Most people will need a visa to freelance in Germany.
Freelancing has become a popular employment method, especially among young professionals, because it gives them the opportunity to have more control over their life and their work.
The German government has updated laws and regulations to cater to the ever-increasing freelance workers in the country. Expats can also freelance in Germany, but they will have to go through quite a lengthy process.
Who Can Freelance in Germany?
Anyone who manages to find work and get a visa can freelance in Germany. You are considered a freelancer if you do not work for an employer, have a so-called “liberal profession”, pay your own tax, and your work fulfils the following conditions:
- There is an economic interest in Germany for your profession.
- Your work or profession will have a positive impact on the German economy.
However, even though technically, anyone can get a freelancing visa and residence permit, it is much easier for citizens of certain countries which have agreements with Germany, such as the U.S., Australia, Canada, Israel, Japan, New Zealand, and South Korea. Citizens from these countries can simply enter Germany, find a place to live, register their business, and get a residence permit even without applying for a visa.
Citizens from EU countries can become a freelancer in Germany. They don’t need to apply for a visa or residence permit at all, although they do have to register their business and residence, just like everyone else.
Freelance Jobs in Germany
You are considered a freelancer in Germany if you work in one of the “liberal professions”, such as:
- Patent attorney.
- Commercial chemist.
- Tax consultant.
- Advisory person.
- Business economist.
- Sworn accountant.
- Tax agent.
- Photo reporter.
The professions are regulated by the German Ministry of Justice and Consumer Protection. According to Section 18 of the Ministry’s Income Tax Act, you are considered a freelancer if you conduct “independent scientific, artistic, literary, teaching or educational activity”, which means it is not limited only to the above-mentioned professions.
How to Become a Freelancer in Germany?
The process of becoming a freelancer in Germany is quite long and tasking, which can be intimidating and even off-putting for some people. However, it can be surmised in the following steps:
- Travel to Germany.
- Find prospective clients.
- Open a bank account.
- Get health insurance.
- Register your living address at the Bürgeramt.
- Register your freelance activity at the Tax Office (Finanzamt).
- Get your freelancer residence permit at the Immigration Office (Ausländerbehörde).
Step 1. Travel to Germany
The first step in your journey is getting a visa at the nearest German Embassy. You need the visa so you can travel to Germany, get everything settled, and apply for a residence permit for freelancing. The type of visa you have to apply for is a Long-Stay Visa for freelancing purposes.
Also remember that a visa itself is not the only permission you need to start working, because it is only valid for a few months. Once you are in Germany, you will have to go through another few rounds of appointments, applications, and interviews before you are allowed to live and work there legally.
Please note: You cannot enter Germany with a Schengen Visa and apply for a Freelancing Residence Permit. You must have a long-stay visa, also referred to as a D-Visa or National Visa.
Step 2. Find Prospective Clients
Next, you need to show the German immigration authorities that there are people willing to work with you once you have the visa. If you prospective clients, they have to write “Letters of Intent” declaring their intention to hire you for your services. This is not the same as a work contract.
There must be at least two prospective clients.
Step 3. Open a Bank Account
Opening a German bank account is not usually a requirement for the visa process, but you are advised to have one. It will make everything easier than having your main account in an out-of-country bank, as you will have all your work transactions and fee payments through there.
Step 4. Get Health Insurance
Everyone who lives in Germany, or even just visits as a tourist, has to get health insurance. As a freelancer, you can choose to get public or private health insurance. However, even though in most cases, public insurance is the most desirable among expats, public insurers may refuse to enroll you until you have received a residence permit. So for the initial period of your stay – while you are getting everything settled with your visa – you might have to get a private health insurance plan.
You can also get expat health insurance before applying for the Freelancer Visa at the German Embassy. This type of plan will cover you during your trip to Germany as well as for those few months before you are fully settled and working.
See a more detailed explanation of health insurance for freelancers in Germany lower in the article.
Step 5. Register Your Living Address
To get authorization to work as a freelancer, you must have a registered living address in Germany. So, as soon as you find long-term accommodation, simply gather the following documents and submit them at the local Resident’s Registration Office (Bürgeramt):
- Your passport.
- The Address Registration Form. You can get this in-person at the Bürgeramt or download it online.
- Your rent agreement.
- Confirmation of residency from your landlord. It has to contain the apartment’s address, your landlord’s name and address as well as your move-in date.
- Any necessary status documents, such as birth or marriage certificates.
You will usually get your Certificate of Residence Registration (Meldebescheinigung) within the same day, but you have to wait a few weeks until you receive your Tax ID Number. You need this number so you can register your freelance activity with the Tax Office, so you should get started as soon as possible.
