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Self-Employed in Germany

How to Become Self-Employed in Germany?

You can choose between:

  • Freiberufler: liberal, regulated, or intellectual professions (lawyer, doctor, journalist, artist). Exempt from Gewerbesteuer (trade tax).
  • Gewerblich: commercial or craft activities, subject to Gewerbesteuer (trade tax).

Registration is done at the Finanzamt (tax office) to obtain a Steuernummer (tax number), and sometimes at the local municipality (Gewerbeanmeldung – business registration) for commercial activities.

Freiberufler or Gewerblich: how to Choose?

Freiberufler are not required to submit annual financial statements, while Gewerblich are.

Example: graphic designer or independent consultant = Freiberufler; e-commerce or artisan = Gewerblich.

The final decision is made by the Finanzamt (tax office) based on the nature of your activity.

Do I Have to Declare My Freelance Income if I Am Employed?

Yes, all income must be declared to the Finanzamt (tax office). It is added to your other income to calculate the Einkommensteuer (income tax). Certain allowances may apply depending on your situation.

What is the Difference between Steuer-ID and Steuernummer?

  • Steuer-ID: unique personal identification number, valid for life.
  • Steuernummer: tax number assigned by the Finanzamt (tax office) for your activity, used for declarations and invoices.

Do I Have to Contribute Twice to Health Insurance if I Am Employed and Freelance?

If your freelance income exceeds your employed income, an additional contribution to the public health insurance fund may be due, up to the regulatory ceiling (Bemessungsgrundlage – assessment basis).

What Insurance Policies are Mandatory for the Self-Employed?

  • Health insurance: mandatory.
  • Public pension: optional for Freiberufler, but highly recommended via Basisrente (basic pension) or private pension.
  • Professional liability insurance: recommended to limit risks.
  • Artists/journalists: possibility of joining the Künstlersozialkasse (KSK – Artists’ Social Security Fund) to benefit from partial coverage of social contributions.

What Taxes and Contributions Do I Have to Pay?

  • Einkommensteuer (income tax): tax on profits.
  • Solidaritätszuschlag (solidarity surcharge) and potential Kirchensteuer (church tax).
  • Gewerbesteuer (trade tax): for Gewerblich, partially deductible.
  • Umsatzsteuer / VAT (value-added tax): if turnover > €22,000 in the first year or > €50,000 in the following year. Possibility of Kleinunternehmerregelung (small business regulation) to avoid charging VAT.

What Business Expenses are Deductible?

  • Home office, computer hardware, and software.
  • Business travel, business meals.
  • Training, professional liability insurance, social contributions.

How to Invoice and Manage VAT?

  • Issue compliant invoices with your Steuernummer (tax number).
  • Apply VAT if necessary, reclaim VAT on your business purchases.
  • Kleinunternehmer (small business) option if turnover < €22,000 / year.

What Financial Aid is Available for Starting a Self-Employed Activity?

  • Gründerzuschuss (start-up grant): for unemployed individuals starting their own business, monthly allowance + €300 social contribution for 6–9 months. Conditions: eligibility for unemployment benefits, credible business plan, primary self-employed activity.
  • Local subsidies, microcredits, or preferential loans via chambers of commerce.
  • Artists/journalists: access to the Künstlersozialkasse (KSK – Artists’ Social Security Fund) to reduce social contributions.

How Can I Optimize My Taxation?

  • Deduct all your business expenses.
  • Carefully choose your status (Freiberufler or Gewerblich).
  • Invest in a tax-advantaged pension (Basisrente).
  • Plan your advance payments (Vorauszahlungen) to the Finanzamt (tax office).
  • Work with a Franco-German Steuerberater (tax advisor) to optimize taxes and social contributions.

What Investments for a Self-Employed Individual?

  • Basisrente (basic pension): reduces taxable income.
  • SCPI (real estate investment trust) / rental property: supplementary income and diversification.
  • ETFs and equity funds: long-term growth, advantageous taxation after 1 year for capital gains.
  • Life insurance: to build long-term capital, especially if you wish to transfer assets or prepare for retirement.

What Tools Facilitate Self-Employed Management?

  • Accounting software: Lexoffice, Sevdesk, Debitoor.
  • Integrated invoice and VAT management.
  • Annual tax planning with a Steuerberater (tax advisor).

Why Choose Faller Finance?

We assist French self-employed individuals in Germany to:

  • Optimize taxation and legally reduce your taxes.
  • Structure your financial investments, pension, and health coverage.
  • Manage your accounting and social obligations securely and efficiently.