IT Freelance in Germany: FAQ

You don't have a German passport? Then this FAQ about IT selfemployment and freelace is definitely for you
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Questions

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ANSWERS


– How do I start my freelance in Germany?

- read the article: How to start IT-freelance if you already work in Germany – 3 very first steps

Registration of self-employment – how much are the fees?

– if the tax office classifies you as a Freiberufler (freelancer), your formalities cost 0 Euro. If you are classified as an Unternehmer (entrepreneur) and you may run Gewerbe (be a tradesman), the registration fee totals €15 (online registration) up to a maximum of €31. (registration happens directly at a Gewerbeamt (trade office) or Ordnungsamt (public order office).

Do I have to inform my employer, health insurance company and the immigration office?

You only have to inform your employer Lores ipsum if this is explicitly stated in your employment contract. So, read your employment contract. If it doesn’t say anything about it, it’s up to you to decide whether or not to inform your employer.

Informing your insurance company of your intention to become self-employed is not a mandatory, but it is just a common sence. As soon as you work a lot self-employed, the monthly amounts will change significantly (guess whether they will be higher or lower )) ). Sooner or later your insurance company will notice that you are working self-employed. It is quite possible that you will have to back pay a lot. Even if you haven’t had a doctor’s appointment in months. Isn’t it reasonable to find out in advance how much your monthly payments can be changed?

You must inform the Ausländerbehörde(immigration authority) in advance of your intended self-employment because as a full-time freelancer another visa category is required: Aufenthaltserlaubnis zur selbstständigen oder freiberuflichen Tätigkeit (residence permit for the purpose of freelance or self-employment). If you have unbefristed (permanent residence permit), also called Niederlassungserlaubnis (settlement permit), you do not have to inform the immigration authority.

How do I register my income and expenses?

– To register your earnings, all your invoices must be stored in a secure location with the following invoice numbers. The same goes for receipts as proof of your expenses. Keep both for 10 years.

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Do I have to write a business plan, financial plan, business concept?

– You need a business plan and a financial plan in two cases: a) to get a visa / residence permit; b) to get financing for your company.
Note that when applying for a visa / Residence permit for the purpose of freelance or self-employment, a trader needs to submit significantly more documents. Thus a freelancer does NOT need to submit the following documents: the company profile, the business plan, the business concept, the capital requirement plan. Source: LABO Berlin.

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Do I need a business bank account?

– A business bank account Geschäftskonto* costs more than a regular current account Girokonto. Therefore banks are interested in opening a business account. Besides, a bank wants to win and keep you as a regular customer. That’s why most banks close their eyes when you start with your current account. In the second year you may want to switch to the business account yourself. After all, it is not too expensive (10-20 Euro per month) and there are good reasons for it, e.g. you could have received credit card payments.

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What are the differences between Freiberufler / Gewerbe / Einzelunternehmer / Kleinunternehmer?

The only difference lies in taxation. There are two large categories here: а) Freberufler (Freelancer) and b) Unternehmer (Trader). The term Einzelunternehmer refers to category “b” and means “sole proprietor”. You can practice your freelance in both categories, as a Freberufler and as Unternehmer. Read more...

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Who classifies IT freelancers as freelancers or as trader?

– After you have submitted the questionnaire for tax registration to the Finanzamt (tax office) officials in the tax office decide in which category to place you: Freiberufler or Unternehmer. If you do not agree with the decision, you can appeal and try to change their decision.

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What is the better status: Freiberufler or Trader (Gewerbe)?

– In a common situation Freiberufler is a bit better, at least in the IT industry. Because:

  • you need less documents to obtain a visa/residence permit for self-employed purposes;
  • you don't need to pay Gewerbesteuer (trade tax).

    For your specific situation ask a tax advisor. Read more...

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    What is the difference between: Gewerbe and Unternehmen, Gewerbetreibender and Unternehmer?

    – For you as a freelancer in the IT industry, the difference is not important. For freelancers / sole proprietors these terms are synonyms.

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    What is the difference between an Unternehmer und Kleinunternehmer?

    – The main difference: less tax, simplified accounting. By the way, both - freelancer as Freiberufler AND as Einzelunternehmer can also be taxed as a Kleinunternehmer. Read more...

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    What is the small business regulation – Kleinunternehmerregelung?

    - Kleinunternehmerregelung is a simplified form of taxation for low turnover entrepreneurs. Based on § 19 UStG). Read more...

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    What is pseudo self-employment – Scheinselbständigkeit?

    - As an example the following situation: You as a freelancer have only one client. Your self-employment is similar to the normal employment: work in the office (no remote work), in regular days and times. In this case, pseudo self-employment can be assumed.What to do about it? Have more than one employer or work for an middleman company who can place several clients with you.

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    What tax does a (foreign) IT freelancer have to pay in Germany?

    – A foreign self-employed person pays absolutely the same tax as a German self-employed person: #1 VAT (Umsatzsteuer / Mehrwertsteuer), #2 income tax (Einkommensteuer) and #3 trade tax (Gewerbesteuer). Read more...

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    Does an IT freelancer must have a tax consultant and/or accountant?

    – There is no law for freelancer that prescribes hiring a tax consultant or accountant. You may do all the accounting and taxation on your own. However, you save a lot of stress and time as soon as you get professional help. A great thing about it – you can “connect” the tax consultant and the tax office – if the officials in the tax office have questions, you will write directly to your tax consultant and clarify everything with him.

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    Why should I put aside 30-40% of my income?

    - If you are subject of Regelbesteuerung (regular taxation) and earn more than €1000 in an average month, it is quite possible that the tax office wants to get some tax in advance in the second or third business year. You’d have to pay that amount sooner or later anyway. That can be quite a bad surprise. However If you deposit 35-40% of your sales into a separate account or sub-account, you are 100% secure. Thanks to this sub-account you always have enough money in hand for the tax office and to pay your tax consultant. As a small business owner, you don’t necessarily need such a sub-account, because a small business owner pays very little tax.

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    * - by the way, the GLOSSARY contains many translations of German terms and abbreviations.
    ** - to be precise, the "visa" is a permit just to enter the country and stay no longer then 3 months, mostly for the purpose of tourism. Otherwise we speak about "residence permit". German: Aufenthaltserlaubnis or Aufenthaltstitel.


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    28.09.20 ©️ Jaroslav Plotnikov ( All articles )
    Copy & share: migwork.com/blog/faq-freelance