibetrag:

Size of Kinderfreibetrag:
- In 2023, the deduction is 8,952 euros per child.
- In 2024, the amount increases to 9,540 euros per child.
- In 2025, the amount increases to 9,600 euros per child.

This deduction has two components: Freibetrag für das Existenzminimum des Kindes (deduction for the minimum needs of the child) and Freibetrag für den Betreuungs-, Erziehungs- und Ausbildungsbedarf (deduction for care, upbringing and education).

Who is Kinderfreibetrag available for:
- Kinderfreibetrag is only available to taxpayers in tax classes I-IV.
- Parents living together apply for a deduction together and receive the full amount.
- Parents living separately can divide the Kinderfreibetrag in half, each of them receives 50% of the total amount.
Choosing between Kinderfreibetrag and Kindergeld: It is important to remember that parents can choose either Kindergeld (monthly payments per child) or Kinderfreibetrag (checking which is more profitable). As a rule, the child deduction becomes more advantageous if the annual income exceeds €64,000 for married couples or €32,000 for single parents.
How to get a Kinderfreibetrag: To use the Kinderfreibetrag, you must provide it when submitting your tax return. The tax office will do the calculation and tell you in the tax notice (Steuerbescheid) which turned out to be more profitable: Kinderfreibetrag or Kindergeld.

Additional deduction: Education allowance

If your child is older and is studying or at university, you can also get an Ausbildungsfreibetrag. This deduction is intended to cover the costs associated with the children’s education.

Until 2022, the Ausbildungsfreibetrag was 924 euros per year.
From 2023, the amount has increased to 1,200 euros per year.

This deduction is in addition to the Kinderfreibetrag if you are still eligible for a Kindergeld for a child who is in school.

Kinderfreibetrag Case Study

Suppose you have one child and you decide to use Kinderfreibetrag in 2024:

Deduction amount: €9,540* will be deducted from your tax base.
Tax reduction: If you pay tax at a rate of 30%, this will reduce your tax burden by approximately €2,862 (30% of €9,540).

*2025: €9,600

If your income exceeds the threshold for Kindergeld, Kinderfreibetrag can provide you with a significant tax advantage.

How to account for expenses and keep receipts?

In order for all these expenses to be accepted by the tax authorities, it is necessary to document them correctly. Each purchase or payment for services should be accompanied by a receipt or invoice, which should indicate the date, amount, description of the purchase and the name of the seller company. All documents must be kept for 10 years in order to have evidence in the event of a tax audit.

Simplified deductions (Fixed lump sums)

Some expenses can be written off without providing checks and documents if the lump-sum deduction system is used. For example, the lump-sum rate for the use of a home office is €6 for each working day spent at home, but not more than €1260 per year (for 2024). There are other lump-sum rates, such as small expenses for office supplies.

Applications of the Kleinunternehmerregelung

In Germany, from 2025, the annual turnover limit for entrepreneurs applying the status of Kleinunternehmer (MwSt) has been increased from 22,000 to 25,000 euros. If your annual turnover does not exceed €25,000, you can take advantage of this status and be exempt from the obligation to collect and pay VAT. However, if your turnover exceeds this threshold, you will be required to switch to the standard VAT payment system.

Please note that when calculating the annual turnover, all income from business activities is taken into account. If your turnover exceeds €25,000 during the year, you must notify the tax authorities and start collecting VAT from your customers, as well as submit the relevant tax returns.

For more information, it is recommended to consult official sources such as the German Federal Ministry of Finance (Bundesministerium der Finanzen) or consult a tax advisor.Accounting for depreciation of assets

Freelancers can account for the depreciation of large acquisitions (e.g., computers, office furniture, equipment) over several years. This allows you to evenly distribute tax deductions over several tax periods.

Применение European Small Business Regulation с 2025 года

From 1 January 2025, a new rule for small entrepreneurs, known as the Europäische Kleinunternehmerregelung, will come into force within the European Union. This rule is aimed at simplifying tax administration for small businesses and individual entrepreneurs, as well as unifying VAT requirements in different EU countries. In this article, we’ll take a closer look at how the new rule will work, who will be able to use it, and what benefits it will bring.

The essence of the new rule

The Europäische Kleinunternehmerregelung offers small businesses with an annual turnover of up to €85,000 to avoid paying value added tax (VAT) within the EU. This rule replaces the national turnover thresholds that have existed in each country until now.

The essence of the new approach:

If the annual turnover of an entrepreneur does not exceed €85,000, he can be exempt from VAT.
The exemption applies to the entire EU internal market, eliminating the need to register VAT in other countries when selling goods or services abroad.
To maintain the status of a small entrepreneur, it is necessary to meet the new criteria every calendar year.

Who is this rule suitable for?

The new rule applies to small businesses and individual entrepreneurs registered in one of the EU countries that meet the following criteria:

Annual turnover up to €85,000. This limit includes all income from the sale of goods and services, both domestically and internationally.
Place of main activity. The entrepreneur must have its principal place of business in one of the EU countries.
Voluntary Use. The new rule is not mandatory. Entrepreneurs who benefit from staying in the VAT system can continue to work under the old rules.

Advantages

Reduced administrative burden: no need to file VAT returns, register in other EU countries and comply with complex cross-border trade rules.
Simplified accounting: less paperwork and reporting.
Cost reduction: The absence of an obligation to pay VAT allows entrepreneurs to offer more competitive prices.

Limitations and Exclusions

Despite the numerous benefits, there are some limitations to be aware of:

If the turnover exceeds €85,000 during the year, the entrepreneur automatically loses the right to VAT exemption and must register as a VAT payer.
The exemption does not apply to imports of goods from countries outside the EU.
Some activities, such as the sale of excise goods (e.g. alcohol and tobacco), are excluded from this rule.

Procedure for use

In order to take advantage of the new rule, an entrepreneur must:

Register with the tax authorities of your country and apply for the Europäische Kleinunternehmerregelung.
Make sure that the annual turnover does not exceed the established limit.
Keep records of income to confirm the right to VAT exemption.

Limitations and risks

It is important to remember that the tax service closely monitors all attempts to illegally reduce the tax base. Attempts to hide income or exaggerate expenses can lead to fines and additional tax audits. Therefore, when optimizing taxes, it is better to seek advice from a professional tax consultant

Tax Calculator

In addition to the theory, link to the tax calculator:

https://www.bmf-steuerrechner.de/ekst/eingabeformekst.xhtml

https://www.steuertipps.de/service/rechner/einkommensteuer-rechner?srsltid=AfmBOopS24R43CYbWcUUJI2sR2hsVbgJKObMVeehVly36oKFrAoSClO8/

Tax Consultant

Handling tax affairs in Germany can be a daunting task for most people, especially when it comes to self-employed, freelancers, or business owners. This is where a tax advisor (Steuerberater) comes in. In this article, we will look at why it is important to contact specialists, in what situations it is necessary, how to choose the right specialist, and share useful resources for finding a tax consultant in Germany. It is not necessary to look for a Russian/English-speaking consultant, since most of the communication takes place in writing, and you can calmly and slowly translate all your requests through Deepl / ChatGPT

1. Who is a tax consultant and what services does he provide?

A tax consultant is a licensed professional who helps individuals and companies deal with tax issues. In Germany, tax advisors are required to be members of the tax chamber (Steuerberaterkammer) and undergo strict professional certification.

The services of a tax consultant may include:

Preparation and submission of tax returns (for both individuals and companies);
Consulting on tax planning and optimization;
Preparation of accounting reports for companies;
Support in tax disputes and proceedings;
Support during tax audits;
Tax accounting assistance for self-employed individuals, freelancers, and small businesses.

2. When should I contact a tax advisor?

Some categories of citizens should especially seriously consider the possibility of cooperation with a tax consultant. Here are a few cases where the help of a tax advisor may be necessary:

Freelancers and self-employed: Self-employment means keeping track of all income and expenses, as well as filing tax returns regularly. Even a small mistake can result in penalties.
Business owners: Accounting and tax reporting for companies is a complex and responsible task. A tax consultant will help you avoid mistakes, optimize taxes and make sure that all financial transactions comply with the law.
Dealing with investments or income abroad: If you have income from other countries or invest in international projects, the tax situation becomes more complicated. A consultant will help you correctly declare such income, take into account the peculiarities of international taxation and avoid double taxation.
Selling or renting out real estate: In these cases, there are various tax benefits and exclusions that can be taken advantage of, but only with a competent approach. A tax consultant will advise you on how to properly account for income from renting or selling real estate in order to minimize tax liabilities.
Tax audit: If you are facing an audit by the tax authorities, professional advice can greatly facilitate the process and protect your interests. A tax consultant will prepare all the necessary documents, explain controversial issues to the tax authorities and help minimize possible risks and penalties.

When can you do without a tax consultant?

Despite all the advantages of working with a tax consultant, there are situations when you can cope on your own and save on his services:

Low or irregular income: If your freelance income is small (e.g. less than €20,000 per year) or irregular and your tax situation is simple enough, you can do without a tax advisor. In this case, the costs of professional services may be disproportionately high compared to the potential tax savings. which will help to take into account the main income and expenses.
Standard tax deductions: If you only claim standard tax deductions (e.g., travel expenses, work tools, standard insurance), then you probably won’t need professional help filing your return. Standard deductions are easy to claim on your return and don’t require complex calculations.
Use of tax software: There are many tax preparation and filing programs available today that can be useful for individuals with a simple tax situation. Such programs usually offer step-by-step instructions that simplify the process and avoid mistakes.
Self-filing experience: If you already have experience filing your tax return on your own and your financial situation hasn’t changed, you may be able to handle it without the help of an advisor. Over time, many people gain enough knowledge to handle their tax affairs on their own.

When should you think about a tax consultant depending on income?

The level of income directly affects the complexity of your tax situation and, therefore, the need for the services of a tax consultant:

Income of up to €20,000 per year: With this level of income, the tax situation is usually quite simple. In most cases, if you do not have additional complex sources of income (such as overseas investment or renting out real estate), you will be able to handle your tax return on your own using the available online tools and programs.
Income from 20,000 to 50,000 euros per year: As income increases, the tax situation becomes more complicated. Here you may have questions about tax optimization, accounting for business expenses and the use of tax benefits. If your income is growing, it is worth considering at least a one-time consultation with a tax consultant.
Income over €50,000 per year: With an income above this mark, especially if you work with several clients or lead large projects, the services of a tax consultant become almost necessary. In this case, a professional will help you optimize taxes, take into account all possible expenses, avoid mistakes that can lead to serious fines, and ensure competent financial planning.

