What is a Freiberufler? Everything you need to know about the liberal professions in Germany

What does it mean to be self-employed in Germany?

Freiberufler are “selbständiger Beruf“, which means “self-employed profession”. Self-employed professions have three main sub-groups in Germany:

• Freiberufler (Liberal professionals)
• Kleingewerbetreibende Einzelunternehmer (Small business/commercial sole traders)
• Großgewerbetreibende Einzelunternehmer (Large business/commercial sole traders)

(As you can see, there is no clean way to translate these terms into English, but hopefully get the gist of what the different terms mean.)

The Gewerbetreibende Einzelunternehmer (“commercial” sole traders) are all those self-employed individuals who don’t meet the criteria of a Freiberufler (liberal professions). In other words, your business is either a “gewerblich” (commercial trade) or “freiberuflich” (liberal professional) business.

Logically, if you have a “gewerblich” type business (e.g., you’re a Gewerbetreibende), you have to do a “Gewerbeanmeldung” (register a trade) with the “Gewerbeamt” (trade office.)

The difference between Kleingewerbe (small businesses) and Großgewerbe (large businesses) depends on profit and annual turnover. Kleingewerbe can’t make more than €30,000 in profit or over €300,000 in revenue per year (depending on the industry).

Many self-employed people work as freelancers – a word sometimes incorrectly used as a synonym with Freiberufler.

Liability (Haftung)

Liability is the same for Freiberufler and Gewerbetreibender. Both take on unlimited liability with their entire private assets.

Accounting (Buchhaltung)

Gewerbetreibende Einzelunternehmer – that is, freelancers with a commercial trade, i.e. sole traders – legally have to keep double-entry accounts. For Kleingewerbetreibender (small traders) and Freiberufler, on the other hand, doing an EÜR (revenue-surplus accounting) is enough.

Taxes (Steuer)

All Gewerbetreibende have to pay Gewerbesteuer (trade tax), Einkommenssteuer (income tax), Solidaritätszuschlag (solidarity surcharge), Lohnsteuer (wage tax) and Umsatzsteuer (VAT).

As a Freiberufler, you can structure your business with any legal form you want (freelancer, UG etc.). And you have certain tax exemptions because of your special status.

What is a Freiberufler? And who can become one?

Not everyone can call themselves a Freiberufler. This status is generally granted if your occupation falls into one or more of the following categories:

• Science
• Education
• Art and culture
• Writing

If you are unclear about the classification of your occupation, ask the Finanzamt (tax office) if what you do counts as “freiberufliche Tätigkeit” (which roughly translates to “liberal professional activity”).

The liberal professions are subdivided into Katalogberufe (“catalogue professions”) and katalogähnliche Beruf (“catalogue-like professions”). The distinction is relevant for the recognition of the status as a Freiberufler.

Katalogberufe: Examples

• Architects
• Doctors as well as dentists, psychologists, midwives
• Lawyers, tax consultants
• Journalists, interpreters, translators, writers
• Teachers, educators

Katalogähnliche Berufe: Examples

• Self-employed photographers, designers
• Management consultants
• Copywriters
• Actors

Types of businesses you can start as Freiberufler include:

• Engineering consultancy
• Pharmacy
• Alternative health practitioner (naturopath etc.) clinic

Freiberufler vs. freelancers (freie Mitarbeiter)

“Freiberuflich” doesn’t necessarily mean “freelance”.

“Freelancing” points to a way of working. Freelancers operate independently and invoice for their work as a business does. They may work for a company regularly, but there is no normal employment relationship. For example, freelancers don’t get any benefits such as holidays, protection against dismissal or paid sick leave. Freiberufler are only freelancers if they run their businesses in this way.

What are the legal and tax requirements for Freiberufler?

The first thing you need to do as a Freiberufler is to register with the tax office. They don’t have to worry about doing a Gewerbeanmeldung (trade registration) because being “freiberuflich” is a status and not a business legal form.

You can join forces with several Freiberufler as a partnership, among other things. To make this official, register with the Partnerschaftsregister (partnership register).

As a Freiberufler, you reap various tax advantages. As a rule, you’re exempt from Gewerbesteuer (trade tax) and double-entry bookkeeping, which makes your accounting so much easier to handle. In so far as you only have to do an EÜR (income statement), and for less than € 22,000 per year, a regular income tax return (Einkommensteuererklärung) is enough.

Most Freiberufler are also exempt from Rentenversicherung (“pension insurance”) contributions or can make voluntary contributions to the pension insurance scheme.

For some Freiberufler, however, there is a Standeskammer (professional association). As a result, membership in a pension scheme is compulsory and thus contributions. Such professions obligated to join a chamber are, for example:

• Doctors
• Notaries, lawyers
• Tax consultants
• Self-employed architects

For artists and publicists, the Künstlersozialkasse (artists’ social insurance fund) is responsible for pension insurance. It also partially covers health and long-term care insurance.

If your liberal profession does not fall within the scope of the Künstlersozialkasse, you must choose between statutory and private health insurance.

Accounting for Freiberufler

As a Freiberufler, you’re not obliged to do bookkeeping. A simple EÜR (income-surplus account) will satisfy the tax office at the end of the financial year.

Thus, there’s no need to do double-entry bookkeeping (doppelte Buchführung) or a balance sheet (Bilanz) – only the difference between business income and business expenses has to be calculated in the EÜR.

EÜR (income-surplus account)

If you have less than €22,000 in business income (including VAT) per year, a Steuererklärung (tax return) is all you need. Your income statement compares the income and expenses of your activity and calculates the profit or loss of the business year. To do this you must list all receipts as what matter is when an invoice is paid and not when it’s created.

Example

Income (Erträge)

• Business income, e.g. a self-employed interpreter writes an invoice for €1,000 for services rendered.
• VAT-exempt operating income, e.g. a gift

Expenses (Aufwendungen)

• Purchases of goods (net)
• Services received (net)
• Salaries, wages for employees
• Operating expenses (entertainment, gifts, etc.)

Fixed costs (Fixe Kosten)

• Rent for business/office premises
• Motor vehicles
• Depreciation

Advantages and disadvantages of being a Freiberufler

Pros

• No trade tax
• No entry in the commercial register
• Greater autonomy
• No double-entry bookkeeping

Cons

• No limited liability, liability with private assets (think about getting property damage liability insurance)
• Advertising ban for some professions
• Employing staff often only possible in a partnership structure
• Have to take out health insurance yourself

Want to know more?

Our Einzeluntern (sole proprietorship) series: 

1. What is an Einzelunternehmen? 
2. What is a Freelancer?
3. What is a Kleingewerbe?
5. The pros and cons of the Einzelunternehmen
6. How to set up an Einzelunternehmen

More on being a Freiberufler:

How to become a Freiberufler in Germany
The GbR for Freiberufler

The Master List of all Company Formation articles can be found here.