A freelancer is someone who is self-employed and works for several clients without working in a single restricted company. They work for each of their clients simultaneously under their own name. Freelancers in Germany operate the same way. They do not belong to any particular company and work for several clients single-handedly.
There is another kind of business people operating their business in Germany. They are called the Tradesmen. The main point of distinction between Freelancers and Tradesmen in Germany is that Freelancers do not function under a company name or come under the category of people paying trade tax to the German Government. This makes freelancing in Germany a very flexible and convenient occupation for the people.
How to become a freelancer in Germany?
Becoming a freelance is pretty easy, compared to becoming a tradesperson in Germany. There are a few administrative formalities that one needs to fulfil to become a freelancer in Germany. That is about it. It is not too much of a hassle.
To be called a freelancer In Germany there are a few things you need to keep in mind. Not all self-employed people are called freelancers in Germany. There is only a fraction of self-employed people who are allowed to call themselves freelancers and enjoy the privileges of the same. Legally, there is a huge difference between the rules for a freelancer and the rules for a tradesperson. This distinction has necessary implications on the amount of tax the two are expected to pay.
Freelancers in Germany are defined as people who work under Liberal professions. The professions include: –
- Tax consultants
These are the categories of professions. Any individual belonging to these categories can be called as a freelancer in German. They will also be allowed to redeem freelancer benefits.
Any other profession except these ones are called tradesmen services. Tradesmen need to get themselves registered under the Trade Office guidelines. They need to pay trade tax too. The final verdict of whether you belong to the freelancing sector of the tradesmen sector lies within hands of the local Tax Office.
Freelancing for Foreigners in Germany
Any foreigner that meets the requirements of freelancing in Germany can freelance in the country. They will not be restricted in any way. All they have to do is have a freelance visa in order to conduct their services in Germany.
The few requirements that a foreigner needs to fulfil to work as a freelancer in Germany are: –
- The individual must have an economic interest or a regional need in the type of work the individual intends to do. Only then can they conduct freelancing business in Germany.
- The profession that the individual wants to take up should either be a part of the liberal professions list or a least be closely related to the liberal professions. Only then can the tax office give the individual a final go ahead.
- The individual must have the ability to financially support themselves in Germany. They need to earn from their business or make money of their services to survive.
Freelancer visa in Germany
If you are a foreigner, you will need to check if you will need a German visa to be a freelancer in Germany. It has different rules for short term and long-term visits. If you are coming anywhere from the EU, the good news is that you will not require any visa to work as a freelancer. That is not the case with people coming from countries.
The people who do not belong from the EU countries have it a little differently. If you are coming from elsewhere you will need legal permission to be a freelancer in Germany. There is a particular visa that you will get at your arrival which will state that you are interested in working as a freelancer in Germany.
How to get your Tax code?
To be a registered freelancer in Germany you first need to fill up a tax questionnaire and submit it to your local tax office. The process can be completed online to simply downloading the form. In case you have any queries or questions regarding the process, you an get help from a Tax Advisor. A Tax Advisor will make sure that all your information is punched in correctly.
To see if you qualify for being a freelancer, you will be asked a few questions: –
- What type of work you do?
- What is the expenditure?
- Details of your personal and business bank accounts.
- The profit you intend on earning.
- Whether you will be charging taxes like VAT.
Bank Account for freelancers
When you start freelancing in German, you are left with two options for managing your finances. You can opt for a second business bank account or continue managing your finances in your personal account. That is entirely your choice and there is no law that can tell you otherwise.
If your income is manageable and straightforward, you can opt for using your personal account for your busines too. There are a few banks in Germany that offer you to make a freelancer bank account. However, you can straight up refuse to make another account if you think you do not need it.
The only thing you need to be careful about is keeping clear records of your business. If you can manage keeping a clear transactional record with a single bank account for personal and professional use, you can go ahead.
Freelancing in Germany is a very flexible occupation option. If your profession falls under the liberal profession categories, you can surely give freelancing a try in Germany.
Read here to know more about How to start a Business in Germany.