3. How much do tax consultant services cost?

In Germany, the cost of a tax consultant’s services is regulated by the fee legislation (Steuerberatervergütungsverordnung). The amount of the fee depends on several factors:

Complexity and amount of work: The more complex the task, the higher the cost will be.
Your income: The higher your income or business turnover, the more time the consultant will spend on your tax reporting.

Sample rates for individuals range from €150 to €500 for preparing a tax return. For entrepreneurs or small business owners, the amount can increase significantly depending on the complexity of the bookkeeping.

4. How to choose a tax consultant?

Here are some tips for choosing a tax advisor:

Check the licenses and membership of the tax chamber. Every qualified tax advisor must be registered with the German Tax Chamber (Steuerberaterkammer). This ensures that they have the necessary knowledge and undergo regular further training.
Review reviews and recommendations. An important criterion may be the reputation of the consultant among other clients. If you have acquaintances who have used the services of a tax consultant, ask for their opinion.
Consider specialization. Some tax advisors specialize in working with individuals, while others specialize in small businesses or companies. If you’re a freelancer or business owner, choose a consultant who has experience working with such clients.
Assess accessibility. It is important that a tax advisor is available to answer your questions in a timely manner, especially in the case of tax audits or urgent filings.

Where to look for a tax consultant?

Below are some useful resources where you can find a tax advisor in Germany:

Steuerberater.de
This is one of the largest directories of tax consultants in Germany. The platform allows you to filter consultants by location and specialization.
Steuerberater Verzeichnis
This site provides a database of certified tax consultants where you can search for specialists by city or region.
DATEV eG
The DATEV Association is a network of professionals in the field of accounting and taxation. They offer the search for qualified tax consultants working using modern accounting technologies.
The German
Chamber of Auditors (Wirtschaftsprüferkammer) also has a register of tax advisors, especially for complex cases involving business or international transactions.
MeineStadt.de
A portal for finding various specialists, including tax advisors, in specific cities and regions of Germany.

6. Conclusion

Tax laws in Germany are quite complicated, especially for those who run a business or work as a freelancer. The decision to contact a tax advisor depends on your income level and the complexity of your tax situation. With small incomes, you can cope on your own, but as they grow and the financial situation becomes more complicated, it becomes advisable to turn to a professional. This will help not only to save time, but also to avoid mistakes, as well as possible problems with the tax authorities.

A tax consultant is not just an assistant in filing returns, but a reliable partner who helps to optimize taxes and feel confident in communicating with the tax authorities. Using the resources listed above, you can find a specialist who is right for you and will help you cope with any tax difficulties.

3. Accounting and Accounts

Freelancers in Germany can use a simplified accounting system – Einnahmen-Überschuss-Rechnung (EÜR), which translates as “calculation of income and expenses”. This system is designed for small entrepreneurs whose annual turnover does not exceed 800,000 euros, and it is simpler compared to double-entry bookkeeping.

EÜR Highlights

Income: All money that comes into your account or in cash must be recorded.
Expenses: All professional expenses, including office rent, transport, marketing, equipment and other expenses, are also recorded.
VAT deduction: If you are registered for VAT (Umsatzsteuer), you can deduct VAT on purchases related to your professional activities.
Final Profit: Final profit is calculated as the difference between income and expenses. This is the amount that is subject to income tax.

The EÜR can be submitted electronically via the ELSTER portal, which is used for all tax transactions in Germany. And you can also use Getsorted or other accounting software.

How does EÜR work?

In the EÜR, income and expenditure are allocated according to the principle of actual receipt or expenditure of funds. This is called Zu- und Abflussprinzip:

Income is taken into account when the money is credited to the account (for example, when paying by card or when making a bank transfer).
The expense is recorded at the moment when the money is actually debited from the account.

A distinctive feature of EÜR is that there is no need to use such complex accounting mechanisms as depreciation accruals or reserves, which are necessary in the double-entry bookkeeping system.

Who is required to file an EÜR?

The following categories of entrepreneurs are required to submit an EÜR:

Small entrepreneurs (Kleinunternehmer) whose annual income does not exceed 25,000 euros.
Freelancers who work in the scientific, artistic, educational, or consulting fields.
Individual entrepreneurs, if their annual turnover does not exceed 600,000 euros and 800,000 (after 01.01.2027) and p, and the profit is 60,000 euros.

How do I create and submit an EÜR?

In order to create and submit an EÜR, you need to register on the ELSTER portal , which is the official online tool for filing tax returns in Germany. After registering on the ELSTER platform, you can fill out the EÜR form online. To do this, log in to your personal account, select the “Formulare & Leistungen” section and find the “Einnahmenüberschusrechnung (Anlage EÜR)” form

Stages of EÜR registration

Filling out the form

After registering on the ELSTER platform, you will get access to the EÜR form. In this form, you must specify:

Income: All income that you have received as part of your activity.
Expenses: All expenses related to your activities (office rent, equipment, software, etc.).

Filling options:

Manual filling: Directly on the ELSTER website.
Automation: Use accounting software to simplify the process and minimize errors. Programs automatically populate and export data to ELSTER.

Submission of documents

Although the documents themselves (for example, invoices, checks, contracts) do not need to be attached to the declaration, it is important to follow the following rules:

Document retention:
All supporting documents must be kept for a minimum of 10 years in case of inspection by the tax authorities. This applies to both paper and digital documents.
Examples of documents to be stored:
- Invoices from customers.
- Invoices.
- Receipts confirming purchases.
- Bank statements.

Tip: Use cloud-based document storage solutions to avoid document loss and provide quick access when needed.

What costs can be taken into account in EÜR?

The following costs can be taken into account in the EÜR:

Equipment costs (e.g., computers, furniture).
Transportation costs (travel to customers, delivery of goods).
Training and professional development costs.
Expenses for renting an office or home office (if it is used for work).
Depreciation of goods that last more than one year (e.g., car, computer).
Advertising and marketing costs.

Accounting Software

Manual bookkeeping can be a complex and time-consuming process. Fortunately, there are many software solutions on the market that help automate accounting, invoicing, VAT accounting, and reporting for the tax office.

Popular accounting software

LexOffice is one of the most popular software for small businesses and freelancers in Germany. It offers simple record keeping, automated invoicing, VAT calculation, and reporting via ELSTER.
SevDesk is a cloud-based freelancer solution that allows you to keep track of income and expenses, manage client accounts, and send tax returns online.
FastBill is a service that automates the management of invoices, taxes, and payments, simplifying the work of freelancers and small businesses.
Getsorted is a popular accounting program for freelancers and small business owners in Germany. It is designed to make it easier to manage financial and tax obligations, especially for those who do not have in-depth knowledge of accounting.

Each of these solutions has its own advantages, so it’s important to choose the one that best suits your needs and type of activity. I’m currently using Lexoffice because Getsorted doesn’t cover my needs.

Billing

In Germany, freelancers are required to follow strict rules when invoicing (Rechnung) and starting from January 1, 2025, Germany begins to phase out the mandatory use of e-invoices. An important point is that from this date, companies are required to be ready to accept e-invoices, while the obligation to issue them is introduced gradually and depends on the size of the company and other factors. Regardless of whether you provide services domestically, within the EU or outside it, each invoice must meet certain legal requirements. Failure to comply with these requirements may result in the refusal to recognize your expenses and revenues by the tax authorities. In this article, we will look at what mandatory elements must be present on each account in order for it to comply with the law.

Contact information

Each invoice must include your full contact details as well as customer details. This includes:

Your name or company name.
Address.
Phone number and email address.
Customer contact details, including name and address.

Invoice number (Rechnungsnummer) and invoice date (Rechnungsdatum)

Each invoice must contain a unique invoice number (Rechnungsnummer) that helps identify and track the document. The invoice date (Rechnungsdatum) must also be indicated. The account number should be sequential and not contain repetitions.

3. Налоговый номер (Steuernummer) или VAT-номер (Umsatzsteuer-Identifikationsnummer)

You are required to enter your tax number (Steuernummer) on your account, which is assigned to you by the tax authorities. If you are required to collect VAT (Umsatzsteuer), you also need to provide your VAT identification number (Umsatzsteuer-Identifikationsnummer). In cases where you work with clients from other EU countries, be sure to provide the client’s VAT number.

4. Description of the service

Each invoice must contain a clear and complete description of the services you have provided. It is necessary to indicate:

Type of service (e.g., consulting services, software development).
The dates or period during which the service was provided.
Number of hours of work or the amount of work performed.

This helps to avoid misunderstandings with customers and confirms what you are being charged for.

5. Prices and amounts (Preis und Betrag)

The following amounts must be indicated on the account:

The cost of the service is exclusive of VAT.
VAT amount (Umsatzsteuer), if applicable.
Total amount including VAT.

If you work under the Kleinunternehmerregelung (simplified system for small entrepreneurs), please indicate that VAT is not charged according to § 19 UStG (German Tax Code). For example: “Gemäß § 19 UStG wird keine Umsatzsteuer berechnet.”

6. Payment conditions

The invoice must state the terms of payment (Zahlungsbedingungen), such as the due date and available payment methods. For example:

Payment within 14 or 30 days from the date of receipt of the invoice.
Bank details for the transfer (IBAN and BIC).

You can also specify that penalties may be charged if payment is delayed.

7.What is an electronic invoice (E-Rechnung)?

An electronic invoice is an invoice that is created, sent and received in a structured electronic format that allows its automatic processing. It is not just a PDF or a scanned document, but data that can be immediately integrated into the accounting system. The main standards applied in Germany are ZUGFeRD and XRechnung.

Step-by-step introduction of mandatory e-invoicing

Stage 1: January 1, 2025 – December 31, 2026

Mandatory acceptance of e-invoices: All B2B companies must be ready to accept e-invoices in established formats (e.g. XRechnung or Factur-X).
Invoicing: Remains optional, companies can continue to use paper invoices, PDFs, and other formats. However, sending PDFs is only allowed with the consent of the recipient.
Preparation: At this stage, it is recommended to start adapting systems for sending electronic invoices.

