I’ve been working as a freelancer since January of this year. Making the switch from full-time employment wasn’t too tricky, but there’s a few things that you need to sort out. Someone over on the RUG::B mailing list was asking questions about being a freelancer in Berlin, and so I thought it would be useful to write a brief overview on some key topics.
Disclaimer: I am not an expert, or a tax adviser, and this information is purely a guide based on my personal experience. Get an accountant, and speak to an expert.
As a freelancer, there are two tax IDs that you’ll need. The first is your Steueridentifikationsnummer, which never changes, and which you will get when you register in Germany. The second is your Steuernummer, which can change. There’s a blog post from Holvi which explains the difference better than I can.
Next, there’s the Umsatzsteueridentifikationsnummer, or VAT number. You’ll have to charge German clients VAT, and include your VAT number on your invoices. For clients in the EU, you don’t have to charge VAT, but you do have to include their VAT number on your invoices. VAT is complicated, and this Medium post does a good job of outlining some of the finer points.
You’ll get the Steuernummer and the VAT number from the Finanzamt when you register as freelance – the registration form is the “Fragebogen zur steuerlichen Erfassung”.
The fun bit: sending an invoice so that people can pay you. Some specific information must be included on your invoices – this includes addresses, VAT IDs, descriptions of what you’re charging for, and much more. This could be a whole blog post in and of itself, but Kontist have a guide entitled “Invoice Basics for Freelancers” which covers all the important parts.
I use Debitoor for everything. It produces invoices, tracks expenses, and helps me to keep everything in once place. For my business bank account, I use Kontist. One big advantage is that the two can be linked together, allowing invoices to be marked as paid automatically, and making expense tracking easier.
A good accountant is a big help. Find one that can do your monthly accounting as well as your tax return. Mine also handled my registration. I’ve struggled to find someone who’ll work electronically. If you’re looking for someone tech-savvy, then Debitoor maintain a list of accountants who work with them. I can’t vouch for any of them.
If you can get a recommendation from a friend: brilliant. If not, go and meet a couple and see which one you get on with the best. (Sorry that this section isn’t more helpful.)
As a non-native German speaker, I don’t trust myself to do my own tax return, so I use an accountant. They handled my registration, and they’re happy to answer any questions I have. It’s been a huge help, and I strongly recommend it.
Tax returns are submitted annually, and you also pay tax annually. For VAT, the Finanzamt might ask you to submit returns and payments on a monthly or quarterly basis. Make sure you budget for this, and don’t spend money that you should be saving for the Finanzamt.
There are other topics you’ll need to think about as well: finding work, health insurance, expenses, pensions, visas, contracts, insurances… Those aren’t covered here, but I might dedicate a future post to them.
- Freelancers - Getting Started, Registration & Tax Necessities by Kontist, who have a lot of good blog posts on many freelance-related topics.
- Expath help new arrivals in Berlin with a range of topics. I found the paid-for video workshops on freelancing useful at the beginning.