Working as a Freelancer in Germany from A to Z | Applying for a Freelance Visa
Freelancing is a popular career choice in Germany. With the rise of digital and internet technologies, freelancers have become an indispensable part of the economy. However, there are many things that you need to know before starting your own business as a freelancer in Germany.
This article will help you understand each aspect of working as a freelancer and make sure that everything goes smoothly when it comes time for your visa application process or health insurance renewal.
About Working as a Freelancer in Germany
If you're unsure if freelancing is for you, we've got some answers. Freelancing is a job that involves working as an independent contractor or consultant to earn money on your terms. As a freelancer, you'll be free to decide how much time and effort to put into each project. This can be great for those who want flexibility in their career path but also want the security of knowing they're earning a steady paycheck every month.
The first step toward becoming a freelance writer is deciding what areas of knowledge interest you most and learning how to market yourself effectively online—we'll teach both here!
Definition of Freelancing in Germany
Freelancing means working for a company or an individual on a contract basis. It is not the same as being unemployed, but it's also not self-employment. The word freelancer can be used to describe anyone who works as an independent contractor, and that includes those who work for themselves and those who have their own company but still have employees under them.
Freelancers are usually individuals who choose to make money by taking on freelance assignments instead of seeking full-time employment with one employer; however, some freelancers may also be considered "employed" because they're paid through a company's payroll system (like employees).
List of Liberal Professions that Qualify as Freelancing Work
According to the German Income Tax Act and the Partnership Companies Act, the following liberal professions are categorized as freelancing work, under the sole conditions that the freelancer is acting on his/her expertise and acting independently:
- teacher and educators
- patent attorneys
- trade chemists
- tax advisers
- advisory bodies and business economists
- certified accountants
- tax representatives
- image reporters
Other similar jobs may also qualify as freelancing work if they meet the abovementioned condition. However, even a person that exercises one of the liberal professions but or uses the help of technically trained workers, that work is no longer recognized as freelancing but rather as self-employment.
Applying for a freelance visa
To apply for a freelance visa, you must have a contract with a German company for at least 1 year and be able to prove that you can support yourself financially by working as an independent contractor. You also need to have health insurance coverage.
To apply for your visa in Germany:
- Visit the German embassy or consulate nearest you (usually located in your home country). You'll need to submit: * proof of employment from the employer; * proof of accommodation from the landlord; * proof of personal net worth; and * passport information
Germany Visa for Freelancers
- You need to be registered with a local chamber of commerce.
- You need to have a German bank account.
- You need to have a German health insurance and/or pension plan, if applicable.
- If you are self-employed or work for yourself, you must also obtain a German tax number (Steuer-Nr.).
In Germany, what is the distinction between freelancers and tradespeople/self-employed?
Those wishing to work as freelancers in Germany should ensure that their work does not fall under the category of self-employed/trade.' There is sometimes a fine line between self-employment and freelancing. While both indicate that you are not an employee but rather the sole decision-maker for the services you provide, there are some distinctions between them.
The main distinction is that, unlike freelancers, self-employed people conduct business under a brand name. Furthermore, some professions may qualify as freelancing even if not listed as liberal.
Regarding mandatory legal procedures, the difference is that while freelancers are exempt from registering with the German Business Registration Authority (Gewerbeamt), self-employed individuals are required to do so. Finally, as explained further below in this article, freelancers must pay fewer taxes than self-employed/tradespeople.
Registering the New Residence at the Foreigner's Office
Every freelancer, regardless of nationality (including EU passport holders), must register their home address at the German Foreigner's Office nearest their new location within the first 90 days of arrival.
The following documents are required: a rental contract signed by the freelancer and their landlord, a fully completed registration form available at the office, and the freelancer's passport or National ID.
Obtaining Medical Insurance in Germany
Everyone moving to Germany, including freelancers, must have health insurance. Before traveling to Germany, freelancers can purchase health insurance that will cover them for their stay. Freelancers can also come to Germany with travel health insurance that covers them for the first few days or weeks and then purchase health insurance from a German provider before it expires.
If you want great coverage at a low cost, your health insurance is here! Those who have insurance from a provider in their home country that also covers Germany are not required to switch; they may do so if they wish. You must get health insurance before working as a freelancer in Germany. You can either get it through your employer or private health insurance companies.
You need to apply for a certificate of health insurance (Abrechnung über die Berufsunfähigkeit) from your employer before starting work. Otherwise, they will not be able to provide any kind of coverage for you. If you don't have one already and want one, contact them and ask them if they offer this service; otherwise, contact an insurer directly and tell them what type of coverage(s) are necessary for freelancers based on their specific needs.
Opening a Bank Account as a Freelancer
As a freelancer, you will need to open a bank account. This is necessary for you to receive payments from clients and receive other kinds of income.
To open an account as a freelancer, you'll have to show proof of income (e.g., invoices), proof of address (e.g., utility bills) and identity documents (e.g., passport). If possible, it's best if this can be done before starting work with your client so that they can pay directly into their own local bank account instead of yours—this will protect both parties from fraud or chargebacks on their part!
In addition to proving residency through documents such as utility bills, health insurance cards and certificates confirming employment status are also required when opening up shop abroad; otherwise there could be issues down the line when trying to get paid or make tax payments at home due diligence requirements imposed by governments worldwide."
Paying Taxes as a Freelancer
While freelancers are exempt from paying Trade Taxes in Germany, they are still subject to the Income Tax and the Value Added Tax, as explained below:
- Income Tax: Germany has a base rate of 14% of the income tax, which can go up to 42%. A solidarity surcharge of 5.5% is also included in this tax. Freelancers will need to pay this tax on a quarterly basis. Those making less than €9,169 are exempt from the income tax.
- Value Added Tax: Freelancers need to prepare VAT declarations periodically, declaring their revenue. According to the service the freelancer usually pays 19% but depending on the service he or she offers, the tax could be as low as 7%. The VAT can be paid online through the official portal of Germany the Elster Portal.
Professional tax consultants at Sorted can assist you with preparing all your tax reports, creating invoices and submitting them directly to the tax office.
Why Open a Bank Account With Kontist?
If you are a freelancer, you should consider opening a bank account with Kontist because:
- The bank account offered by Kontist (in partnership with Solarisbank in Berlin) is designed specifically for freelancers.
- For each transaction, Kontist will calculate your income and sales tax and set it aside automatically.
- For each transaction, you can upload the receipts and add notes.
- You have a free account option with an integrated invoice tool: two monthly invoices free of charge. Many of the tax calculation benefits are not available in the free option.
- You will receive a VISA Business Debit Card and a German IBAN. With the free account, you only receive a virtual debit card to make online payments. With the Premium and Dou packages, you also receive a physical debit card.
- With the Kontist app, you can also manage your invoices and expenses, pay your taxes and get personalized tax consultation and customer support.
It is important to remember that working as a freelancer in Germany may still be illegal. Therefore, it is advisable to consult with an immigration attorney before starting work on your own. They can help you navigate the German legal system and make sure that you are not breaking any rules or laws by doing so.