On this page:

• The general principles
• Setting up a business
• Social Security
• Taxes

Working as a freelancer in Germany means not only discovering how German business works but also discovering German law and bureaucracy.

Let's start with just the general principles. For tax and professional registration purposes, self-employed people need to be divided into freelancers and tradesmen.

Income from freelance business needs to be shown in a profit-and-loss assessment
Freelancers do not have to be registered at the Commercial Registry. They are not obliged to become a member of (or contribute in anyway to) the local Chamber of Commerce.

Freelancers don't need to prepare annual financial statements for taxation purposes; a simple profit-and-loss assessment is sufficient.

And last but not least', freelancers do not have to pay trade tax.

According to German income tax law ('Einkommensteuergesetz'), a freelancer can be described as a self-employed person whose business is either in the artificial (i.e. painter, musician), scientific, authorial (professional writing), teaching or educational sector, or if their work is determined by his or her personal knowledge of particular profession. This includes physicians, dentists, journalists, translators, lawyers, business consultants, etc.

These are professions which are listed in the German income tax law as typical freelancer's professions.

But it is worth pointing out that as a result of case law other professions are accepted as freelancers, too, although not mentioned in the German tax law. This includes IT-consultants, masseurs, nurses and more.

• the local tax authorities
• the responsible professional association
• the responsible accident insurance company (if they employ people).

While the registration at the professional association and the accident insurance company might require a somewhat more formal process, (i.e. completion of official forms and lodging documents setting out qualifications), registering at the local tax authorities is relatively straightforward and can be achieved with an informal letter.

Once you have registered, the tax authorities will then send you a questionnaire asking for personal details, your estimated income in the current tax year and if you want to opt for VAT (more about that later).

Based on the estimated income the tax authorities will assess income tax instalment payments.

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