Source: https://handbuch-deutschland.de/en/work/self-employment.html
Timestamp: 2020-04-08 00:21:42
Document Index: 261149998

Matched Legal Cases: ['§21', '§ 19', '§12', '§ 4', '§ 19', '§45']

Starting up as Self-Employed ("Freiberufler") | Handbook Germany
How can I register as self-employed?
Many people dream of working as self-employed and being their own boss. Starting to work as self-employed is called "Existenzgründung”. As a self-employed person, you are the one who decides which jobs to accept or how and when to work. But self-employment also requires a lot of effort: you are personally responsible for everything and have to take care of many issues. Furthermore, you do not receive a regular fixed salary.
In this chapter, you will find essential information required for starting self-employment in a so-called Liberal Profession ("Freien Beruf"). If the job you practice is not categorised as a liberal profession and you are not a "freiberufler", visit our chapter "Starting up a Registered Business ("Gewerbe")" to find the essential information you need about self-employment for tradespeople.
Who is considered self-employed ("Freiberufler")?
http://handbookgermany.de/content/wtg/en/work/self-employment/jcr:content/par/accordion.detail.html
In principle, you are self-employed if you practice one of the following professions but are not employed in a company:
Doctor, veterinarian, dentist, lawyer, tax consultant, notary, engineer, architect, interpreter (these professions are also called "catalogue professions"/"Katalogberufe".)
Teacher, lecturer, journalist, musician, author, designer, artist, as well as other scientific, literary, artistic or education-related professions (these occupations are also called "Tätigkeitsberufe" or "Activity Professions".)
designers, structural engineers, photographers, graphic artists or similar technical or creative professions (these professions are referred to as "Ähnliche Berufe" or "similar occupations".)
The tax office can tell you whether you are considered to be self-employed ("Freiberufler") or not when you register there. If you are not sure whether you are self-employed, just ask the staff at your local Tax Office directly- they will help you with the accurate classification. On Behördenwegweiser, you can find the Tax Office responsible for you. Just select "Finanzamt" on the left and enter your postal code on the right to see the result.
Please note: If you mistakenly sign up as self-employed while having a business venture ("Gewerbe"), you will have to pay arrears of the business tax. You can learn more about business tax in our chapter "Starting up a Registered Business ("Gewerbe")".
Can I become self-employed?
In order to work independently, your residence permit must explicitly state "Employment allowed" ("Erwerstätigkeit gestattet") or "Self-employment permitted" ("selbständige Tätigkeit gestattet"). If you have been recognised as entitled to asylum, refugee status or subsidiary protection, you should be able to find one of these sentences on the small green sheet you have received, along with your residence permit, from the Immigration Office. If your residence permit does not allow self-employment, you can, under certain conditions, apply to the Immigration Office for a residence permit in accordance with §21 par. 6 Residence Act. For more information in this regard, check our chapter "Immigration to Germany".
Please note: If you have a Tolerated Stay Permit ("Duldung") or in case your asylum procedure is still ongoing, you will not be allowed to work as self-employed.
You must register as self-employed directly at the responsible Tax Office. On Behördenwegweiser, you can find the tax office responsible for you: select "Finanzamt" on the left and enter your postal code on the right to see the result. Once you have found the appropriate Tax Office, you can register as self-employed by writing them (an informal) short letter. You must inform the Tax Office no later than four weeks after you start. Then the Tax Office will send you the so-called "questionnaire for tax collection" („Fragebogen zur steuerlichen Erfassung“), which you must fill and return. There you can also indicate whether you want to use the small business regulation or "kleinunternehmerreglung" (more on that in the section "What is the small business regulation?"). You can also pick up the questionnaire directly from the Tax Office or fill it in online on the website of the Federal Ministry of Finance and then mail it to your Tax Office to save time. Once you have filled and submitted the questionnaire, the Tax Office gives you a tax number ("Steuernummer). If you need help filling it, you can find assistance online, for instance, at www.fuer-gruender.de. You can also seek advice from a tax accountant, but keep in mind that you usually have to pay for their service. You can find a tax accountant online- for instance, on datev.de.
