Fancy freelancing in Germany? Then you should know there are different types of freelancers in Germany. That is, your self-employed activity can either be freiberuflich and gewerblich and, therefore, you’re either a Freiberufler (freelancers that have a liberal profession) or a Gewerbetreibender (freelancers that don’t have a liberal but rather a commercial profession or trade) respectively. This guide is for those who want to freelance in a liberal profession in Germany, and, thus, become a Freiberufler.
- What is a Freiberufler?
- How to register as a Freiberufler
- Can I be a Freiberufler part-time?
- Pros and cons
- Want to know more?
Generally speaking, a Freiberufler is someone whose activity other has a Katalogberuf (catalogue profession) or katalogähnlicher Beruf (catalogue-like profession) otherwise known as a liberal profession. Let’s unpack what these categorisations cover:
- Katalogberuf involves artistic, teaching, educational or writing activities.
- Katalogähnlicher Beruf is a professional who works in the consulting and appraisal, or healing and medicine fields. This also includes scientific and technical professions.
In Germany, someone who practises one of these liberal professions is a Freiberufler. Conversely, a Gewerbetreibender is a trader (commercial business person) who doesn’t practice a freiberuflich profession but has a gewerblich profession. In other words, a Freiberufler practices a liberal profession and all other self-employed people fall under the Gewerbetreibender category.
Gewerblich vs. freiberuflich activity
Freiberuflich activity has the following features:
- Not a mass product or service, but specialised
- Payment is in the form of fees
- Often an academic degree is required
- Usually has a special relationship of trust with the client
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Classification can be tricky
Although the Einkommensteuergesetz (income tax act) regulates which professions belong to the freie Berufe (liberal professions), there are always individual cases where things aren’t black and white. For example, the profession of photography shows that the boundaries are often blurred. On the one hand, photographers who offer professional services and take photographs commercially (e.g. for passport photos) must register a Gewerbe (trade) because this is classified as gewerblich activity. On the other hand, artistic photography or photojournalism is considered to be freiberuflich activity.
To start practising as a Freiberufler officially, you need to get the right registrations. The registration procedure depends on whether you want to carry out your activity alone or together with other Freiberufler. Usually a Gewerbeanmeldung (trade registration) is not needed but bear in mind there are some exceptions to this rule. The registration procedure is explained step by step below.
The tax office is the first place to register your Freiberufler business. You can do this by sending a freeform letter to the Finanzamt (tax office) notifying them that you’ve started your freiberuflich activities. You will then receive your tax number from the tax office and the tax registration questionnaire, to be completed. The questionnaire contains information about you and your activity. You also have to give an estimate of how much you will earn. This is used to determine your tax rate.
When filling out the questionnaire, you also have the option of opting for the Kleinunternehmerregelung. This allows you to save VAT up to a certain income limit.
Proof of qualifications
Similar to the Handwerksberufe (craft profession which is a skilled trade), Freiberufler are also obligated to show proof of professional qualifications, as many of their professions require training and a high level of competence to be practised properly.
This is particularly important for professions that have an industry Kammer – professional associations that represent the interests of their members and monitor compliance with professional obligations. For example, the Landesärztekammer is a Kammer – an association that represents the interests of medical professionals in Germany and all medical doctors in Germany have to be a member of it.
You should now check whether or not your liberal profession is subject to the obligation to register with one because this is how you find out the right place to send proof of your qualifications.
The liberal professions that must register with a professional association include:
- Ärzte (medical doctors)
- Apotheker (pharmacists)
- Architekten (architects)
- Beratende Ingenieure (consulting engineers)
- Notare (notaries)
- Patentanwälte (patent attorneys)
- Psychotherapeuten (psychotherapists)
- Rechtsanwälte (lawyers/solicitors)
- Steuerberater (tax advisers)
- Tierärzte (veterinarians)
- Wirtschaftsprüfer (chartered accountants)
- Zahnärzte (dentists)
Freelancers whose activities are not regulated by a Kammer or professional association have to provide proof of their qualifications to official bodies, such as the tax authorities.