Stage 2: January 1, 2027 – December 31, 2027

For companies with an annual turnover of more than €800,000 in the previous year:
E-invoicing becomes mandatory for all B2B transactions.
Companies with a turnover of up to €800,000 in the previous year:
can continue to send paper invoices or – with the consent of the invoice recipient – another electronic invoice format, such as PDF.
EDI (Electronic Data Interchange): Remains a valid alternative.

Key exceptions

Some categories of transactions are exempt from the e-invoicing requirement:

Tax exemptions (e.g. medical services).
Invoices for a small amount of up to €250 can still be sent as “other invoices”, e.g. in paper form. This also applies to travel tickets. Invoices for services that are not taxable in accordance with § 4 No 8-29 (Value Added Tax Act) are also tax-free.

Small Enterprises (Kleinunternehmer) (Section 19 of the Value Added Tax Act)

Under the new provisions of the Income Tax Act 2024, effective from 1 January 2025, sales of small businesses are exempt from VAT (without the right to deduct input tax). Therefore, they are not required to issue electronic invoices in the new format. Invoices can still be issued on paper or in another electronic format (e.g. PDF).

IMPORTANT: The obligation to receive electronic VAT invoices remains for small businesses.

8. VAT Provision (Reverse-Charge for International Transactions in the EU)

If you’re invoicing a customer from another EU country and a Reverse-Charge system applies, this must be clearly stated on the invoice.

What does it mean?
In this case, the customer is responsible for paying VAT. You do not charge VAT on the service, but you must include the appropriate wording on the invoice. For example:
“Steuerschuldnerschaft des Leistungsempfängers” (VAT is paid by the customer of the service).

What is important to remember?

Make sure your customer has a valid VAT number that can be verified via LIVES.
The transaction must be reflected in tax returns, including the Zusammenfassende Meldung in Germany.

Invoicing (outside the EU)

1. Accounts for customers outside the EU (Reverse Charge)

If you provide services to customers located outside the EU, you are exempt from VAT in Germany. This is due to the provision of § 4 Nr. 1a UStG (Value Added Tax Act).

The invoice must indicate that this transaction is exempt from VAT. Example of wording:
“Umsatzsteuerfrei nach § 4 Nr. 1a UStG.”

2. Exchange rates

If the invoice is issued in a currency other than the euro, you should:

Specify the exchange rate at the time of invoicing.
For example, “Payment in euros or in the specified foreign currency at the current exchange rate.”

Invoicing template

https://www.lexware.de/fileadmin/noindex-follow/wissen-tipps/vorlagen/lexware_rechnung_freiberufler_mustervorlage.odt

It is also important to note that in the Accounting software and online banks for business there is already a built-in invoicing functionality, where it is enough to fill in the missing fields.

An example from getsorted:

Invoicing through the website and online platforms

1. What is Stripe and how does it work?

Stripe is an online payment platform that makes it easy for businesses and freelancers to accept payments online. Stripe supports a variety of payment methods, including credit and debit cards, bank transfers, and local payment methods such as Sofort and Giropay, which is especially true for freelancers in Germany.

Stripe’s main advantage is its simplicity and flexibility. With Stripe, you can easily issue invoices, accept payments, and manage financial transactions without having to deal with the complexities of traditional banking systems.

2. Benefits of Using Stripe for Freelancers

Ease of integration: Stripe offers easy integrations with websites and platforms like WordPress, WooCommerce, or even self-written sites via API. If you don’t have a website, you can still use Stripe to create payment links or billing.
Support for Multiple Payment Methods: Stripe allows you to accept payments with a variety of methods, including:
- Credit and debit cards (Visa, MasterCard, American Express, etc.)
- Bank Transfers (SEPA)
- Local payment methods popular in Germany (Sofort, Giropay)
- Mobile payments (Apple Pay, Google Pay)
High level of security: Stripe is PCI-DSS compliant and uses advanced encryption technology to protect payment data. This gives your customers peace of mind that their data is safe.
Automation of the payment process: Stripe provides the ability to automatically exhibit invoices, send payment reminders, and send regular charges, which is especially useful for freelancers working on a subscription basis or long-term contracts.
Multi-currency: Stripe allows you to accept payments in more than 135 currencies, making it easy to work with customers from different countries.

3. How to Set Up Stripe to Accept Payments

Register and set up an account

Create an account on Stripe: Go to stripe.com and register. You will be required to provide information about your business, such as name, address, type of activity, and bank details for withdrawals.
Go through the verification process: Stripe requires proof of identity and banking information. To do this, you will need to upload documents proving your identity (such as a passport or ID card), as well as provide a valid bank account.

Setting up payment methods

Choosing payment methods: In your Stripe account, go to the “Payments” section and select the payment methods you want to offer to your customers. For German customers, it is useful to set up SEPA Direct Debit, Sofort, Giropay, and other popular payment methods in Germany.
Integration with your website: If you have a website, Stripe provides out-of-the-box integration solutions such as WordPress/WooCommerce plugins or website builders. If you’re designing your site yourself, the Stripe API provides a complete set of tools for creating a customized payment process.
Creating payment links: If you don’t have a website, you can use the “Payment Links” functionality in Stripe. This feature allows you to create a unique payment link that can be sent to the customer via email or instant messengers.

4. Invoicing and receiving payments

Create an invoice: Stripe has a feature for creating and sending invoices to clients. This is especially handy for freelancers, as you can customize the invoice template, specify a description of the services, quantity, and apply tax (if applicable).
Receiving payment: After sending the invoice to the customer, Stripe will notify you when the payment has been made. The funds are credited to your Stripe account and you can then withdraw them to your bank account.
Automation: Stripe allows you to set up automatic charges, which is ideal for recurring payments, such as subscription-based or recurring service payments.

5. Fees and Withdrawals

Fees: Stripe charges a fee for each transaction. For European cards, the fee is 1.4% + €0.25 per transaction, for non-European cards it is 2.9% + €0.25. Additional fees may be charged for certain types of payments, such as international transfers.
Withdrawals: Funds can be withdrawn to your bank account automatically according to a schedule (daily, weekly, monthly) or manually. Usually, funds reach your bank account within 2-7 days.

6. Features of using Stripe in Germany

Taxation: In Germany, freelancers are required to declare VAT (Mehrwertsteuer) on invoices to clients if your annual income exceeds a certain threshold. Stripe allows you to automatically add value-added tax to your invoices. Do not forget to consult with a tax consultant to properly configure the system in accordance with the requirements of German tax law.
Local payment methods: Stripe supports popular payment methods in Germany, such as SEPA Direct Debit, Giropay, and Sofort, making it more convenient for your customers to pay.
Accounting The platform provides detailed transaction reports, making it easier to keep records and prepare for tax filings. Integrations with popular accounting systems such as DATEV, Xero, and QuickBooks are also available.

7. Practical tips for working with Stripe

Testing: Before you start accepting payments from customers, test the payment process using Stripe’s “Test Mode”. This will make sure that everything is set up correctly and payments will go through smoothly.
Use reports: Stripe provides detailed transaction reports, making it easy to manage your finances and prepare for tax reporting.
Customer Support: Stripe offers an extensive knowledge base and support team to reach out to in case of questions or issues.

What is Wise Business and how does it work?

Wise Business is an online service that allows freelancers and businesses to send and receive international payments using real-world exchange rates. This means there are no hidden fees or markups on currency conversions. The platform supports multi-currency accounts, making it ideal for those working with clients around the world.

The service is especially useful for businesses that regularly issue invoices in different currencies. Wise Business simplifies the payment process and makes it transparent for both the sender and the recipient.

Benefits of Using Wise Business for Freelancers

Low fees : Wise Business charges a fixed fee and a percentage of the transfer amount. It’s much cheaper than traditional bank transfers or using credit cards.
Multi-currency accounts You can create virtual accounts in more than 40 currencies, including euros (EUR), US dollars (USD), British pounds (GBP) and more. This is convenient for working with clients from different countries, as you avoid unnecessary conversion costs.
Invoicing The platform allows you to create professional invoices with the cost of services in the desired currency. Customers can easily pay them by bank transfer or card.
Wise’s real-world exchange rates use mid-market rates with no markups, which allows you to save on international transfers.
Integration with accounting systems The service supports integration with tools such as Xero and QuickBooks, which simplifies financial reporting.

How to set up Wise Business to accept payments

Account Registration Register on the Wise Business website by providing information about your business. The registration process includes verification of the company’s identity and documents.
Adding currencies After registration, you can open a multi-currency account and customize it to meet the needs of your business.
Invoicing Use the platform to create invoices by specifying the service description, cost, and currency. The invoice can be sent to the customer by email.
Connecting a bank account To withdraw funds, link your bank account to the platform. Wise allows you to send money in 80+ countries.

Fees and withdrawal times

Wise Business взимает:

Fixed fee: for example, €0.50 per transfer.
Percentage of the transfer amount: for most currencies, it varies from 0.35% to 1%.

Withdrawals to a bank account usually take anywhere from a few minutes to 1-2 business days.

Features of using Wise Business in Germany

Working with international payments in Germany has its own nuances. Wise Business helps you efficiently address issues related to tax accounting, local requirements, and customer convenience. Here are the key features:

1. SEPA Payment Support

SEPA (Single Euro Payments Area) is a standard for bank transfers in EU countries, which provides fast and convenient transactions in euros. Wise fully supports SEPA payments, which provides the following benefits:

Fast Transfers: Funds are usually received within one business day.
Low fees: Unlike traditional banks, Wise charges minimal fees for such transfers.
Easy to use: There is no need to specify the IBAN manually – the system automatically checks and simplifies the sending process.

2. Tax Compliance

In Germany, all companies and freelancers are required to take tax aspects into account when invoicing. Wise provides features that make it easy to comply with local laws:

VAT inclusion (Mehrwertsteuer): The tax rate (usually 19% or 7%) can be specified on the invoice and the VAT amount can be clearly stated. This is especially important for customers who are registered as legal entities.
Export reports: The platform allows you to export transaction data for any period, which is convenient for filing a tax return or preparing for an audit.
Support for local tax codes: Ability to specify a tax number (Steuernummer) or VAT ID (USt-IdNr) directly in the invoice template.

3. Work with clients in Germany

For customers in Germany, it is important to use popular and familiar payment methods. Wise offers convenient solutions:

SEPA Direct Debit: This is an automatic debiting of funds from the customer’s bank account, which is convenient for subscription models or recurring payments.
Interface localization: The system is available in German, and invoices and notifications can be sent in German, which increases customer confidence.
Multi-currency support: Despite working in Germany, many freelancers work with clients from other countries. Wise allows you to invoice in EUR, GBP, USD, and many other currencies, which eliminates additional conversions for the client.

