Understand how: Freelance in Germany

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Freelance work in Germany is an attractive prospect for many freelancers due to their clean environment, their cultural attractions, their strong social system and their general security. Germany also has one of the strongest economies in the world and welcomes foreigners who want to move there.

Freelance in Germany

Germany is one of the most popular and livable places in Europe – and for good reason. The incredibly diverse landscapes, clean and developed infrastructure, efficient transportation systems and strong welfare system make it the perfect place for migration.

Many freelancers also move to Germany because of their high quality healthcare and the many benefits it offers.

How to become a freelancer in Germany

Freelancing in Germany can be a lengthy process, but it’s worth it. Here are some things to consider before doing this:

# 1 Types of Self Employment

In Germany there are basically three different types of self-employment: freelancer, freelancer or trade. While all three are similar in nature, each of them is different in terms of legal obligations and taxes.

Before starting freelance work in Germany, you need to decide which type will suit you best as your choices will determine what type of taxes you will pay.

Business

If you work as a trader and run a trading company that sells products, your work will be classified under the trade ‘trade’. First you have to register with the German commercial register or the commercial register and then contact the trade office to apply for a trade license.

You then have to pay the trade tax. Business tax varies depending on the city you are in and is calculated by multiplying 3.5% of your profit by the local tax factor ‘assessment rate’.

freelancer

Freelancers and freelancers are often seen as the same thing in Germany, but in reality they are actually two different things. A freelancer or freelancer is a person hired by companies for short-term projects or assignments.

As a freelancer, you have to register with the tax office. You will then receive your tax ID.

freelancer

The term “freelancer” is used to associate freelancers with specific professions such as medical professions, coaches, graphic designers, IT professions, and so on. Freelancers in Germany often have their own practice and, like freelancers, do not have to register at the trade office.

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# 2 visa

Before you move to Germany, you need to find out what type of visa you need to apply for – unless you are a citizen of an EU or EEA country.

You must specifically apply for the freelance freelancer visa. This visa is usually valid for 3 months and can be converted into a residence permit once you are in the country. This residence permit is valid for up to 3 years.

# 3 health insurance

It is advisable to take out health insurance before moving to Germany or before applying for your visa. This is because you will need specific health insurance for your visa application.

Germany has two options for health insurance – public and private. Public insurance makes up 14.6% of your income, while private insurance is only available to people who meet certain criteria, including professional activities.

You can opt for public health insurance at any time and supplement this with private health insurance. Look for one that also covers accidents or get liability insurance.

# 4 address registration

Once you have found your permanent accommodation, you will need to register it with your local citizenship office. This process is known as “registration” and ends with the receipt of the registration certificate “registration confirmation” – a document that is required, for example, when opening a bank account. You will also receive your tax ID when you register for the first time.

# 5 bank account

At some banks in Germany, such as DKB Bank, N26 and Revolut, you can open your bank account from abroad.

However, it will be easier for you to open your bank account when you are in Germany. To do this, you need:

  • Your passport along with your visa
  • Registration – proof of address
  • Proof of your income

German professional tax

As mentioned above, as a business you have to pay business tax, but you are exempt from it if you work as a freelancer or freelancer. However, they are subject to income tax and VAT.

# 1 income tax

The income tax rate in Germany is between 14% and 42% and applies to everything you earn as a freelancer. In order to pay your income tax, you must prepare either a surplus income statement or an income statement and pay that tax quarterly to your local tax office or tax office.

# 2 VAT

All self-employed persons in Germany are subject to sales tax. VAT returns must be drawn up and declared on a regular basis.

The VAT rate can be either 7% or 19% depending on the goods and services offered by the person. You can make claims on these goods and services at the end of the year.

💡 You can easily pay your VAT via the official ELSTER portal.

# 3 business tax

As mentioned above, business tax or business tax varies by city and is calculated by multiplying 3.5% of your profit by the local tax factor assessment rate. Limited liability companies, partnerships, sole proprietorships and corporations are subject to this tax.

The trade tax only applies to self-employed traders and is also paid to the tax office as part of the tax return. However, if your annual turnover is less than € 24,500, you are exempt from trade tax.

Freelancing in Germany certainly sounds exciting. Would that be something you would ever think about? Tell us your thoughts below!

📌 Further instructions:
How to: Freelance in Portugal 🇵🇹
How to: Freelance in the UK 🇬🇧

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