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Freelancers & Self-Employed in Germany: The Complete Guide (2025)

  • Writer: Shivam Singh Chaudhary
    Shivam Singh Chaudhary
  • May 25
  • 3 min read

Working independently in Germany can be a rewarding path—but it's also one that comes with serious tax responsibilities. Whether you're a freelancer (Freiberufler) or a self-employed business owner (Gewerbetreibender), understanding the tax system is essential to staying compliant and stress-free.


Here’s your complete guide to managing taxes as a self-employed professional in Germany in 2025, including registration, tax types, invoicing rules, and more.




Understanding the Two Types of Self-Employment in Germany

Germany divides self-employed individuals into two categories:


  1. Freiberufler (Freelancer) — Professionals offering intellectual, scientific, artistic, educational, or healthcare services (e.g., writers, consultants, teachers, doctors).


  2. Gewerbetreibender (Business Owner or Trader) — Those running a commercial business, such as craftspeople, shop owners, eCommerce sellers, or small manufacturers.


The distinction impacts how you register your activity, pay taxes, and deal with trade licenses or chamber membership.


Step 1: Registering Your Activity


For Freelancers (Freiberufler):


  • No business license needed

  • Complete the "Fragebogen zur steuerlichen Erfassung" via ELSTER (Germany’s online tax portal)

  • Receive your Steuernummer (tax number)

  • Declare if you'll charge VAT (Umsatzsteuer) or apply for the Kleinunternehmerregelung (small business exemption for revenue under €22,000/year)


For Gewerbetreibende (Business Owners):


  • Must register with the Gewerbeamt (Trade Office) and obtain a Gewerbeschein (trade license)

  • Pay a small registration fee (€20–€40)

  • The Gewerbeamt notifies the Finanzamt, Chamber of Commerce (IHK), and other local bodies

  • Complete the ELSTER registration to receive your tax number


Step 2: Taxes You Must Pay


  1. Income Tax (Einkommensteuer)

    • Paid on net profits

    • Rates range from 14% to 45%

    • Basic tax-free allowance is €11,604 (2025)

    • Most self-employed people must prepay taxes quarterly based on estimated income

  2. Solidarity Surcharge (Solidaritätszuschlag)

    • 5.5% of your income tax

    • Applies mainly to higher earners

  3. Church Tax (Kirchensteuer)

    • 8–9% of income tax if you're part of a registered religious community

  4. Value Added Tax (VAT / Umsatzsteuer)

    • Standard rate: 19%; reduced rate: 7% for specific services (e.g., journalism, education)

    • If revenue is under €22,000/year, you may qualify for Kleinunternehmerregelung (no VAT collection or deduction)

    • If VAT-registered, submit monthly or quarterly advance returns and an annual VAT summary

  5. Trade Tax (Gewerbesteuer) – Only for Gewerbetreibende

    • Paid if profits exceed €24,500/year

    • Rates vary by municipality, usually 7–17%

    • Partial credit available against income tax

  6. Chamber Contributions – Only for Gewerbetreibende

    • Membership in IHK or HWK is mandatory

    • Annual fees depend on income level


Step 3: Bookkeeping and Invoicing


  • Keep accurate records of all income and expenses

  • Use accounting tools like Lexoffice, Debitoor, or Sorted

  • Invoices must include:

    • Full name and address

    • Tax number

    • Invoice number and date

    • Description of service

    • VAT (if applicable)

    • Payment terms and bank details

  • Double-entry accounting is required if:

    • Annual revenue exceeds €600,000

    • OR annual profit exceeds €60,000

    • Otherwise, simplified Einnahmen-Überschuss-Rechnung (EÜR) is allowed.


Step 4: Health Insurance & Social Security


  1. Health Insurance

    • Mandatory for all

    • Choose between public (GKV) or private (PKV)

    • Freelancers and Gewerbetreibende must pay the full premium themselves

  2. Künstlersozialkasse (KSK)

    • Available for artists, musicians, and media professionals

    • KSK covers 50% of health, nursing, and pension insurance

  3. Pension Contributions

    • Voluntary for most

    • Mandatory for certain professions (e.g., teachers, physiotherapists, craftspeople with Meister title)

    • Private pension plans or Riester-Rente encouraged

  4. Unemployment Insurance

    • Voluntary enrollment for the first 3 months of self-employment (under certain conditions)


Step 5: Working with International Clients


  1. EU Clients: Must include VAT ID and may apply reverse charge rules

  2. Non-EU Clients: May be VAT-exempt, but must document transactions properly

  3. Use invoicing tools that handle multi-currency and international VAT compliance

 
 
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