Buckle up. Becoming a freelancer or self-employed in Germany is not for the faint of heart. But if you’re here reading this article, odds are you’re determined to make it work. And make it work you shall. Starting by reading this super helpful blog post.

Step 1 – Prepare yourself

Remember there is a light at the end of the tunnel. Once you deal with the nitty gritty, it’s smooth-ish sailing from there. Freelancing in Germany has many advantages and can be a fruitful journey.

Step 2 – Prepare yourself some more (specifically with a tax number)

Tap yourself on the shoulder for completing step 1. Now prepare yourself to obtain your freelance tax number, a Steuernummer. (This is different from your personal tax ID, the Steueridentifikationsnummer. That number you get once you register your address for the first time.) To obtain your freelance Tax number, you must first fill out a form, the Fragebogen zur steuerlichen Erfassung. You can either fill out the form and send it to your local Tax office, or do so virtually using Elster. When filling out this form, you’ll have to define your profession and what services you’ll be offering. Not all of these are considered to be a freelance (Freiberufler) profession. If you plan for example to run a business, that would be considered a trade (Gewerbe). These are the 3 categories when it comes to self-employment.

• Freiberufler – liberal professional, or freelancer 
• Gewerbetreibender/Einzelunternehmen – self-employed/ sole proprietorship
• Kleingewerbe – a small business

Once you get your brand new Steuernummer make sure to include it on all your invoices.

Step 3 – German banking time

Now, you don’t need a German bank account, but it will make life easier. It can avoid paying international banking fees, make it easier for clients to make payments, and best of all: keep all your business transactions in one place. One popular option is Kontist, it’s specifically designed for businesses and freelancers. Other options include N26 and Qonto. Everything is conveniently done online and they offer support in English. These banks offer various pricing plans, from free accounts to premium ones. 

Step 4 – Health insurance

The fun continues! This time with getting your very own health insurance. It’s mandatory for residents in Germany to have health insurance coverage. As a freelancer coming to Germany, you have two main options for health insurance: state insurance (GKV) and private insurance (PKV). State insurance typically charges freelancers around 15% of their income for coverage, with providers like Techniker Krankenkass (known as TK) offering English support.

It’s essential to note that as a freelancer, joining state insurance is not straightforward. You can join state insurance if you’re an artist or journalist and part of the artists’ social fund (Künstler Sozialkasse), or if you’re coming from another EU country where you were already on state insurance (in which case you may be able to transfer to the German state insurance). If you initially come to Germany and secure a job with state insurance coverage, you can continue to be covered by state insurance even if you later transition to freelancing.

Private insurance (PKV) offers an alternative to state insurance and can be a better option for freelancers earning above a certain threshold, usually around €30,000 per year. PKV premiums are calculated based on factors like age and coverage options, with the potential for lower monthly payments, especially for younger, healthier individuals.

Before deciding on private insurance solely for financial reasons, it’s important to consider the overall coverage, potential risks, and long-term affordability. While private insurance may offer lower premiums initially, there can be caveats, such as limited coverage for pre-existing conditions or each family member needing to pay their own premium. Navigating the private insurance system involves more direct interaction with healthcare providers and managing reimbursements, unlike with state insurance.

The ins and outs of German health insurance might seem daunting but that’s why we’re here. You can book a free consultation and we’ll walk you through it.

Step 5 – buy a big binder

Fun fact: fax machines are not a thing of the past. Not in Germany at least. German bureaucracy dictates for lots of letters and old school communication. It’s slowly digitalizing and on its way to employing more modern means. In the meantime, enter: the binder. Or whatever you use to store your records. German law reserves the right to do an audit and request documentation of your last 10 years of work. This only happens in very rare cases, but keeping track of all your invoices and more importantly, every single business expense, will go a long way come tax season. That receipt for lunch you had with a client? To the binder. The train ticket to Hamburg where you had to buy business supply? To the binder. Your phone bill? To the binder! Since your binder is so big, you can also file the dozens of letters you’ll get from the tax office in there. Naturally, a big folder on your computer to keep track of all your expenses is also an option. 

Step 6 – Taxes

If you’ve done step 5, you know, the one with keeping track of absolutely everything, you’ll be happy to know you can really save a lot on taxes by keeping track of expenses. There are 3 main tax brackets:

• Yearly income is under €11,604: you won’t need to pay taxes
• Yearly income is between €11,604 and €22,000: you’ll need to pay income tax (Einkommensteuer)
• Yearly income is above €22,000: you’ll need to pay sales tax (Umsatzsteuer)

If you’re earning above €22,000 a year, make sure your invoices include VAT (19%). 

Now to declare your taxes. You can do this yourself online, or you can hire a tax accountant. In any case, you have till July 31st to file your tax return. You can use Elster to do your taxes online, a free tool provided by the German tax administration. 