To fill the questionnaire, you need to have a Personal Tax Identification Number ("Steueridentifikationsnummer" or IdNr.). You will automatically receive an IdNr per post the first time you register in Germany. This number is for a lifetime- and every child born in Germany will automatically be assigned an IdNr. If you have lost your IdNr, contact the Federal Central Tax Office.
Please note: Unlike business people ("Gewerbetreibenden"), you do not need to register at the Trade Office ("Gewerbeamt").
Which legal form should I choose?
You must decide for a legal form when registering as self-employed. The legal form has a significant influence on your level of liability and the amount of tax you pay. Most self-employed people who work independently choose the sole proprietorship ("Einzelunternehmen") as their legal form. Self-employed individuals who start a venture together with other self-employed people, usually choose GbR as their legal form. If you want to join one or more other self-employed professionals to work together (as self-employed), partnership company ("Partnerschaftsgesellschaft") may be the fitting legal form for you. To start such a partnership, you first must register with the Partnership Registry ("Partnerschaftsregister") with the help of a notary. You can find a notary nearby on notar.de.
All the legal forms mentioned above are considered to be unincorporated firms ("Personengesellschaften"). In such firms, you are personally liable for the debts and have to pay the firm's debt using your private assets if the firm does not have enough money to settle what it owes. As a self-employed person, you can also choose the legal form of a corporation or "Kapitalgesellschaft" (GmbH, KG, OHG, AG, ...). In the latter case, you are not personally liable for the company's debts, however, you will no longer be considered self-employed and must pay business taxes ("Gewerbesteuer").
To learn more about the different legal forms available, visit firma.de and freiberufler-werden.de.
What is the Small Business Regulation ("Kleinunternehmerreglung")?
If your annual turnover does not exceed € 22,000, you can use the so-called small business regulation. As a small business owner, you do not have to pay sales tax ("Umsatzsteuer") to the Tax Office. Thus, you are also exempt from the sales tax pre-registration ("Umsatzsteuer-Voranmeldung"). In addition, for small businesses, simple bookkeeping and profit determination is usually sufficient. When registering with the Tax Office, you can already indicate in the tax collection questionnaire that you would like to use the small business regulation.
Please note: As a small business owner, you are not allowed to claim sales tax on your invoices- and you must specify sales tax is not included, for instance, by adding this sentence: "Gemäß § 19 UStG wird kein Umsatzsteuer berechnet". And of course, you cannot deduct any input tax ("Vorsteuer").
As soon as your turnover increase or in case you want to forego the small business regulation for other reasons, you can inform the Tax Office in an informal letter and switch to regular taxation.
Find out more about small business regulation on existenzgruender.de.
Some liberal professions are so-called "liberal professions subject to the chamber" ("kammerpflichtige Freie Berufe"). This concerns doctors, dentists, veterinarians, pharmacists, notaries, lawyers, patent attorneys, tax consultants, auditors, architects and consulting engineers. If you would like to become self-employed in one of these professions, you must register with the professional chamber ("berufsständischen Kammer") or chamber of expertise ("Standeskammer") responsible for your fiels of work. You can find the chamber responsible for you at Behördenwegweiser. Select "Kammern" on the left and enter your postal code on the right. When registering, you must prove that you are qualified for the job, i.e. you have to submit your certificates. To learn more about authenticating the certification you have obtained abroad, check our chapter "Recognition of foreign certificates".
All non-doctor health professionals such as physiotherapists must register with the Public Health Department ("Gesundheitsamt") and submit their qualifications there. You can find the Public Health Department responsible for you at Behördenwegweiser. Select "Gesundheitsämter" on the left and enter your postal code on the right to see the result.
Which taxes do I have to pay when working as self-employed?
As self-employed, you pay income tax ("Einkommenssteuer") and usually also the so-called pre-tax ("Vorsteuer") and sales tax ("Umsatzsteuer "), which are colloquially called "Mehrwertsteuer" (or VAT).