What kind of business structures can Freiberufler have?
As a Freiberufler, you have the option of carrying out your activity alone or joining forces with other Freiberufler to form a separate legal form (Rechtsformen) – that is, a discreet business structure. Possible legal forms for Freiberufler are the Partnerschaftsgesellschaft (PartG), in which you are jointly entered in the partnership register, the Freiberufler-GbR (civil law partnership) or also a Kapitalgesellschaft (corporations/incorporated companies such as GmbH, UG, etc.). When setting up a limited liability company, however, you have to run the gauntlet of the company formation process in Germany, such as entry into the Handelsregister (commercial register).
Each legal form has different advantages and disadvantages for Freiberufler. For example, with a corporation, most of the advantages you have as a Freiberufler are lost. The choice of the legal form should therefore be well considered so that you can benefit from the greatest possible advantages. Moreover, unless you set up a corporation (GmbH, UG, etc.) for your Freiberufler business your liability is always unlimited. That’s why all Freiberufler that don’t have a corporation should therefore invest in liability insurance.
Health insurance for the self-employed
Even if you are self-employed, it is still compulsory to have health insurance. If you work as an artist or journalist, you have to be a member of the Künstlersozialkasse which will give you the coverage you need. For everyone else, it’s up to them to organise things. You can choose between private and statutory health insurance. There is one important caveat: if you have private health insurance as a Freiberufler, you can only switch back to statutory health insurance if you give up your freiberuflich activity and get a job.
Künstlersozialkasse (artists’ social insurance fund)
The Künstlersozialkasse (KSK) coordinates the payment of its members’ contributions to health, pension and long-term care insurance and provides freelance artists and publicists with access to statutory social insurance. Membership in the KSK is compulsory for artists and publicists. Freiberufler who are members of the KSK only pay contributions equal to an employee’s share of 50%. Members of the KSK can decide for themselves which insurance company and which fund they want to be insured with. Freedom of choice between statutory and private health insurance is also given here.
There are various pension schemes (Versorgungswerk) in Germany that provide retirement benefits for the Freiberufler. Here are the key points when it comes to Freiberufler and retirement funds:
- Professional association (Kammer) members are required to use their association’s pension scheme.
- Some specific professions that have special statutory protections, including teachers, pilots, midwives, and coastal sailors, also have mandatory pension scheme membership.
- All other professionals who don’t opt for a private scheme can voluntarily join a pension scheme.
Professional liability insurance
Professional liability insurance for Freiberufler comes under the purview of Berufsgenossenschaften (professional associations also known as employer’s liability insurance associations) in Germany. These are the institutions responsible for statutory accident/liability insurance. If you are self-employed, you’ll need to register with the relevant Berufsgenossenschaft. Whether or not you are also obliged to be insured there depends on the association. You can find out which Berufsgenossenschaft is responsible for you on the DGUV website.
Business bank accounts
Although it is not compulsory to have a Geschäftskonto (business account) in Germany, Freiberufler should keep their personal and business finances separate. The best way to do this is with a business account. Depending on the bank, there are different offers and models tailored to the needs of Freiberufler.
Having a side-gig Freiberufler profession is possible. Indeed, starting as a part-time Freiberufler is a good way to see if it’s right for you. But you need to be careful.
Firstly, you might only be allowed to work a certain number of hours per week, depending on your situation. For example, if you are on unemployment benefits and want to try out a freelance side job, you can’t work more than 15 hours per week otherwise the Agentur für Arbeit (employment agency) will cut your payments.
Secondly, you need to make sure that at least half of your income comes from a job that has social insurance contributions.
To register, you just need to send a freeform letter to the tax office and fill out a tax registration form. Luckily, as a part-time Freiberufler, you don’t have to do social security declarations.
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