4. Accounting for currency transfers

Freelancers working with international clients often face the need to convert currencies. In Germany, it is important to:

Indicate the exact amount in the client’s currency and its equivalent in EUR, if required for tax reporting.
Use the mid-market rate to avoid additional costs. Wise automatically displays the conversion rate and fees, making the process transparent.

5. Automation of accounting

Bookkeeping in Germany can be a daunting process, especially for freelancers. Wise offers integrations with accounting systems such as DATEV, Xero, and QuickBooks, allowing you to:

Automatically synchronize transactions.
Mark paid invoices and track debts.
Prepare data for your tax return without the need for manual accounting.

6. Integration with German banks

To withdraw funds or pay customers, you can link a German bank account to Wise. This guarantees:

Fast withdrawals: Funds usually arrive within 1-2 business days.
Easy IBAN linking: The platform supports all German banks, which simplifies the setup process.

7. Practical Help for Freelancers

Wise actively updates its knowledge base and provides specialized instructions for freelancers in Germany:

Billing guidelines.
Tips for managing multi-currency accounts.
Information on tax regulations and reporting in Germany.

8. Reporting for Finanzenamt

Wise allows you to prepare all the necessary information for reporting to the German tax office (Finanzamt):

Download all transactions for the year in a convenient format (CSV or PDF).
Specify account IDs for easy sorting of income.
Include currency conversion details if payments are received in different currencies.

Practical tips for working with Wise Business

Multi-currency accounts: Use them to minimize currency conversion costs.
Accounting automation: Integration with Xero and QuickBooks will speed up the financial accounting process.
Testing the system: Before sending the first invoice to the client, test the functionality of the platform.

Annual Reporting

Annual reporting is an important part of a freelancer’s job in Germany. Reporting includes collecting all financial data for the year, filing a tax return, and meeting legal deadlines. For freelancers using the EÜR (Einnahmenüberschussrechnung), a simplified income and expense accounting system, proper preparation and submission of reports helps to avoid problems with the tax office.

1.1. Preparation of the Annual Report

The preparation of an annual report begins with the systematization of all financial documents and their correct accounting. It is important to collect and process:

Earnings: All earnings earned for the year, including invoices you issued to customers and payments received.
Expenses: Includes office rent, equipment costs, travel, professional training, as well as any other costs associated with running a business.
Depreciation of assets: If you have purchased equipment or vehicles, their value can be written off over several years.

To prepare an annual report, you can use various accounting platforms, such as LexOffice, SevDesk or Getsorted. These programs simplify data collection and help organize accounting in a convenient format.

1.2. Filling out a tax return

Completing your tax return is an important step that must be completed before the deadline. Basic forms for submission:

Anlage EÜR – for income and expense accounting;
income tax return ;
Umsatzsteuererklärung – VAT return, if you are registered as a VAT payer;
Trade tax return – business tax return (if applicable).

Programs for automating reporting

ELSTER: The official portal of the German tax office for filing returns online.
LexOffice: A cloud-based accounting and tax reporting platform that helps automate processes.
SevDesk: Provides simple tools for bookkeeping, creating invoices, and filing tax returns.
Getsorted: Another convenient service for freelancers that makes it easy to manage finances and reporting.

These platforms make it easy to integrate income and expense data, automatically generate the necessary documents, and can help avoid mistakes in filling out a tax return.

1.3. Reporting deadlines

It is important for freelancers to comply with reporting deadlines to avoid fines. The main deadlines are as follows:

Until July 31 of the following year, if you file the return yourself.
Until February 28 of the following year if you work with a tax consultant.

Example: If you file your 2023 tax returns, the deadline for self-filing is July 31, 2024, and if you use a tax advisor, the deadline is extended to February 28, 2025(

Compliance with these deadlines allows you to avoid fines and problems with the tax service, and the use of specialized accounting platforms simplifies the process of preparing and submitting reports.

Accounting Software

Freelancers in Germany need to effectively manage their financial flows and taxes. Accounting programs allow you to automate processes, which greatly simplifies the work. Here are seven popular solutions that are ideal for freelancers.

1.Lexoffice

Lexoffice is one of the most popular cloud-based accounting automation solutions. It is suitable for freelancers and small businesses, providing the ability to integrate with banks and automate taxation. It supports the creation of annual EüR reports and integration with ELSTER and DATEV systems.

Поддерживаемые банки: Qonto, N26, Commerzbank, ING, Finom,Kontist..
Cost: from €6.90 to €29.90 per month.

Pros:

Ease of use.
Integration with banking systems.
Automatic calculation of taxes and VAT accounting.

2. SevDesk

SevDesk is a cloud-based accounting software that helps automate accounting, invoicing, and tax reporting. It also integrates with many banks and the DATEV system.

Поддерживаемые банки: Sparkasse, Deutsche Bank, Commerzbank, Volksbank, N26, Finom,Kontist.
Cost: from €8.90 to €42.90 per month.

Pros:

Mobile app.
Integration with 3000+ banks.
Ability to scan receipts.

3. Lexware

Lexware is a desktop solution suitable for freelancers and small businesses. It supports double-entry bookkeeping and payroll, making it ideal for those who work with a large number of transactions.

Поддерживаемые банки: Volksbank, Postbank, Sparkasse, Fine,Kontist.
Cost: from €19.90 to €71.80 per month.

Pros:

Support for double-entry bookkeeping.
Payroll.

4. FastBill

FastBill offers accounting automation for small businesses and freelancers, as well as integration with banking systems and services. With FastBill, you can easily keep track of receipts, create invoices, and manage taxes.

Supported banks: Deutsche Bank, N26, Postbank, Sparkasse.
Cost: from €9 to €53 per month.

Pros:

Automation of financial processes.
Ease of use.

5. Sage 50

Sage 50 is a comprehensive accounting solution that also supports integration with payment systems and online stores. This makes it suitable for both freelancers and small businesses.

Supported banks: Commerzbank, PayPal, Stripe.
Cost: from €30 to €40 per month.

Pros:

Support for online stores.
Integration with payment systems.

6. Accounting Butler

BuchhaltungsButler offers accounting automation and integration with banks and tax reporting systems such as DATEV and ELSTER. The software is suitable for automating routine accounting tasks.

Supported banks: DATEV, Sparkasse, Deutsche Bank, Volksbank.
Cost: from €34.95 to €79.95 per month.

Pros:

Support for automatic scanning and accounting of documents.

7. Barrow in Veso

WISO Mein Büro offers both desktop and cloud versions for accounting management. It supports integration with banking systems and payment services.

Поддерживаемые банки: Commerzbank, Sparkasse, Postbank, Fine,Kontist..
Cost: from €14.90 to €139.90 per month.

Pros:

Extensive reporting capabilities.
Integration with ELSTER.

Getsorted

Getsorted is another cloud-based solution designed specifically for freelancers and small businesses in Germany. It helps automate accounting and tax reporting, facilitating the process of submitting annual EüR reports through integration with ELSTER.

Features:

Full automation of taxes and filings.
Integration with banking systems and automatic receipt of transactions.
EüR and USt (Value Added Tax) support.

Поддерживаемые банки: N26, Deutsche Bank, Commerzbank, Sparkasse, Finom, Kontist..

Cost: from €8 per month.

Accountable

Accountable is a cloud-based accounting app specifically designed for freelancers and the self-employed in Germany. It helps automate income and expense accounting, create invoices, file tax returns, and integrates with German tax standards.

Supported banks: N26, Commerzbank, Deutsche Bank, Sparkasse and others.
Cost: Free basic plan or €7.50 to €24.50 per month for premium features.

Pros:

Convenient mobile application.
Easy integration with bank accounts.
Automatic filling of tax returns.
Tax deadline reminders.

Accounting Software Comparison Table

Program	Free Version	Bank Integration	Tax Management	Invoice Creation	Annual Reports (EUR)	Monthly Cost	Features
Lexoffice	No	Kontist, Qonto, N26, Commerzbank, ING	Yes	Yes	Yes	€6.90 – €29.90	Tax automation, bank integration
SevDesk	No	3000+ banks, DATEV, Sparkasse, Deutsche Bank	Yes	Yes	Yes	€8.90 – €42.90	Mobile app, receipt scanning
Lexware	No	Volksbank, Postbank, Sparkasse	Yes	Yes	Yes	€19.90 – €71.80	Double-entry accounting, payroll management
FastBill	No	Deutsche Bank, N26, Postbank, Sparkasse	Yes	Yes	Yes	€9 – €53	Receipt automation, DATEV integration
Sage 50	No	PayPal, Stripe, Commerzbank	Yes	Yes	Yes	€30 – €40	Inventory management, online store support
BuchhaltungsButler	No	DATEV, Sparkasse, Deutsche Bank, Volksbank	Yes	Yes	Yes	€34.95 – €79.95	Accounting automation, ELSTER data transfer
WISO Mein Büro	No	Commerzbank, Sparkasse, Postbank	Yes	Yes	Yes	€14.90 – €139.90	Cloud and desktop versions, ELSTER support
Getsorted	No	N26, Deutsche Bank, Commerzbank, Sparkasse	Yes	Yes	Yes	€8	Full tax automation, ELSTER integration

Banks

An overview of popular online freelance banks in Germany

Choosing the right online bank for a freelancer is an important step for effective financial management. The article discusses the main banks that offer flexible tariffs, convenient Internet banking, integration with accounting programs, and other useful features. We’ve also included a detailed table to compare key parameters.

1. Kontist

Kontist is a bank specially designed for freelancers. It offers automatic tax calculation and integration with popular accounting software, which greatly simplifies financial reporting and tax management.

Functions:

Automatic calculation of taxes and VAT.
Free virtual Visa card, physical card for €29/year.
Integration with Lexoffice, Debitoor, Fastbill — you can easily manage expenses and income.

Features:

No cashback.
Video identification.
Google Pay/Apple Pay for mobile payments.

2. N26 Business

N26 is one of the largest mobile banks in Europe, offering favorable conditions for international transfers and built-in cashback on purchases. Supports integration with external accounting services.