The amount of your income tax depends on the profit you make — the higher your profit, the higher your due income tax. You can deduct business expenses such as the costs of a company car and an office or advertising expenses from your payable tax. As self-employed, you usually have to pay your income tax in advance. Only if your expected profit is less than 400 €, you do not have to make any advance payments. The prepayment is due on 10 March, 10 June, 10 September and 10 December. You will receive, in due time, a notification from the tax office about the amount of the advance payment. The amount of this advance payment depends on the level of income you have estimated in the "Tax Collection Questionnaire" ("Fragebogen zur steuerlichen Erfassung")- that is if you've just started- or past earnings, in the case have been working as self-employed for at least one year. As soon as you submit your tax return for the whole year, it will be calculated whether you have paid more or less than what you should have paid in advance. If you have paid too much, you will be paid back. If you have paid too little, you will have to pay the remnants of your taxes within a month. If your profit is below 9000 €, you do not have to pay any income tax; however, you must still submit a tax return. Please note that you must submit your tax declaration by 31 July of the following year.
Anyone who gains a financial turnover with their work in principle has to pay taxes. This type of tax is called the Sales Tax or "Umsatzsteuer". If the small business regulation does not apply to you, you will, in principle, have to pay 19% of the revenues you make in Germany as sales tax. People in some liberal professions such as writers, artists and similar jobs pay only 7% sales tax (§12 Sales Tax Act). Some services in the field of human medicine are entirely exempt from sales tax (§ 4 Sales Tax Act). You usually must pre-register your sales tax with the Tax Office by the 10th of each month. To do so, you must calculate your sales tax liability. You can calculate your payable sales tax by deducting the sales tax you have paid for goods or services to other companies from the sales tax you've paid in advance for your self-employed job (this is called the input tax or "Vorsteuer") and transmitting the resulted amount to the Tax Office. That's called sales tax pre-registration ("Umsatzsteuer-Voranmeldung"), and it must be made via www.elster.de. If the sales tax you charge for your service is higher than the sales tax you have paid, it means you must pay the Tax Office. If your input tax is higher than your sales tax, you will be reimbursed by the Tax Office. The annual tax statement then must be submitted, along with the annual sales tax return, in the following year by 31 July. Please note: Small companies can be exempted from sales tax (small business regulation or "Kleinunternehmerreglung"), which means as the owner of a small business, you do not have to do sales tax pre-registrations. Keep in mind that You still have to file a sales tax return.
In contrast to businesspeople ("Gewerbetreibenden"), the self-employed, in principle, do not have to pay trade taxes ("Gewerbesteuer"). To learn more, read the section "Which legal form should I choose?"
Seek advice from a tax consultant (at the latest) before filing your first tax return. Their service costs money, but without the help of an expert, doing your taxes correctly could be a real challenge. You can find a tax consultant in your area on datev.de.
Where do I submit my annual tax return?
The tax declaration can only be submitted electronically. You can do so either on www.elster.de free of charge or by using other paid tools such as Smartsteuer. Although what you need to do is explained on the official portal (elster.de), it is sometimes difficult to understand- but paid tools are more user-friendly. Of course, you can also do your tax return with the help of a tax consultant. You have to pay for a consultant's service, but seeking advice from a professional can potentially save you taxes. You can find a tax consultant, for instance, on datev.de.
As a self-employed professional, you can usually do the bookkeeping in the basic EÜR framework ("Einnahmen-Überschuss-Rechnung" or "Revenue-Surplus-Calculation"). Only if you have chosen "Corporation" as legal form, you have to create a so-called "double-entry bookkeeping" (i.e. "doppelte Buchführung"). With the EÜR as a framework, you have to record all incomes and expenditures in an analogue or digital cash book. For more information in this regard, visit fuer-gruender.de.
You must keep all invoices that you issue and receive for ten years. If the Tax Office decides to check your bookkeeping, they may ask you to submit all your invoices and other documents.
When and how should I write invoices?
Whenever you provide a service, you must issue an invoice within six months. All invoices you issue must be kept for ten years. The Tax Office can request these invoices at any time to check if your taxation has taken place correctly.