Step 6. Register Your Freelance Business at the Tax Office
Once you have your Tax ID Number and Residence Registration, you must visit the local Tax Office (Finanzamt) and register your freelance activity. You will have to complete the “Questionnaire for Tax Collection” (Fragebogen zur steuerlichen Erfassung), either online or by requesting it from the Finanzamt. Through this process, you will get a freelance tax number (Steuernummer), which you use to pay your taxes and contribute to the German economy.
You will have to submit the following documents, and any others if requested:
- The Tax ID Number you received when registering your address.
- Your bank details.
- A description of your freelance activity.
The process for receiving the freelance tax number can take a few weeks.
Step 7. Get Your Residence Permit for Freelancing
Once you have all the relevant documents and registrations in order, you can apply for a residence permit for freelancing at the German Immigration Office (Ausländerbehörde). The residence permit is the document that will allow you to live and work in Germany long-term. It is usually issued for one to two years, and it can be renewed indefinitely, as long as you still fulfil the conditions.
The process of getting the residence permit can take anywhere from a few weeks to several months. You are not allowed to work until you have the permit.
Freelancer vs. Self-Employed in Germany
Although they seem similar, according to German law, there is a difference between freelance and self-employed activity. In a nutshell, you are a freelancer if you offer a service and charge a fee for each client, whereas you are considered self-employed if you are a company or business owner. Freelancers usually do not have employees whereas self-employed business owners might. Freelancers usually work under their own name, while self-employed individuals can work under their company name.
According to the State of Berlin Service Portal, the difference between being a freelancer and self-employed is:
- Freelancer: Includes occupations under Article 18 of the Income Tax Act, such as artists, writers, language teachers and self-employed doctors, engineers, auditors, interpreters or architects.
- Self-employed: Includes the company founder, sole proprietor, or managing director/legal representative of a partnership or corporation.
Ultimately, it is up to the Tax Office to decide exactly which category you fit in when you go to register your activity and get the Steuernummer (tax number).
Understanding Health Insurance for Freelancers in Germany
All German citizens and residents are required by law to have health insurance coverage. But before you can start looking for an adequate plan, you should know how health insurance for freelancers in Germany works.
There are two types of health insurance options for workers in Germany: public health insurance, which is obligatory for the majority of the population, and private health insurance. As a freelance or self-employed worker, you have the option to actually choose whether you want to be insured publicly or privately. Most people do not have a choice.
The reason freelancers can choose which type of insurance they want is that public insurance is funded by monthly contributions, which is about 14% of your income. Usually, half the contributions are paid for by the employer and the other half by the employee. As a freelancer, you would be paying the whole 14% yourself. The maximum amount you are facing is about €400/month, and many freelancers consider it to be too high.
The other option is private insurance; only freelancers and high-income individuals are allowed to opt-out of public insurance and get a private plan instead. Private insurance plans are desirable for freelancers because they can often be much cheaper than paying the entire contributions for the public scheme themselves, especially if you are young and healthy.
Understanding Taxes for Freelancers in Germany
There are two types of tax you have to pay as a freelancer:
- Income Tax.
- Value Added Tax (VAT).
You have to pay your income tax after you declare your income to the Tax Office (Finanzamt). The tax year in Germany runs from January 1 to December 31. At the end of the year, you declare your income and then you have to pay your income tax by July 31 of the following year.
This means that you have to calculate your estimated tax return and save up every month, so you can pay it at the end of the year. If you have paid more or less than required, you’ll be reimbursed or asked to pay additionally, depending on the situation,
Your income is not only what you receive from your freelance work, but all income even from rent, investments, etc. The income tax rate is from 14% to 42% and there is a 5.5% solidarity surcharge on top of that.
If you earn less than €9,744, you are exempt from paying income tax. Additionally, you only pay tax after you have deducted any business expenses.
Value Added Tax (VAT)
Most businesses have to charge VAT (Umsatzsteuer) on goods and services then turn it over to the Finanzamt. The VAT rate in Germany is from 7% to 19%, and you must include it on your invoice. You have to return your VAT turnover to the Finanzamt through the ELSTER tax portal.
However, if you earn less than €22,000/year you can be registered as a small business (Kleinunternehmer) and are exempt from charging VAT to your clients.
Registering with the tax office can be quite daunting and complex, especially for freelancers who have no experience with the German tax system. That’s why it is advisable to consult with tax professionals, such as Sorted, to assist you on these matters. They can assist you in preparing all the necessary tax reports, issuing invoices and submitting them to the tax office.
Why submit your taxes through certified tax professionals?
- Sorted is a leading Germany-based company with a strong backing of serious investors.
- They cover the entire tax needs for the vast majority of the freelancers and self-employed professionals in Germany.
- Sorted supports you if you have domestic clients or even outside of Germany.
- With Sorted, you register as a freelancer, do your bookkeeping and submit yearly tax reports for free, until your revenue meets a certain amount or obtain clients in the EU.
- You can submit your tax reports electronically to the Finanzamt through Sorted. Sorted is connected directly to the Finanzamt through their official software provider, ELSTER.