Functions:

Free basic plan with unlimited SEPA transactions.
Connection to Accountable to automate accounting.
Cashback from 0.1% to 0.5%.

Features:

Support for mobile payments via Google/Apple Pay.
Video identification for opening an account.
Connection to external services via API.

3. Qonto

Qonto provides a variety of plans and advanced features for small businesses, including the ability to connect multiple users. It’s the perfect choice for freelancers who want to have accounting integrations and manage their accounts.

Functions:

Integration with Lexoffice, Datev, SevDesk to automate financial accounting.
Ability to use multiple cards and sub-accounts.

Features:

Google Pay/Apple Pay for mobile payments.
Video identification.
Possibility of API integration for process automation.

4. Delicious

Finom offers a flexible invoicing system and integration with accounting systems, making it attractive to freelancers working with numerous clients.

Functions:

Tools for managing receipts and invoicing.
Integration with Lexoffice and SevDesk.

Features:

Cashback up to 3% on premium plans.
Mobile payments through Google Pay and Apple Pay.
Video identification and API support for automation.

5. First

Fyrst is a German digital bank that supports accounting programs and offers free cash withdrawals from ATMs in Germany. Its main advantage is its convenience and integration with financial systems such as Lexoffice and SevDesk.

Functions:

Интеграция с Lexoffice, SevDesk, Sage.
Free VISA card for business.

Features:

German only.
Google/Apple Pay support.
Free cash withdrawals from ATMs throughout Germany.

6. Vivid

Vivid is another interesting choice for freelancers. It offers high cashbacks and free service for basic users. Suitable for those who want to use a variety of additional cards and sub-accounts.

Functions:

Up to 25% cashback on selected categories of purchases.
Free cash withdrawals up to €200 per month.

Features:

Google/Apple Pay.
Video identification.
API for integration with external services.

Table creation date 11.09.2024

The most up-to-date information on bank offers for Geschäftskonto can be found at the links below:

https://www.finanzfluss.de/vergleich/geschaeftskonto/

https://www.fuer-gruender.de/kapital/fremdkapital/hausbank/geschaeftskonto/vergleich/

Insurance

Freelancers in Germany, like other self-employed individuals, must consider several important types of insurance in order to protect themselves and their business from possible risks. Insurances can be both mandatory and recommended, depending on the nature of the activity.

1. Medical and disability insurance (Krankenversicherung + Pflegeversicherung)

In Germany, every freelancer is required to have health insurance. You have the choice between public (gesetzliche Krankenversicherung) and private (Krankenversicherung) insurance. For young and healthy freelancers, it is often more advantageous to choose private insurance, as its premiums do not depend on income, unlike public insurance, where premiums are 14.6% (plus an additional contribution of 1.0 – 2.0% on average) of income plus about 3-4% for care insurance (Pflegeversicherung). However, it is possible to insure family members for free in the public system, which is not available in private plans.

Cost: €250 – €1,000 per month, depending on the option chosen.

2. Accident Insurance (Unfallversicherung)

This insurance is mandatory for freelancers if they are members of the Berufsgenossenschaft, a professional association. In other cases, the insurance is voluntary, but highly recommended.

Cost: 5 – 20 € per month.

3. Pension insurance (Altersvorsorge)

Pension insurance is mandatory only for certain professions, such as journalists, doctors and teachers. For the rest of the freelancers, participation in the state pension system is voluntary. It is important to start saving for retirement as early as possible, as the state does not provide social guarantees for freelancers.

Cost: about 930 € per month (if participating in the public system). The minimum contribution is about 100 euros per month. It is up to you to decide how much you want to make the contribution.

4. Disability insurance

This is one of the most important insurances for freelancers, as it protects against financial loss in case you are no longer able to work due to illness or accident. Insurance covers missed income and helps to avoid serious financial difficulties.

Cost: 60 – 200 € per month.

5. Professional Liability Insurance

This insurance is essential for freelancers, especially those who are engaged in consulting or project work. It protects against the risks associated with errors that can lead to financial losses for customers. For example, if you gave incorrect advice or violated copyright, this insurance will cover legal costs and possible fines.

Cost: 10 – 50 € per month.

6. Business Civil Liability (Business Liability Insurance)

This insurance protects you in the event that someone suffers damage (physical or material) in your workplace or as a result of your activities. For example, if a client slips in your office or you accidentally damage their property, insurance will cover the cost of treatment and repairs.

Cost: 8 – 25 € per month.

7. Юридическая защита (Intellectual Property Law)

This insurance is important if you need to defend your interests in court, especially in the case of disputes with customers who refuse to pay their bills. The insurance covers legal expenses, including attorneys’ fees and court costs.

Cost: 25 – 50 € per month.

8. Business Property Insurance

This insurance protects your business’s property, such as office equipment or machinery, from theft, fire, or other damage. It is especially relevant for those freelancers who have their own office space.

Cost: 5 – 10 € per month.

Table of insurances:

Conclusion

For freelancers, it is important to choose the right insurance programs that will help protect their business and ensure financial stability. Some insurances are mandatory, such as medical and care insurance, while others (such as professional liability) are highly recommended to provide protection against unforeseen risks.

Work

Calculating your value in the labor market

Correct calculation of the hourly rate is a key factor in running a successful business. It is important to consider all your expenses, income, and factors that may affect your work and earnings. In this chapter, we will look at how to calculate your bet using the data provided and the calculator table. We will also add information about average rates by industry and accounting for various expenses, such as taxes, holidays, sick leave, and other unforeseen expenses.

Step 1: Determine your desired income

The first step is to determine how much you want to earn monthly or annually. In our example, the freelancer established:

Monthly income: 5750 euros
Annual income: 69000 euros

This is your starting point. However, it is important to remember that this is not the amount that you will receive “in hand” – this amount includes all your future taxes, expenses for social contributions and other mandatory payments.

Step 2: Consider the number of working hours

Next, you should calculate how many hours per month you plan to work. This can be done by determining the number of working days in a year. In our example:

Working days in a year: 261 days
Free days: 45 days (including holidays, vacation, study days and sick days)

Now it is important to consider that not all the time will be paid by customers. On average, freelancers lose about 30% of their time on unproductive tasks such as finding clients, bookkeeping, training, and other administrative tasks. Therefore:

Non-billable time: 30%

Step 3: Calculate the number of billable hours

To get the number of billable hours per month, you need to take into account the above-mentioned parameters. In our example:

Total working hours per year: 261 days × 8 hours = 2088 hours
Non-billable time (30%): 2088 × 30% = 626.4 hours
Billable time per year: 2088 – 626.4 = 1461.6 hours per year or 121.8 hours per month.

So we have a benchmark: you will work 121.8 paid hours per month.

Step 4: Calculate the hourly rate

Now you can calculate the minimum hourly rate. To do this, you need to divide your desired income by the number of paid hours:

Monthly income: 5750 euros
Billable hours per month: 121.8 hours

Hourly rate = 5750 / 121.8 = €47.20

This is the minimum bid you need to charge for each hour you work in order to reach your revenue target. However, in practice, this rate can be increased, taking into account the following factors:

Unexpected expenses: There are times when a project takes more time or there are unexpected costs, such as increased prices for tools or services.
Market competition: If you’re in a highly competitive niche, your bid may need to be adjusted based on the average bid level.

Step 5: Account for social contributions and taxes

In Germany, freelancers are required to make their own contributions to social funds such as health insurance and pension contributions. In our example, the following rates are used:

Health insurance (including disability insurance): 14.6%
Pension contributions: 18.6%

These percentages must be factored into your total income. For example, if your Social Security expenses are about 20% of your income, then you would need to add 20% to your minimum rate to cover these costs:

47,20 евро × 1,20 = 56,64 евро

This is a new rate that includes your social contribution costs.

Step 6: Consider the main expenses of the freelancer

In order not to end up at a loss, it is important to take into account all your costs when calculating the bet. Here are the main categories to include:

Office and work expenses:
- Renting a workspace or office (if you are not working from home)
- Purchase of equipment (computers, software)
- Costs for Internet, telephone, postal services
- Maintenance of equipment and programs
Advertising and Marketing:
- Created and maintained by
- Promotion in social networks
- Payment for advertising platform services
Transportation costs:
- Business trips and trips to client meetings
- Vehicle depreciation and maintenance (if used for work)
Learning and development:
- Advanced training courses
- Buying literature, participating in conferences
Administrative expenses:
- Accounting services
- Payment of tax consultants
- Costs of reporting and accounting
Insurance:
- Health insurance (mandatory)
- Accident Insurance
- Third party liability insurance
Reserve funds:
- Unforeseen expenses (equipment repairs, legal services)
- Reserve fund in case of lack of orders or illness

Step 7: Accounting for weekends, sick leaves, and holidays

When calculating your rate, it’s important to consider the time you’re not working. Freelancers, unlike employees, do not receive payment for sick leave or weekends. Include these periods in your calculations:

Public holidays: In Germany, the number of public holidays can vary depending on the federal state. Usually, it is about 13 days a year.
Vacation: Even though freelancers often can’t afford a lot of days off, it’s a good idea to include a minimum of 25 vacation days per year in the calculations.
Sick leave: Statistically, in Germany, illness takes about 10-15 days a year.
Time to learn: On average, freelancers spend 5-10 days a year on professional development.

Example of final calculation

Let’s say a freelancer wants to earn €69,000 per year and works 1,462 hours a year, including all downtime. It calculates the minimum rate by adding Social Security costs:

Basic hourly rate: €47.20
Rate including social contributions: €56.64

Thus, to achieve the desired income, a freelancer should focus on an hourly rate of at least €57.

Step 8: Consider Market Rates by Industry

It is very important to understand that the hourly rate also depends on your specialization and industry. In Germany, there is a large range of hourly rates, which varies depending on the specifics of the job. According to data from Freelancermap, here are examples of average rates in different industries:

SAP consultants: 99 euros per hour
Consulting and Management: €93 per hour
IT development: 91 euros per hour
Engineering services: €87 per hour
Media: €69 per hour

These figures show the average level in the industry, and your hourly rate should be comparable to competitors in your field. For example, if you are an IT specialist working on software development, then a rate in the range of 90 to 100 euros will be justified.

Conclusion

The hourly rate of a freelancer in Germany depends on a variety of factors, such as working hours, unproductive hours, taxes and social contributions, and the market situation. Using the calculator and the data provided, you can accurately calculate your bet to cover all expenses and earn the amount you want. Remember to review your calculations regularly, taking into account changes in costs and market demands.