The invoices you issue must contain certain information. These are:
name and address of the invoice recipient
performance Period, i.e. the period during which you've provided the service
type, extent and date of the service provided
your Tax ID Number ("Steuernummer") or sales tax ID Number ("Umsatzsteueridentifikationsnummer")
the sales tax rate as well as the net and gross amount (or if you are a small business: the amount to be paid and a sentence that indicates you do not charge sales tax in accordance with § 19 Sales Tax Act)
It is also useful if your invoice contains the customer number associated with the invoice recipient, the payment deadline and your bank details. You can find more information regarding invoices on fuer-gruender.de. On rechnungsvorlagen.de you can find generic invoice templates you can use.
What does „Scheinselbständigkeit“ mean?
If you are officially working as a self-employed person, but, in fact, you only have a single employer and do not work independently, your work is categorised as "Scheinselbständigkeit" or "bogus self-employment"- which means that you are self-employed only on paper but actually treated like an employee. In this case, the company would actually have to hire you regularly and pay social security contributions and payroll tax ("Lohnsteuer"). "Scheinselbständigkeit" or "bogus self-employment" is punishable in German law both for employee and employer. You can learn more about the differences between bogus self-employment and genuine self-employment on the website of the DGB.
Yes. In addition to your job as an employee, you can also work independently as a part-time self-employed professional. No matter you work as self-employed on a part-time or full-time basis, the same rules apply to you. Please note that you have to pay taxes both for your salary as an employee and for the profit you make as a self-employed professional.
Where can I receive financial support?
If you start your own business but do not have enough capital to make the necessary investments, there are various types of funds for which you can apply either from the state or development banks. When applying for these funds, your business plan is of great significance. To find out how you can write a solid, convincing business plan, visit unternehmenswelt.de.
Generally speaking, the following financial support options are available:
Grants from the Employment Agency or the Jobcentre
Start-up Grant ("Gründerzuschuss")
If you have been unemployed for at least one day and still have at least 150 days' of entitlement to unemployment benefit I ("Arbeitslosengeld I") and would like to be self-employed full-time, you can apply for the so-called start-up grant ("Gründerzuschuss") from the Employment Agency, directly at the branch office responsible for you. In order to receive the start-up grant, you must submit a convincing business plan, a copy of your tax registration and a so-called "viability certificate" ("Tragfähigkeitsbescheinigung") - i.e. a confirmation from a business consultant or an expert from a start-up centre who support your business plan as well-thought of and reasonable. You will also need to submit a CV and all the credentials and certificates which confirm your qualifications to your case officer. If your application is approved, on top of the start-up grant, you will receive your monthly unemployment benefit I for six months plus an additional € 300 for your health insurance and retirement insurance. Furthermore, you can attend various seminars and workshops on different topics (e.g. accounting, marketing, etc.) free of charge. After the first six months, there is the possibility to receive a monthly subsidy of 300 € for a further nine months. Keep in mind that you are not entitled to a start-up grant- so whether you receive it depends on your case officer's decision.
Initial Financial Support ("Einstiegsgeld")
If you receive unemployment benefit II and want to become self-employed (full-time), you can apply for the so-called initial financial support ("Einstiegsgeld"). In order to receive it, you need to present a convincing business plan, your CV and a copy of your registration with the Tax Office. Your case officer may also request an expert's opinion about your business plan. The amount of the initial financial support depends on the duration of the time you have been unemployed and the size of your so-called "community of dependence" ("Bedarfsgemeinschaft"); so it is usually assessed for each case separately. You also have the option to apply for additional money for goods or "Geld für Dinge" (such as a computer) that you need for your work. Altogether, you can benefit from the initial financial support for a total of up to 24 months. Whether you will be granted such financial support depends on your case officer; i.e. you are not necessarily entitled to it.
Discounted loans from development banks
A loan from a development bank (such as KfW development bank) is generally more affordable than a conventional loan, as the development banks have lower interest rates. In addition, you can often arrange a repayment-free period, so that you do not have to start repaying from the very beginning. Keep in mind that you have to apply for these discounted loans in advance. Plus, you cannot apply for such loans directly: you must first contact your regular bank, and they will then forward your application to the development bank.
Loan Security from guarantee banks ("Bürgschaftsbanken")
A so-called "Bürgschaftsbank" can assume liability for loans on your behalf. In order to receive a credit, you usually have to prove that you can repay the loan even if your business plan fails. If you do not have collateral, a guarantee bank can assume the liability and therefore, increase your chances of securing a loan. You cannot apply for such loan security directly through the guarantee bank but must do so through your regular bank.
