15/01/2024
New to freelancing in Germany? 💻
We help you navigate the process of freelancing as an expat in Germany post-residency permit. From tax obligations to health insurance, co-working spaces to invoice templates, we've got your professional journey covered.
💼Freelance vs. Self-Employed?
Germany defines freelance and self-employment activity distinctively, with different business and accounting requirements depending on your classification. In a nutshell, individual service providers, artists and consultants can be freelancers, while those with employees, selling products, tradespeople, e-commerce stores & more need to be registered as self employed or form a company. The definitions are important for your tax status, health insurance and residency permit so take note!
💼Finanzamt (tax-office) registration
Before delving into tax matters, it's crucial to register yourself at the Finanzamt to obtain a tax number. Each freelance activity requires its own tax number and even different VAT rates might need to be charged, so if you are working across fields, consider whether you need a new tax number to avoid penalties or over- or under-payments.
💼The "Small Business Killer" and VAT Considerations
Taking the path in becoming a freelancer poses challenges particularly in the beginning, notably the “small business killer’’ phenomenon. As the first year ends, freelancers face tax payments for the previous year and prepayments for the following year. So taking this into consideration and putting some money aside beforehand can safeguard your business from “getting killed’’.
💼Renting a Flat or Office as a Freelancer
Despite the horror stories, renting a flat as a freelancer doesn’t have to be so different from being employed. Landlords in Germany always want proof of a stable income, so you’ll need an income statement, prepared by a lawyer or tax advisor, showing your post-tax profit for the previous and current year, showing a net income of three times the warm rent. And freelancers, you might need to flex those invoicing muscles for six months to a year for the income assessment. 💪
Learn how to thrive as an expat freelancer in Germany, from tax obligations to health insurance, co-working spaces to finding work, and complying with legal requirements. Master the art of freelancing in Deutschland.