What counts as freelance work?
A Freelancer is someone who:
- is independent and works at their own responsibility
- and pursues a scientific, artistic, literary, teaching or educational activity
There is a catalogue of freelance professions (Katalog freier Berufe - §18, paragraph 1, no. 1 EStG) that provides good orientation, but the catalogue doesn´t include all freelance professions. In individual cases and in cases of uncertainty, the tax office will decide whether an activity counts as freelance work or not. The definition and separation from a normal business or trade (Gewerbe) is not always entirely clear.
For example, if someone works as a coach and also sells online courses on their homepage, a distinction must be made between the two activities. The sale of online courses is a commercial activity and requires registration with the trade office (Gewerbeanmeldung) as well as a separate account. As a coach, on the other hand, you work as a freelancer. It is not necessary to register a business and you don´t need a separate account and bookkeeping.
Because: As a freelancer it is not necessary to register a trade. But you have to inform the tax office about the start of your freelance activity.
How do I register my freelance work?
Freelancers are exempt from the obligation to register with the trade office (Gewerbeamt) and the commercial register (Handelsregister). However, founders who start a freelance activity may register voluntarily.
Freelancers must register with the relevant tax office (Finanzamt) no later than four weeks after starting their freelance work. There you need to request and complete a questionnaire for tax registration. You can find helpful instructions on how to fill it out here (in German).
Through this process, the tax office issues a tax number to the freelancer.
It is also important to note that only tradespeople are obliged to pay trade tax. So, those who register a freelance activity do not have to pay the trade tax.
Often there are professional chambers, also called chambers of ethics, with which the freelancer must register if they want to register a freelance activity. Freelance professions that are subject to registration are:
- doctors, dentists, veterinarians, pharmacists
- Notaries, attorneys, patent attorneys
- Tax consultant, auditor
- architects, consulting engineers
Further information is available from the start-up office of the responsible tax office.
What insurance do I need?
Where can I get support?
- Start-up subsidy (Gründungszuschuss): One possibility of financial support is the start-up subsidy from the Agentur für Arbeit. You can apply for it if you are entitled to unemployment benefits. It is paid in two phases. In the first phase, which lasts six months, there is a subsidy in the amount of the unemployment benefit - this is usually 60 percent of the last salary. There is also a €300 subsidy for social security contributions. After that another €300 per month may be approved for the remaining six months. More information can be found on the website of the employment agency.
- Credit: In addition, one can take out a start-up loan from the KfW-Förderbank. The state-owned KfW-Bank has the public mandate to financially support business start-ups with loans. You apply for the start-up loan through your house bank.
- Starting a business on the side: Many freelancers work on the side and start a business while studying, for example. Those who no longer study can also build up their freelance work parallel to their job. However, the employer must be notified of any secondary employment.