The federal-state Grants
On deutschland-startet.de and fuer-gruender.de you can search for funding options for your business idea in your federal state of residence. Depending on where you live and your personal situation, there are different support programs available for you. On both websites, you will find a short questionnaire- after filling them, you will be presented with the suitable support programs free of charge. You can also call 0800-5895505 (cost-free) and directly ask your questions concerning funding (in German).
You can find further information on various financial support options available from banks or the state on unternehmenswelt.de and fuer-gruender.de.
As a self-employed person, you can choose between the so-called "voluntary statutory health insurances" ("freiwilligen gesetzlichen Krankenversicherung") and private health insurances. You can read more in this regard in our chapter "Health Insurance". In Germany, having health insurance is mandatory. For artists and publicists, in addition to the statutory and private health insurance, there is a third option: the Artists' Social Insurance or "Künstlersozialkasse" (for short: KSK). As a member of KSK, half of the amount you should contribute to health, long-term care and pension insurance is covered by the state and other companies. You cannot, however, register and automatically become a member of KSK: the KSK will first check to verify if you are, in fact, self-employed.
Some liberal professions are obliged to register for pension insurance. For others, pension insurance is voluntary. If the job you practice is subject to insurance or "Kammerpflichtig" (see section "Where do I have to register?"), You will need to join the pension insurance in the appropriate chamber's so-called pension scheme ("Vorsorgungswerk"). If you practice a so-called "particularly vulnerable" profession ("besonders schutzbedürftigen Berufe") -e.g. self-employed teacher, self-employed midwife or self-employed maternity nurse, self-employed carer or nurse- you are also obliged to have pension insurance. You can read more in this regard on the website of the German Pension Insurance. Others can all voluntarily contribute to pension insurance or obtain private provision. In any case, you should make due plans to secure your retirement.
Under certain conditions, you can also voluntarily contribute to and benefit from unemployment insurance. You can do so within three months of starting your self-employment at the Employment Agency at your place of residence. To learn more, visit existenzgruender.de.
In principle, you must have occupational accident insurance ("Berufsunfallversicherung") as well. To obtain one, you must register at the professional association ("Berufsgenossenschaft") responsible for your profession. If you contract an occupational disease or in case of an occupational accident, you will be supported by your professional association. If you have employees, you must have them insured as well. You can also seek advice from your professional association regarding occupational safety.
It is not compulsory, but it may make sense to consider occupational disability insurance ("berufsunfähigkeitsversicherung"). If you are no longer able to work because of an accident or illness, the occupational disability insurance will pay you a monthly pension. To compare different occupational disability insurances, visit Portal Check24.
Depending on the job you do and the services you provide, it may also make sense to obtain professional liability insurance ("Berufshaftpflichtversicherung"), business liability insurance ("betriebshaftpflichtversicherung") or/and property insurance ("Sachversicherung"). The professional liability insurance covers your loss if you are responsible for another person's financial loss, e.g. by providing wrong advice. Having such insurance is particularly beneficial for lawyers, accountants, architects, engineers, doctors and interpreters. The business liability insurance protects you when your mistake causes a personal injury or damage to property. Without business liability insurance, such an error can jeopardise your entire professional life. With property insurance (for example, equipment insurance), you can cover items you need for your work, such as electronic devices against damage. If something breaks down, the insurance company pays for its replacement. On finanzchef24.de, you can compare the services and costs of different insurance providers.
Yes. However, you must observe the regulations applicable to your profession regarding the kind and number of employees. Keep in mind that you are considered self-employed only if you handle all orders on your own responsibility. If your employees have professional responsibilities, you may lose your status as self-employed, and your venture may be considered a trade ("Gewerbe"). You would then have to pay appropriate trade tax ("Gewerbesteuer").