This calculation will help you manage your finances efficiently and be sure that you are getting paid fairly for your services while remaining competitive in your industry.

Where and how to look for a job (Kundenakquise für Freelancer)?

One of the main tasks for a freelancer, especially at the initial stage, is finding clients. The ability to effectively attract customers determines the success and stability of work. It is important to understand that the customer base must constantly expand, and it is risky to depend on only one source of projects. In this article, we’ll break down strategies to help freelancers attract new clients, as well as the best platforms to find projects.

What is customer acquisition?

Customer acquisition or “Kundenakquise” is the process of finding and winning new customers. It includes various actions aimed at identifying potential customers, involving them and concluding contracts. However, success in client acquisition is based on understanding the needs of the client and the ability to offer a solution that meets his problems and expectations.

Forms of attracting customers

There are several main forms of “Kundenakquise”, each of which has its own advantages:

Cold contacts (“Kaltakquise”) are direct contacts with potential customers without prior relationships. Usually such contacts take place through phone calls, e-mails or social networks. Cold acquisition requires perseverance and preparation, as not all companies are ready for unexpected offers.
Warm contacts (“Warmakquise”) – this is where the client already knows about the freelancer or his services. This can be contact through references, former clients or previous business connections.
Referral marketing (“Empfehlungsmarketing”) is the act of getting new customers through recommendations from satisfied customers. This method is effective if you already have customers who can recommend your services to colleagues or partners.

Active and passive methods of attracting customers

There are two main approaches to customer search: active and passive.

Active methods:

Participation in conferences and industry events.
Direct contact with companies via email or phone.
Using freelancing platforms to find projects.
Building a personal brand through social media and posts.

Passive methods:

SEO optimization of your own website or portfolio.
Blogging or publishing articles that can grab the attention of potential customers.
Profile on platforms with the ability to search for freelancers.
Posting positive reviews and cases to attract new customers.

Steps to Successful Client Acquisition

1. Identify your target audience

To find customers, you need to know who they are. Analyze potential customers: their age, profession, interests, industry. Create “buyer personas” — fake personas of typical customers that will help tailor your offer.

2. Find Your Niche and Unique Selling Proposition (USP)

How are you different from your competitors? It’s important to highlight your unique strengths, whether it’s specialized expertise, unique skills, or specific ways of working. Determining your “USP” helps not only to stand out from the competition, but also to choose the right channels to attract customers.

3. Choose the right channels to attract customers

Where does your audience spend their time? If your clients are young startups, they’re most likely on social media. If you work with large companies, you should pay more attention to business platforms like LinkedIn or Xing.

4. Constantly search

Don’t wait for a decline in projects to start looking for new clients. It should be a constant part of your work, even when you have ongoing projects.

5. Build long-term relationships

After the project is completed, keep in touch with the client. Regular emails, holiday greetings, or simply paying attention to company news can make you the “default freelancer” for the following tasks.

TOP 5 platforms for finding customers in Germany

In Germany, there are many specialized platforms for finding projects. Here are five of the most popular among freelancers:

Freelancermap.de A German platform that specializes in projects in the field of IT, software development and digital marketing. It provides access to a large number of vacancies for freelancers.
Xing ProjekteXing is the German equivalent of LinkedIn, and it offers a dedicated section for finding projects and freelancers. This is a great platform for those who are looking for customers among German-speaking companies.
Gulp.deGulp is one of the largest platforms for finding IT freelancers in Germany. It offers projects for both short-term and long-term work in areas such as software development and IT consulting.
Twago.deTwago is geared towards freelancers in various fields, from marketing to software development. The platform allows you to contact customers directly and submit applications for projects of interest.
DasAuge.de The DasAuge platform is popular among designers, graphic artists and advertising specialists. It provides access to creative projects for freelancers working in Germany.

TOP 5 international platforms for finding customers

At the global level, there are also platforms that allow freelancers to find work in different countries:

UpworkOne of the largest freelancing platforms in the world, offering projects in a variety of fields, from IT to translation to design. Upwork provides freelancers with the ability to find both short-term and long-term projects.
Freelancer.com An international platform where you can find projects in development, design, marketing, and other areas. Freelancer.com is popular due to its huge number of users and projects.
FiverrFiverr offers freelancers the ability to sell their services starting with small tasks for $5. It’s a great platform for those who want to quickly find short-term assignments and build a portfolio.
ToptalA platform for experienced freelancers in IT and software development. Toptal has partnered with the world’s leading companies, and the selection process for the platform is more rigorous than other sites.
PeoplePerHourA platform that connects freelancers and clients around the world. Projects on PeoplePerHour cover a wide range of services, from web design to digital marketing.

Conclusion

Attracting clients for a freelancer is an ongoing process that requires strategy, perseverance, and the use of the right tools. It is important to be able to combine active and passive methods, regularly search for projects and keep in touch with clients. The use of specialized platforms combined with a well-thought-out personal brand and networking will help freelancers to successfully develop their business and find new customers both in Germany and around the world.

Job loss and government support

In Germany, there are support programs for those who want to start freelancing while on unemployment benefits, as well as for those who are already working as freelancers, but have lost clients and found themselves in a difficult situation.

1. Start of freelancing with unemployment benefit (Arbeitslosengeld I)

If you are on unemployment benefits (ALG I) and plan to become a freelancer, you can apply for the Gründungszuschuss (subsidy for starting a business). This subsidy consists of two stages:

Step 1: For the first 6 months, you receive an amount equal to your last unemployment benefit, plus an additional €300 per month for social security.
Step 2: If you demonstrate successful business development, you can receive another €300 per month for the next 9 months, IHK_DE

Requirements for obtaining a Gründungszuschuss:

Balance of ALG I eligibility: Minimum of 150 days of residual eligibility.
Business plan: A detailed business plan must be submitted, including financial projections and a description of the concept, which must be approved by an expert body, such as the IHK (Chamber of Commerce and Industry)
Proof of viability: You must convince the labor agency of your competence and the viability of the business idea.

Additional costs:

IHK fee: For example, at IHK Berlin, the fee for evaluating a business plan is €50 plus VAT
Initial investment: A capital expenditure plan, financing, and a detailed description of personal expenses must be submitted

2. Transition to unemployment benefit for freelancers (Arbeitslosengeld II)

If you were a freelancer and lost clients, which led to financial difficulties, you can apply for Arbeitslosengeld II (ALG II), also known as Hartz IV.

Einstiegsgeld for freelancers on ALG II:

Entry fee: If you want to become a freelancer again while on ALG II, you can apply for this subsidy. It is designed to stimulate the transition to independent activity and is provided for a certain period. The amount of the subsidy is determined by your manager at the Jobcenter based on your situation reference IHK_DE
Business viability: As with Gründungszuschuss, you need to prove the viability of your idea and the ability to run a business.

Voluntary unemployment insurance for freelancers

Freelancers can insure themselves against unemployment through the Freiwillige Arbeitslosenversicherung. To apply for the insurance, you must submit an application within 3 months of starting your activity. Contributions are fixed and do not depend on your income. The insurance entitles you to unemployment benefits if certain conditions are met:

Criteria: Activities must be carried out for at least 15 hours per week.
Rights: In the event of unemployment, freelancers participating in insurance are entitled to receive an Arbeitslosengeld(

The main aspects of voluntary insurance:

Deadlines: You need to submit an application within 3 months from the start of independent work.
Contributions: Contributions are fixed, but for new entrepreneurs or parents on maternity leave, they can be reduced by 50%.
Benefit: The amount of the benefit depends on your previous income. You must prove that you were socially insured for at least 150 days in the two years before unemployment.

How to apply?

Gründungszuschuss: You can apply and receive detailed instructions from your local employment agency or on the website of the Bundesagentur für Arbeit
Freiwillige Arbeitslosenversicherung: The application can be submitted online via the Arbeitsagentur portal.

As such, Germany provides several opportunities to support freelancers during the transition period, whether it’s starting a new business or overcoming temporary financial difficulties.

Types of contracts for a freelancer

When concluding a contract between a customer and a freelancer, it is important to choose the right type of contract, depending on the nature of the project, the goals and expectations of both parties. The contract is the main document that fixes the terms of cooperation and regulates the rights and obligations of the parties. Let’s consider the main types of contracts for freelancers:

1. Service contract (Dienstvertrag)

Dienstvertrag, or service contract, obliges the freelancer to provide services without a guarantee of a specific result. The focus here is on the service itself, rather than the end result, as is the case with Werkvertrag.

Features of Service Contract

A freelancer is not responsible for the final result of the work, but only for the performance of his obligations under the contract.
The work must be carried out in accordance with the client’s instructions, without significant flaws, for the obligations on the part of the freelancer to be considered fulfilled.
A freelancer receives a certain reward for the work performed, which does not depend on the ultimate success of the project.

Service Contract Use Cases

IT services: support and maintenance of the company’s IT infrastructure, where the freelancer is responsible for the day-to-day management of the systems, but not for their ultimate success.
Online marketing: Ongoing support for a company’s marketing campaigns, where the process of providing services is key, not the end result.
Consulting services: Advising clients on a variety of issues where the focus is on providing knowledge and guidance rather than the end result.

Advantages of Service Contract

Flexibility: the contract allows the client to receive services on an ongoing basis without being tied to specific results.
Protection: A freelancer is protected from claims related to the final results of the project, provided that the work is done properly.
Thus, Dienstvertrag is the best choice for projects where it is not the end goal that is important, but the process of providing the service, and both parties receive clear terms of cooperation.

2. Contract (Werkvertrag)

Unlike a service contract, a contractor agreement involves an obligation to achieve a specific result. The focus is on the successful completion of the project. Payment is made for the final product or service, not for the process of work.

Example: A graphic designer undertakes not only to develop a website layout, but also to present a ready-made, working site in accordance with the customer’s requirements.

3. Fee agreement (Honorarvertrag)

This contract is used to establish payment terms for certain services provided by a freelancer. The contract prescribes the amount of work, deadlines, the amount of the fee and the terms of payment.

Example: If a graphic designer enters into a fee agreement to create a logo, it will specify the design, the deadline for its provision, the amount of the fee, and the payment procedure.

4. Consultation agreement (Beratervertrag)

This contract is suitable for freelancers who provide consulting services. It regulates consulting services, their scope, cost and terms of cooperation.

