Freelancing in Germany: register with the Finanzamt and get a tax number

Who needs it

Anyone who works for themselves in Germany, full-time or on the side, must register with the tax office. The first question is which type of self-employment you have. It decides your paperwork.

Whether an activity counts as a liberal profession is sometimes unclear, for example in IT or consulting. The Finanzamt decides. If you're unsure, describe your work precisely in the questionnaire.

Non-EU citizens

You need a residence permit that allows self-employment. A permit for employment usually does not. Freelancers can apply for a permit under § 21 AufenthG. If you are over 45, you must also show adequate retirement provision. Check the wording on your current permit and ask your immigration office (Ausländerbehörde) before you start. See residence permit.

When

• Tax office: within one month of starting.
• Gewerbeanmeldung: when you start a trade.
• Health insurance: you must be insured from day one. Tell your insurer that you are self-employed.

What you need

• Your tax ID and registered address (Anmeldung)
• An ELSTER account, the tax office's free online portal
• An estimate of your expected turnover and profit for this year and next
• Your bank details. A separate account for the business is recommended.
• For non-EU citizens: a residence permit that allows self-employment
• For a Gewerbe: your ID or passport and residence permit, for the trade office

How to do it

1. Register with the tax office. In ELSTER, fill in the Fragebogen zur steuerlichen Erfassung (tax registration questionnaire) for a sole proprietor. You'll state your activity, start date, expected income and your choice on VAT. It must be sent electronically.
2. Decide on the Kleinunternehmerregelung (small business rule). If your turnover was no more than €25,000 last year and stays at or below €100,000 this year, you can choose not to charge VAT. You then can't reclaim VAT on your purchases. If you go over €100,000 during the year, the exemption ends immediately.
3. Register a Gewerbe, only if you run a trade, at your city's trade office (Gewerbeamt). Many cities offer this online. The trade office passes your data to the tax office, but you still fill in the questionnaire.
4. Wait for your Steuernummer (tax number). It arrives by post. If you do business with EU clients, request a USt-IdNr. (VAT ID) too.
5. Set up invoicing. Each invoice needs your full name and address, the client's name and address, your tax number or VAT ID, the date, a unique sequential number, a description of the service, the service date, the net amount, the VAT rate and the VAT amount. If you use the small business rule, write a note that no VAT is charged because of the exemption.
6. File VAT returns if you charge VAT. The usual rate is 19%. Some goods and services use the reduced rate of 7%. You submit Umsatzsteuer-Voranmeldungen (VAT prepayment returns) through ELSTER by the 10th day after each month or quarter, and pay at the same time. Your Finanzamt tells you how often.

What happens afterwards

• Income tax return: freelancers must file every year, including a simple profit calculation (Einnahmenüberschussrechnung). See tax return.
• Health insurance: you pay the full contribution yourself, in public or private insurance. See health insurance.
• Pension: most freelancers are not required to pay into the state pension, but some groups are. These include self-employed teachers and trainers, carers and midwives, craftspeople, and people who mainly work for one client. Check with the Deutsche Rentenversicherung.
• Künstlersozialkasse (KSK): self-employed artists and writers (publicists) can apply to the KSK. It covers health, care and pension insurance, and you pay only about half the contributions, similar to an employee.

Common problems

Can I freelance next to my full-time job?

Usually yes, but check your employment contract. Non-EU citizens also need permission on their residence permit. You must register the side business with the Finanzamt just the same.

How long does it take to get a Steuernummer?

Often a few weeks, sometimes longer. You can start working, but invoices need a tax number or VAT ID, so register early.

Do I need an accountant?

No, it's optional. Many freelancers file themselves in ELSTER. A tax adviser helps with VAT, trade tax or complex cases.

I'm a Freiberufler. Do I still need a Gewerbeanmeldung?

No. Only trades must register at the Gewerbeamt. If the Finanzamt later decides that your work is a trade, you'll have to register then.