Whether you hire your staff full-time, part-time or for a mini-job (a so-called "450 € Job") is your decision. Of course, you can also pay another self-employed professional for specific services. Please note that you must pay social security contributions for employees earning more than € 450 per month. These contributions amount to approximately 23% of the salary you pay to the employee. For a mini jobber, you do not need to make social security contributions, but you must pay a lump-sum tax of about 30% of the wage to the Mini-job Centre ("Minijobzentrale").
When you hire employees, you must note the following:
You must apply for a company number ("Betriebsnummer") for each employee at the company number service ("Betriebsnummern-Service" or BMS) of the Employment Agency. You will need this number for registering your employees at Social insurances or the Minijob Center.
You need a written employment contract. It is only with a written agreement that you can avoid misunderstandings and legal conflicts. There are specific rules that you must follow when writing a contract of employment. For more information in this regard, check the website of the Federal Ministry of Labor and Social Affairs. You can also find an employment contract template on the website of the IHK.
You need to register your employees at Social insurances or Minijob Central and make appropriate contributions- even if your employee is a family member. Not doing so is considered to be an offence. Registration must be done electronically via sv.net.
You must register your employees at the statutory accident insurance ("Unfallversicherung").
You must pay your employees at least the statutory minimum wage. If you have any questions in this regard, you can call the citizen line of the Federal Ministry of Labor and Social Affairs. The staff can be reached Monday to Thursday from 8 to 8 p.m. at 030-60280028. The service is free of charge.You must deduct income tax and, if applicable, the church tax at source every month and transfer it to the Tax Office's account. To learn more, visit fuer-gruender.de.
Where can I find counselling and support?
You can have a free initial consultation at the Institute for Liberal Professions ("Institute für Freie Berufe"). The staff there can answer all your questions regarding starting a business as a self-employed professional. You can reach them at 0911-235650. You can also call the information line of the Federal Ministry of Economics and Energy. The staff there speak only German and are available from Monday to Thursday from 8:00 to 20:00 and on Fridays from 8:00 to 12:00 at 030-340606560. You can benefit from their service free of charge.
Comprehensive business consultation with a management consultant or start-up consultant usually costs money. However, in some federal states, you can receive grants for the consulting fees. To learn more about the options available in your federal state, visit existenzgruender.de.
If you are currently unemployed and are considering becoming self-employed, you can apply for a so-called "activation and placement voucher" ("Aktivierungs- und Vermittlungsgutschein" or "AVGS" according to §45 I 1 No. 4 social security statute book III - MAT) at the Employment Agency. With an AVGS you can benefit from a free consultation on building a business start-up and, for instance, attend seminars on marketing or accounting, or seek the help from a coach in the preparation of your business plan or financial concept. Whether or not you receive an AVGS depends on your case officer at the Employment Agency. Keep in mind that you are entitled to AVGS only if you have been receiving unemployment benefit I for at least six weeks. You can apply for the AVGS either directly by telling your case officer in the Employment Agency or by sending a letter to the Employment Agency responsible for you. You can prepare the written application as an informal letter, but you have to specify your unemployment number and specify since when you are unemployed. Please note that you have to redeem the AVGS while you are still unemployed, i.e. before starting your business as self-employment.
How can I deregister as a freelancer?
If you want to give up freelance work, you need to deregister at the Tax Office- you can usually find the necessary form on their website. Please fill out the form and send it to the Tax Office. If you cannot find the form, send your Tax Office an (informal) letter/email. Keep in mind that you need to provide your tax number. The Tax Office will then send you the deregistration form.
Please note: If you deregister during the calendar year, you still have to submit your tax return for the year in question.
If you would like to work as a freelancer part-time (rather than full-time), there is no need to deregister from the Tax Office. However, if doing so make you fall under the "small business regulation" category ("Kleinunternehmerregelung"), you should inform the Tax Office so that you no longer pay the input tax ("Vorsteuer").
Please note: If you are employed and also work as a freelancer on a part-time basis, you are required to file a tax return.
If you are self-employed on paper, but only work for a single company and are not, in fact, working independently, you are categorised under "bogus self-employment" or "Scheinselbständig", which is punishable in Germany. You can learn more about the relevant regulations on the website of the DGB.
Are my qualifications recognised in Germany?
A website "Für Gründer"
Here you can find all the information you require to start your own business in Germany.
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