Becoming Self-Employed in Germany. A step-to-step guide for the Selbstständige Arbeit

It’s never easy to untwist yourself in a newly complicated labyrinth of bureaucracy. Nevertheless, professionals from the fiscal and law sector may give us a hand when comes the time to choose which tax regime and taxation is better for us. This article is going to explain which steps to follow for those who want to be self-employed in Germany.The most important thing, for you, is to know which institutions are a direct reference, which one to consult in your city in order to request information and help. For this reason, you will find some links at the end of this post.Out there, on the internet, there is plenty of information, sometimes confusing and vague. After browsing and browsing the web, I hope this guide will give you a “first aid”, gathering the most important information. Nevertheless, the best thing to do is still to consult experts on the matter. The content of this article will certainly make you feel more confident about the German tax system.

Let’s classify your job

Freiberuflich means self-employed, but what does this category implies in tax regulation?
Foremost, you must determine the exact classification of your work. Laws and regulations may vary depending a lot on what sort of business you plan to engage in. This can be complicated and, again, it is desirable to get an expert, professional advice in finding out just exactly where your profession fits in. Essentially, there are three big groups:

  • Free-professionals (Freiberufler) is for those who have academic training like lawyers, doctors, pharmacists, etc. Other professions may be considered to be "trades."
  • “Crafts” - such as butchers, barbers, florists, etc.
  • “Freelancers" - writers, artists, performers, independent consultants, etc.

Your work classification affects your tax liability, or the several certificates and licenses you may need in order to work in Germany. It can also happen that you may be required to become a member of a professional association or other "chamber".

The difference between Freiberuflich and Gewerbe

The German office in charge of tax liability is the Finanzamt. Independent professions, as we said in advance, are defined as Freiberuflich and must register with the Finanzamt which will provide you with a tax number for identification. As a “Freiberufler”, you can submit an individual tax return, the “Einnahmen-Überschuss-Rechnung”.

In case you aim to engage in what may be classified as a "trade", you should go checking with the local Trades Office (Gewerbeamt).

At that place, you will register your business and obtain a certificate of registration (Gewerbeschein) after you demonstrate that you are qualified to manage your business.

After that, you will pay local trade tax (Gewerbesteuer) and become a member of the local Chamber of Commerce (Industrie- und Handelskammer - IHK) that includes a yearly membership fee to them.

Social security and benefits (Sozialversicherungen)

In Germany, a self-employed person does not have the obligation to contribute to social security, but of course, he/she can through private or public health insurance agencies (Krankenkassen).

In case you wish to hire someone, these workers would have to contribute to social security and, in order to do so, you will need to request a company identification number from the unemployment office (Arbeitagentur).

As you may know, lots of benefits are linked to the Social Security contribution, like child allowance for your children and others, but still, the regulation could be different from case to case.

For example, if a spouse of a Romanian freelancer takes a job with a German company will he or she be eligible for German benefits? What sort of tax issues would that present? Or suppose a person from Italy or the Czech Republic is working for a company that obtains a contract to perform services in Germany? Would health insurance issues and benefits be involved?

The importance of being assisted by experts about being self-employed in Germany cannot be stressed enough. Rules and procedures always go through changes. To minimize misunderstandings that may result in a headache and troubles with the authorities, you should get professional assistance.

Dendax has now formed a new team of professionals ready to offer you all the assistance you need about being self-employed in Germany. Contact us and get expert advice for free.

Useful vocabulary and links for being Self-Employed in Germany

Finanzamt, Gewerbeamt, Freiberuflich, Sozialversicherungen, Ausländeramt, Berufgenossenschaft, selbstsändig, Rechnung, Umsatzseuer, Krankenkassen, Fragebogen zur steurlichen Erfassung, Industrie- und Handelskammer.

Websites of interest