Step 7 – Consider a pension plan

As a freelancer, you’re responsible for thinking about your retirement. You can choose a pension plan to invest in, or put some money aside — or whatever works for you. There’s also the artists’ social fund, Künstler Sozialkasse, which “ensures that self-employed artists and journalists enjoy similar protection in statutory social insurance as employees. It is not a service provider itself, but rather coordinates the payment of contributions for its insured persons for health insurance of their own choice.”

Another option for freelancers is the Rürup pension, also known as the basis pension. The Rürup pension provides benefits to self-employed individuals, freelancers, and high-income earners seeking tax-efficient retirement savings solutions.

Thanks for your time, Ronja. We are so happy to have you working with us. And thank you for all you do at Archer Relocation for our lovely clients.

Step 8 – That’s right, a bonus step

Enjoy the fruits of your labor. You can set your own hours, choose which clients to work with, and make the most of your journey. You can especially be proud of yourself for navigating all these steps. There are many freelancing opportunities in Germany, and once you build your client base you’ll find word of mouth goes a long way. Until then you can start looking for work here: Linkedin, Indeed, Upwork, English Jobs Germany, or Creative city Berlin. 

Navigating the complexities of moving to Germany, including the language, culture, and bureaucracy, can be daunting. Fortunately, there are resources available to help ease the transition. Consider using the “Move to Germany” app, designed to make your move as smooth as possible. With free information, guides, forms, and manuals for DIY tasks, as well as tutorials, community support, coaching calls, and more, Archer Relocation provides an international service standard to aid in planning, arrangements, and settling into your new German home. It’s available on the App store and Play store.

Too many steps? Fear not! Below your specific questions answered. 

Everything you need to know about becoming a freelancer in Germany 

All your questions answered in one convenient place.

How can I become a freelancer in Germany?

To become a freelancer in Germany, you’ll first need to ensure that you’re legally eligible to work in the country. Depending on your residency status/passport,  you may need to take specific steps to obtain the necessary permits or approvals to work legally in Germany. This could involve securing a residence permit that allows self-employment, applying for a freelance permit, or meeting other legal requirements as mandated by German immigration laws. You’ll also need to obtain a freelance tax number (Steuernummer), set up a German bank account to facilitate transactions, arrange for health insurance, maintain detailed records, manage taxes, and consider a pension plan.

How do I obtain a tax number for freelancing in Germany?

You can obtain your freelance tax number (Steuernummer) by filling out the “Fragebogen zur steuerlichen Erfassung” form and submitting it to your local Tax office or using Elster online.

Do I need a German bank account to freelance in Germany?

While not mandatory, having a German bank account can simplify transactions, avoid international fees, and streamline financial management.

What is the health insurance requirement for freelancers in Germany?

Health insurance is mandatory for residents in Germany, with options including both state insurance (GKV) and private insurance (PKV). Freelancers typically pay around 15% of their income for health insurance coverage under the state insurance. Alternatively, freelancers earning above a certain threshold may opt for private insurance, which can offer different coverage options and premiums. To learn more about your options, you can book a free consultation.  

How can I manage my taxes as a freelancer in Germany?

By keeping track of expenses and income, freelancers can save on taxes. Depending on income levels, taxes may include income tax (Einkommensteuer) or sales tax (Umsatzsteuer), and taxes can be filed online using tools like Elster.

What steps can I take to prepare for taxes as a freelancer in Germany?

Keeping meticulous records of business expenses and income is crucial for tax preparation. Freelancers should be aware of the three main tax brackets and ensure invoices reflect VAT if earning above €22,000 per year.

Should freelancers in Germany consider a pension plan?

Yes, freelancers are responsible for planning their retirement. Options include investing in a pension plan or setting aside funds. The Künstler Sozialkasse is available to artists and journalists for social insurance contributions. If you plan on applying for a permanent residence permit, having an adequate pension plan is essential as you’ll have to prove you have enough funds to retire.

Where can freelancers find work opportunities in Germany?

Freelancers can explore job opportunities on platforms like LinkedIn, Indeed, Upwork, English Jobs Germany, and Creative City Berlin, and leverage word-of-mouth referrals as they build their client base. Bigger cities have many networking events which are great for finding work. Similarly working in a coworking space can also offer access to networking.

Looking to make your move to Germany smoother?

Book an Online Consultation for a 45-Minute Relocation Consultation. Have your questions ready and go for it! We can advise on which neighborhoods would be best suited to you and your family, how many rooms you need, how many square meters you can get within your budget, which paperwork you need to provide, and how to go about your home search. Other topics might be, how does the school system work? How do we find a kindergarten place? You might want to find out more about how to register your address, banks, the insurance system, how to apply for a residence permit, you name it, just ask away.

Archer Relocation has been providing relocation services to families, individuals and companies in Berlin since early 2015.  Managing Director, Emily Archer, founded the company desiring to use her first-hand experience as an expat to make the relocation process as smooth as possible for others moving to Berlin.  Read other useful information about moving to and living in Berlin, such as ‘How to Find a Berlin Apartment’, on our Berlin Blog.  
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