Example: If a company needs advice on redesigning their brand, they enter into a consulting agreement with a designer that specifies the purpose of the consultation, the time of the meetings, and the amount of the fee.

5. Confidentiality agreement (NDA)

An NDA protects confidential information that is transferred between the customer and the freelancer. This contract is important when the project requires the protection of intellectual property, ideas or trade secrets.

Example: If a graphic designer discusses a new product with a client, the NDA protects the designer’s ideas from being used or disclosed without their permission.

6. Termination of the contract (Kündigung)

Termination of the contract can take place at the initiative of one of the parties. This requires formal notice to the other party, subject to the agreed terms and conditions of termination.

Example: A graphic designer can terminate a contract if the project is not feasible, but all contractual notice periods must be respected.

7. Digital employment contracts: what do you need to know? (updated 2025)

The Bureaucracy Reduction Act (Bürokratieentlastungsgesetz) allows for the use of digital employment contracts, which greatly simplifies the paperwork process. Employers can provide information about the key terms of the contract via email or special services for electronic signatures, such as DocuSign. In most cases, compliance with the written form and the presence of a qualified electronic signature are not required A text form that includes the applicant’s name and does not require a personal signature is acceptable. This approach saves paper and simplifies document management.

What requirements must be met?

For digital employment contracts, the following conditions must be met:

Contract availability: The employee must be able to open, save, and print the document.
Proof of receipt: The employer must ask the employee for proof of receipt of the document.

Exceptions to the Text Form Rule

There are situations when the text form is not allowed. These include:

Contracts in industries with a high risk of illegal work.
Most fixed-term employment contracts (befristete Arbeitsverträge).

In such cases, compliance with the written form, including a personal signature on paper, is required.

Digital employment contracts are an important step towards digitalization and document simplification, but they are not suitable for all cases, so employers must take into account exceptions and the specifics of the industry.

How to choose the right contract?

The choice of the appropriate type of contract depends on what the goals of the project, the scope of work and the expectations of both parties are. For example, if the main requirement is the provision of a service without a guarantee of the result, a service contract is the best choice. At the same time, for projects where it is important to obtain a specific result, a contractor agreement will be optimal.

Mixed forms of contracts, such as combining service and construction contracts, are also possible if the requirements are clearly defined. This approach can be beneficial for both the freelancer and the customer.

Choosing the right contract plays a key role in the successful completion of the project and ensures transparency between the freelancer and the client.

Contract templates:

https://www.freelancermap.de/blog/freelancer-vertrag-abschliessen/#:~:text=Auch%20die%20jeweiligen%20Rechte%20und,%2D%2C%20Honorar%2D%20oder%20Beratervertr%C3%A4ge.

https://www.frankfurt-main.ihk.de/recht/mustervertraege/freie-mitarbeiter-vertrag-5196842

https://www.arbeitsvertrag.org/freelancer-vertrag/

Termination of the contract and an example of a letter

Termination of a contract for a freelancer is a process that requires special attention to a number of aspects. When it comes time to end the cooperation with the customer, it is important to properly execute the “Kündigung” (termination), observing all the requirements of the contract and the law. Let’s consider how a freelancer can competently approach the issue of terminating a contract.

Main points when terminating a contract

Even
if the law does not provide for a mandatory written form, it is important for freelancers to insist on this condition in their contracts. Verbal or electronic notices (e.g. by e-mail) can make it difficult to confirm the termination, date and reason.

Confirmation from the customerObtaining a written confirmation (“Bestätigung”) from the customer is desirable, although the customer is not legally obliged to do so. This can be an additional guarantee.
Wording in the documentIt is not necessary to use the word “Kündigung” in the letter, but it must be clear from the text that the purpose is to end the business relationship and that the freelancer will no longer provide services.
Reason for terminationGiving a reason (“Kündigungsgrund”) is only required in the case of extraordinary termination (“außerordentliche Kündigung”) for an important reason. For ordinary (“ordentliche Kündigung”) termination of the contract, an explanation of reasons is not mandatory.
Revocation of terminationCancellation of a “Kündigung” is not possible, as it is a unilateral statement that requires the consent of the receiving party only. If both parties want to continue cooperation, a new contract will be required.

What is a Termination Letter?

A letter of termination (“Kündigungsschreiben”) is a document that terminates a contract unilaterally. It means that one of the parties notifies the other about the end of cooperation without requiring consent. In cases where the parties come to an agreement, they can sign an “Aufhebungsvertrag” (termination agreement).

Termination Conditions

As a rule, freelancers enter into a “Dienstvertrag” (service contract) or “Werkvertrag” (contractor agreement), which clearly spell out the terms and conditions of termination. It is important to review the contract carefully before signing it to ensure that all clauses and deadlines are acceptable.

Types of termination and terms

Ordinary termination (“ordentliche Kündigung”)
Ordinary termination allows the contract to be terminated within a pre-agreed period. If there are no special terms and conditions in the contract, § 620 and § 621 of the German Civil Code (BGB) apply.
Early termination for an important reason (“außerordentliche Kündigung”)
If one of the parties is in breach of obligations or other important reasons arise, one of the parties can terminate the contract immediately. For example, a failure by the customer or a serious breach of the terms of the contract may be grounds for early termination.

Examples of reasons for termination

Delayed payments If the customer does not pay the fee on time, this can be a reason for early termination. In advance, the freelancer must send a written warning (“Mahnung”) indicating the deadline for eliminating the violation.
Breach of contractAny serious breach of contract, such as breach of confidentiality obligations (“Geheimhaltungsvereinbarung”), may also be grounds for termination.
CrimesSuspicion of a crime (“Straftat”) on the part of one of the parties may be grounds for immediate termination of the contract.

Conclusion

Every contract termination is unique, and it is important to carefully review the terms of the contract before signing. If in doubt, it is better for a freelancer to seek advice from a lawyer to protect their rights and avoid possible financial consequences.

Fictitious employment

How to avoid fictitious self-employment in Germany – current legislation in 2024

Fictitious self-employment is a matter of concern to freelancers and their customers in Germany. The Act against Fictitious Self-Employment is designed to protect employees and prevent situations where freelancers de facto work as employees, but without appropriate social guarantees.

What is fictitious self-employment?

Fictitious self-employment is a situation where a person is registered as self-employed (Freiberufler), but in reality works in conditions similar to employees, for example, having fixed working hours, vacations and performing tasks at the direction of the employer. In such cases, it falls under the obligations provided for employees, including social contributions.

How to recognize fictitious self-employment?

Signs of fictitious self-employment may include:

Fixed working hours
Right to leave (Urlaubsanspruch)
Integration into the company’s processes (feste Prozessintegration)
Duty to report (Pflichten zum Reporting)
Activity according to instructions (activity according to instructions)

Other factors that may indicate fictitious self-employment:

More than 80% of revenue comes from a single customer
Lack of a personal website or other signs of doing business
Participation in training events organized by the customer
Income comparable to the salary of an employee or lower

Self-employment criteria

Germany’s federal courts have identified several criteria that help define true self-employment:

The work is carried out on his own behalf and at his own expense (im eigenen Namen und auf eigene Rechnung).
Self-service pricing and contracting (Eigenständige Preiskalkulation).
Free scheduling of working hours and no vacation.

The more these criteria correspond to the activities of a freelancer, the higher the probability that he is considered a true self-employed.

Who is at risk of fictitious self-employment?

Freelancers working in the following areas may be involved in fictitious self-employment:

IT consultant (IT-Berater)
Programmers (Programmierer)
Graphic Designers (Grafiker)

Who checks fictitious self-employment?

The main inspection body is the German Pension Insurance (Deutsche Rentenversicherung), which can initiate the so-called Statusfeststellungsverfahren – the procedure for determining employment status.

How to avoid accusations of fictitious self-employment?

Freelancers can reduce the risk of accusations with carefully drafted contracts and a clear delineation of duties. There are several types of contracts, such as Werkvertrag (contractor agreement), that can help structure cooperation correctly.

Consequences of fictitious self-employment

If fictitious self-employment is established, the consequences can be serious for both the freelancer and the customer. For example, the customer will be obliged to pay social contributions (with all penalties and fines) for the last four years, and in the case of a deliberate violation, for 30 years.

Here are some recommendations on how to avoid fictitious self-employment:

1. Execution of competent contracts

One of the most important steps for a freelancer is to have properly drafted and legally verified contracts. There are several types of contracts that can help structure the relationship with the customer:

A contract for work (Werkvertrag) implies the performance of a specific work with payment upon completion and acceptance of the result.
A service contract (Dienstvertrag) involves the performance of work on a regular basis, but the freelancer is not an employee of the company.

It is important that the contract clearly reflects that the freelancer bears entrepreneurial risks and works independently.

2. Work with multiple clients

One of the key signs of fictitious self-employment is the receipt of more than 80% of income from one customer. To avoid this, it’s a good idea to work with multiple clients, even if the main project takes up most of the time. This indicates independent entrepreneurial activity.

3. Demonstration of the appearance of the business

A freelancer must actively behave as an independent entrepreneur, which may include:

Creating your own website or portfolio (Webseite),
Availability of business cards (Visitenkarten),
Active advertising of their services,
Own customer base.

All this shows that the freelancer conducts independent entrepreneurial activities.

4. Freedom to choose the time and place of work

A freelancer should be able to determine their own working hours and where they work. If the contract or practice specifies fixed working hours or a place of work, this may raise suspicions. For example, working in a customer’s office may indicate integration into the company.

5. Use of your own working tools

Real freelancers work using their own tools and equipment (computers, software, etc.). If the customer provides work tools such as a laptop, access to programs, or materials, this may indicate a dependency.

6. Lack of rights to vacation and sick leave

Freelancers should not be entitled to paid vacation or sick leave. Such rights are typical for employees, and their presence may indicate fictitious self-employment. For true freelancers, work breaks should be unpaid and self-scheduled.

7. Conclusion of long-term contracts with a clear indication of the scope of work

If the freelancer works with the customer on a long-term basis, it is better to draw up long-term contracts that clearly spell out the scope of work and the conditions for its implementation. At the same time, it is important that the work is project-based and evaluated according to the results, and not according to the time spent on tasks.

8. Outsourcing

A sign of self-employment can also be the ability to attract other specialists or subcontractors to perform part of the work. This shows that the freelancer acts as an entrepreneur and not as an employee of the company.

