The article is about how to start freelancing in Germany being a foreigner. You’ll learn about the requirements, how to register, and the tax deductions.
Table of Contents
In the previous guide, we have discussed the central part of freelancing in Germany. You can refer to our last article, Freelancing In Germany – I, to get in-depth details about how to start your journey as a foreigner. Here let’s explore more essential parts related to freelancing in Germany.
Getting Health Insurance as a Freelancer
We all know that health insurance is mandatory for everyone moving to Germany. That’s how it is compulsory for freelancers also. The freelancers can purchase health insurance before arriving in Germany. The health insurance will cover them for the needed period. There is one more option of travel health insurance. Freelancers can also come to Germany with this insurance, which protects them for the first few days or weeks. You can purchase health insurance from a provider in Germany before its expiration. You can refer to our article Health Insurance In Germany for more details.
Opening a Bank Account as a Freelancer
Having a bank account is very important when you move to Germany as a freelancer. You need it for multiple purposes. Your bank account will help you to get a residence permit for transactions and to receive payments from your clients. It is advisable to open a bank account as soon as you register your home address in Germany. You can open a bank account with any registered German bank. Most banks offer bank accounts, especially for freelancers and self-employed. In Germany, most banks have English-speaking representatives, especially foreigners. They also have special bank offers for freelancers. You can check with them and find the most suitable for you. Please refer to our article Opening A Bank Account and Bank Account Comparison for more information.
German Residence Permit For Freelancers
Once you are done with registering your home address, getting health insurance, and opening a bank account, you must proceed with the next step for your stay in Germany to be legal. That’s how applying for a residence permit is the next task on your to-do list. It is essential and does not feel like a huge deal or a complex process. In fact, it is way easier than getting a visa. Being a freelancer, you must set an appointment with the nearest local immigration office. A few documents are necessary for the application, and every freelancer needs to obey specific rules. Please follow our article Residence Permit to get detailed information about the residence permit.
Registering as a Freelancer in Germany
Once you register your home address at the Foreigner’s office, automatically, within about ten days, you will receive a letter with your personal tax ID. The tax ID contains the tax identification number. It is essential to get the tax number as a freelancer. You can get this number by completeing the relevant form called Fragebogen zur steuerlichen Erfassung. Once you fill out the form, you can submit it at the Finanzamt office. You can submit the form at the nearest office where you live in Germany.
Professional tax consultants such as Sorted can help you register as a freelancer in Germany. Tax consultants will handle all the necessary paperwork on your behalf.
There is one more option for bookkeeping and managing your taxes Kontist. You will get the full service for your taxes with personal consultancy via Kontist. They also offer customer support for a fixed monthly fee. There is a straightforward process to get started with Kontist. All you need to do is download the application and open an account.
Paying Taxes as a Freelancer
You must be aware that the freelancers are exempt from paying the trade taxes in Germany. However, all freelancers are still subject to income tax and value-added tax. Let’s talk about it, in brief, to understand it in a better way.
- Income Tax: While arriving in Germany, you should be aware that Germany has a base rate of 14% of income tax. It is not a fixed percentage; it can go up to 42% depending on your gross income. A solidarity surcharge of 5.5% is also included in income tax. All freelancers need to pay income tax every quarter. The freelancers earning less than €9,169 are exempt from the income tax.
- Value Added Tax: Being a freelancer, you must prepare VAT declarations periodically by declaring your revenue. As per the service, the freelancers usually pay 19%. However, depending on your service, the tax could be as low as 7%. The value added tax can be paid online. You can refer to the German official portal Elster.
You can get professional tax consultants at Sorted. They can assist you with preparing all the tax reports, creating invoices, and submitting them directly to the tax office. You can also refer to our article Taxation In Germany – II to get more detailed information.
Importance of Tax Consultants for Freelancers
Sometimes it could be challenging to manage your accounts and bookkeeping for tax submission purposes. In such a situation, the freelancers should consult tax consultant companies such as Kontist and Sorted. Their services are designed especially for freelancers and self-employed individuals in Germany. You should refer to a tax consultant company as a freelancer instead of struggling with taxes. There are multiple reasons and benefits to choosing tax consultant companies; let’s look.
- Tax consultants will keep track of your records and prepare all the necessary tax reports.
- You must double-check everything and submit the prepared tax reports to the Finanzamt online.
- You can refer to certified tax experts for any tax-related queries.
- The tax consultants will help you create invoices in line with German laws.
- You will feel free to focus on your work or business because tax consultants will manage your bookkeeping and reports.
In a Nutshell
Here you have a detailed overview in this article to start your freelancer career in Germany. There might be a possibility that you should tackle a few questions depending on your profession and the skill set you choose. To help with it, you can refer to the official website of the German government and call them for advice. Apart from this, once you start your journey of freelancing in Germany, you will definitely find a way to your destination.