9. Use of the risk insurance system

Freelancers often insure themselves against professional risks (for example, mistakes in work), which also emphasizes their entrepreneurial status. Having insurance helps to avoid accusations of fictitious self-employment.

10. Carrying out employment status through verification (Statusfeststellungsverfahren)

If you have any doubts about the status of a freelancer, you can contact the German Pension Fund (Deutsche Rentenversicherung) for a status check procedure (Statusfeststellungsverfahren). This allows freelancers and their clients to make sure that the status is correct in advance.

11. Refusal to participate in corporate training programs

If the freelancer participates in trainings and courses organized by the customer, this may indicate close integration into his activities. To avoid accusations of fictitious self-employment, it is better to refuse such events or attend them on general terms as an invited specialist.

Additional measures:

Written confirmation of independence. In the contract, you can prescribe conditions confirming the independence of the freelancer, for example, that he works according to his own schedule, and is also responsible for the final result.
Regular reporting. Reports should be related to the completion of specific tasks or stages of the project, and not to the number of hours worked.

Following these guidelines helps freelancers in Germany minimize risks and avoid situations in which their activities may be recognized as fictitious self-employment.

Conclusion

Understanding the differences between real and fictitious self-employment is crucial for freelancers in Germany. Following the rules, clearly drawing up contracts and meeting self-employment criteria will help avoid unpleasant consequences.

Part-time work as a self-employed

In Germany, part-time work as a self-employed or freelancer is becoming a popular option for those who want to earn extra income. Unlike classic employment, self-employment allows a person to work for himself, but requires taking into account legal and tax aspects. In this article, we will look at how to become self-employed in Germany, what steps need to be taken, and what taxes and restrictions should be taken into account in the case of a part-time job.

1. What is a part-time job as a self-employed?

A part-time job as a self-employed person (Nebentätigkeit als Freiberufler) is an activity that you do on the basis of contracts with clients and not as part of an employment contract with an employer. At the same time, you are fully responsible for organizing your work, attracting customers, paying taxes and insurance premiums.

2. Is freelancing right for you as a side hustle?

Before you start freelancing, it’s important to assess your capabilities and the compatibility of this activity with your main type of employment. Freelancing as a side hustle is suitable for those who:

Has the time and desire to work additionally outside of regular working hours.
Able to manage their time and organize tasks effectively.
Wants to develop additional skills or engage in interesting projects.

Freelancing can be both a continuation of your main professional activity and a completely different direction.

3. Registration as a self-employed

In order to legally work as a self-employed person in Germany, you need to register your activities. The registration process depends on the nature of the work.

For liberal professions (Freie Berufe), see Chapter 1: If you work as a freelancer in fields such as IT, consulting, journalism, design, etc., your activities will be classified as liberal professions. To register, you need to send an application to the tax office (Finanzamt), where you will receive a tax number.
Trade-related activities (Gewerbe) see Chapter 1: If your part-time job concerns trade, crafts or other commercial activities, you will need to register with the Trade Register (Gewerbeanmeldung) in addition to registering with the tax office.

4. Obtaining a tax number and paying taxes

After registration, the tax office will assign you a tax number (Steuernummer). This number will be used when invoicing and filing your tax return.

When it comes to taxes, there are a few key points:

Income tax (Einkommensteuer). You are required to declare all income received from freelancing and pay income tax on it. If your income from a part-time job does not exceed 10,096 euros per year (2024), you do not pay income tax thanks to the non-taxable minimum (Grundfreibetrag).
Value Added Tax (Umsatzsteuer). If your annual income from a part-time job exceeds 25,000 euros, you are required to charge VAT on your services. However, you can take advantage of the small business benefit scheme if your income does not exceed this limit. In this case, you do not need to charge and pay VAT.
Record keeping. The self-employed need to keep records of all their income and expenses, as well as regularly submit a tax return to the tax service.

5. Social Insurance and Health Insurance

If you combine a part-time job as a self-employed person with your main job, the social security system works differently than for fully self-employed individuals.

Pension insurance (Rentenversicherung)

If your part-time job is self-employed and is a secondary (not the main source of income), the obligation to pay contributions to the pension system remains with your employer. Since your main job covers your income for retirement insurance, you are not required to pay additional contributions on income from a side hustle. However, if your side hustle starts to generate significantly more income than your main job, or if it involves professions that require mandatory contributions (such as teaching or counseling), you may need to consider additional pension contributions.

Health insurance (Krankenversicherung)

Because your primary employer already covers you with health insurance, taking an extra side hustle won’t result in having to pay full health insurance premiums twice. However, it’s important to keep in mind that your total income (including income from a side hustle) can affect your contributions, especially if your income increases significantly.

If you earn more than a certain threshold (e.g. €65,400 per year in 2024), you may have to opt for private health insurance (private Krankenversicherung, PKV) instead of public health insurance. At the same time, part-time work as a self-employed can be a decisive factor when choosing an insurance system.

For those who continue to work at their main job and have a part-time job, public health insurance (gesetzliche Krankenversicherung, GKV) usually covers all necessary expenses, and the additional income only affects the amount of the monthly contribution.

6. Restrictions for part-time work

When working as a self-employed, it is important to consider the restrictions from both the IRS and your primary employer.

Time limits. It is legally established that the total number of working hours, including part-time work, should not exceed 48 hours per week. This means that if you have a 40-hour work week at your main place of work, your freelancing activity should be limited to 8 hours per week.
Income restrictions. If your income from a part-time job exceeds 450 euros per month, you will be required to pay taxes on this income.
Conflict of interest. If a part-time job may conflict with your responsibilities at your main job, be sure to coordinate it with your employer. For example, if you work for an IT company and plan to freelance in the same field, this can lead to a conflict of interest. Many employers in Germany include clauses in their contracts that restrict part-time work without their consent.

7. Advantages and disadvantages of part-time work as a self-employed

Pros:

Additional income. You can increase your earnings through a side hustle.
Flexibility. You determine when and how much to work, which gives you more freedom in time management.
Skills development. Part-time work in new areas helps to develop additional professional skills that can be useful in the future.

Cons:

Increased responsibility. You are responsible for all aspects of your business, including tax reporting and insurance.
The need for income accounting. Bookkeeping can become complex and time-consuming.
Risks to the main job. A part-time job can create tension in your relationship with your main employer if it negatively affects the performance of your duties.

8. Legal aspects of part-time work as a self-employed

A part-time job as a self-employed person in Germany requires not only complying with tax and financial obligations, but also understanding the legal aspects related to your main employment. An employer may have certain expectations and rules that need to be taken into account in order to avoid conflicts and legal problems.

8.1 Need to coordinate with the main employer

In Germany, the labor code allows employees to work part-time as self-employed, but many employers include special clauses in employment contracts that regulate additional types of employment. This is especially important if the part-time job is related to the same field of activity as the main job.

According to § 60 of the German Civil Code (BGB), an employee is obliged to notify his employer of his intention to start a part-time job if it may affect the performance of the main duties or potentially create a conflict of interest.

Key points of agreement with the employer:

Conflict of interest. If your side hustle is related to the same field of activity as your main job, it may be perceived as competition. For example, if you work for an IT company and at the same time offer freelance services in the same field, the employer may demand that you stop working part-time.
The load on the main job. A part-time job should not interfere with the performance of your main duties. This means that if you are too busy or tired due to freelancing, which affects the quality of work in the main company, this can be grounds for breaking the contract.
Disclosure of confidential information. If you use the knowledge gained at your main place of work as the basis for your freelance activities, it may violate the rules on confidentiality and trade secrets. It is important to be careful with information that is protected by a contract or company policy.

8.2. What to do if the employer is against part-time work?

If your employer opposes your part-time job, you must:

Openly discuss the situation. Make sure that your freelancing does not create a conflict of interest or interfere with your day job. Sometimes an honest conversation can help you find a compromise solution, such as agreeing on the number of hours you can devote to freelancing.
Study the terms of the employment contract. The contract may provide clear conditions for secondary employment. If the employer insists on stopping part-time work, this must be legally justified and comply with the terms of the contract.
Obtain written consent. Even if your employer doesn’t object to a side hustle, it’s wise to get that consent in writing. This will protect you in case of future claims.

8.3. Possible consequences of uncoordinated part-time work

If you did not notify the employer about the part-time job and it contradicts the terms of the employment contract or the interests of the company, this can lead to the following consequences:

Verbal or written warnings. The employer can issue a warning if they find that your part-time job affects your main job or violates the contract.
Termination of the employment contract. In the most serious cases, for example, when disclosing trade secrets or conducting activities to the detriment of the company, the employer can initiate the termination of the employment contract without prior notice.

Conclusion

Freelancing or running your own business in Germany may seem like a tempting idea that promises freedom and flexibility. However, the reality is that this freedom comes with certain obligations, especially in terms of taxes, registration and accounting. Germany is a country with a highly developed bureaucratic system, and in order to be successful as a freelancer or owner of Gewerbe, you need to understand all the nuances of this system.

This document provides comprehensive guidance for those who choose to work for themselves in Germany. It covers the entire journey, from registration and choosing the right form of activity (Freiberufler or Gewerbe), to tax optimization, bookkeeping and finding clients.

Key findings:

Choosing between freelancing and Gewerbe: It is important to determine from the outset whether you are a freelancer or a Gewerbe owner. This determines not only the legal aspects, but also the tax liabilities.

Registration and taxes: The registration process requires attention and knowledge of all the details. Be prepared for the fact that tax obligations will take up a significant part of your work, and it is important to understand them from the beginning to avoid problems with the tax office.

Accounting: Keeping records of income and expenses is essential from day one. Using specialized accounting software can make this process much easier and help you avoid mistakes.

Insurance: In Germany, insurance is not just an option, but an important aspect of protecting your business and personal finances. Health insurance, liability insurance, and pension contributions are mandatory elements to consider when planning your budget.

Finding clients: The success of a freelancer directly depends on a constant flow of clients. The document provides tips on how to build your client base and use various platforms to find projects.

Freelancing in Germany is not just a job, but a whole system that you need to learn how to interact with. The document “freelancer_gewerbe_guide_v0.3” helps to avoid common mistakes and provides tools for successful business. Using this guide, you will not only be able to start your journey as a freelancer or business owner, but also effectively manage your financial and legal obligations, staying afloat in the German bureaucratic system.