Working as a Freelancer in Germany from A to Z

Working as a Freelancer in Germany

Have you ever wondered how working independently functions? Well, if so, we think that freelance could be a good alternative for your future career.

Have you ever enjoyed the idea of getting your work done NOT worrying about hours you have to devote inside the workplace, or other procedures and conditions that the company wants you to be familiar with? Have you ever wondered how working independently functions? Well, if so, we think that freelance could be a good alternative for your future career.

Globally, serving for proficient individuals as the way to generate higher incomes compared to a classic contractual job there are various vacant freelance opportunities. Freelance work is associated with the increased necessity of modern societies for multi-employment, due to higher living standard and increased costs as a result, for generating bigger profits and getting more time that is personal.

Talking about the importance of freelance, the fact is that many freelancers do not realize that through their work they by some means step-in into the world of business, by becoming bosses of themselves only.

Benefits of freelancing

Whereas a contractual job tend to be safer, covering fixed employed period with an opportunity to be changed into permanent job, in a freelance job the worker has a wider independence but a freelance arrangement cannot be altered it into a permanent job.

However, freelancers benefit in many other ways. As a freelancer you can decide when and where to work; there are no specific working conditions and rules; there are no working hours to be calculated; less taxes to be paid, higher chance to work in different jobs/projects meantime; no need to attend the office or have regular meeting with the employer/buyer of the product/service; more working creativity.

Freelancing in Germany

Freelancing in Germany classifies as a self-employment job, with minor dissimilarity. As a freelancer “Freiberuflich” in Germany, you become a subject to pay fewer taxes compared to a self-employment job. Self-employment jobs significantly relate with business shortages of Germany, and so the issuance of residence and work permit under self-employment purposes greatly relates with that. Freelance jobs, due to their independent nature, do not closely relate to the job shortages. Freelance jobs in Germany mainly relate to professions such as painters, artists, performers, scholars and scientists, authors, teachers, educationalists, reporters, doctors, interpreters, dentists, commercial advisors, attorneys, and a comprehensive list of other professions.

In spite of the independence of freelance professions, the German Residence Act “Aufenthaltsgesetz” were established as an instrument for monitoring the migration process of foreigners who seek to implicate themselves into Germany’s economic activity. In respect to this, there is a strict selection process of visa application, greatly correlated to the present state of German labor market and its need for qualified workers. Accordingly, Germany issues freelance visa – a temporary residence permit to work as a freelancer that is in full accordance to German Residence Act, section 21 and paragraph 1.

Explaining the passage that a non-EU should go through for becoming an eligible freelancer in Germany the article will attempt to distinguish steps for doing so.

Step one – Freelance Visa

Eligibility for working as a freelancer in Germany depends on the country of origin of the individual. For that reason, non-EU freelance-seekers in Germany must identify rules and regulations applied for their own country in specific.

Hence, being visa-free to enter Germany, non-EU nationals of US, Japan, Israel, Australia, Canada, Korea, and New Zealand shall apply for the work permit once in Germany, with validity up to three months. Three months after, they must choose to either go back in their home country or settle down the residence permit at Foreigner’s Registration Office, a permit giving the right to reside and work as a freelancer in Germany. The residence permit at any case must indicate the reason for staying in Germany under the intention of freelancing.

Foreseen for non-EU nationals who are a subject to visa restriction for entering and working in Germany, Freelance Visa is compulsory. German Embassy or Consulate in the living country is the address where you shall apply and get this visa type. Successful freelance visa holders are only individuals for which “Bundesagentur Für Arbeit” of Federal Employment Agency of Germany agrees so, as the institution that evaluates each work visa application.

Step two – Getting your German identification number

Let us say that you as a freelance visa holder now entered Germany and found the proper accommodation, there are several things to carry on in advance, before launching your freelancing activity.

As a freelance visa holder, you shall register at “Bürgeramt” or Local Registration Office in the respective German city in seven days after being lodged. Registration consists of appointing online a registration meeting, which does not take much time. During the meeting a duly-completed application form must be submitted (entirely in German) as one with passport, visa, rental contract and proprietor’s “Vermieterbescheinigung”- a verification letter affirming the time of relocation of the aspirant in the apartment/house/room.

The identification number given upon the registration, after just few days, supports your further registration at German Tax Office for getting: Tax number, opening a German bank account, paying internet, telephone contract, electricity, and so on. It takes about four weeks or more to obtain the tax number by post mail. The number that you as a freelancer receive when registering its location is called Identification Number “Identifikationsnummer”, Tax Identification Number “Steueridentifikationsnummer” or Tax ID “Steuer-ID” but the three of them refer to the same number and are the same thing. You can find more information here.

Step three – Getting your German Tax number

Regardless that you are a freelancer, in Germany paying Income Taxes “Einkommensteuer” annually is a compulsion. Nevertheless, these taxes are pretty lower than for individuals involved in contractual or permanent jobs.  As a freelancer, you must get “Steuernummer” or Tax Number as the permit for acting an eligible freelancing activity in Germany. Registration procedure involves submitting duly completed Tax Number Registration Form, so called “Fragebogen zur Steuerlichen Erfassung” at the nearest Tax Registration Office of the city of residence.

Step four – Toward the Freelance World

From the time that you receive Tax Number from German Tax Office you are ready to think about freelancing plan, as you automatically become an eligible freelancer permitted to start your commercial activity and sending clients the invoices with the Tax Number in it.

Opening a Freelance Bank Account

Surely, as a freelancer you will need a bank account for receiving payments from its clients.  It is necessary to mention here that are different options for opening bank account. There are specific accounts for freelancers, so make sure to require information either online or directly from the information desks of local banks to know which among options is mostly suitable in your case.

Taking health Insurance

There are two categories of health insurances: public (statutory) and private. As a freelancer staying temporarily in Germany, you are highly suggested to take private health insurance as getting public one can be more demanding, as you will be treated as a subject to have irregular monthly incomes. Mawista Employee is a product especially designed for Freelancers, as well as for Employees and Expatriates in Germany.

Catching clientele

There are plenty web-based platforms for you to bump into freelance jobs online, but just registering and waiting for someone to hire you is not the case. You will absolutely need to influence your clients launching there a very expressive portfolio of your past work, with a clearly written bio or curriculum vitae and presenting surplus skills grown thru specific trainings. The idea behind it is to present the best of you in front of your potential clients, a touch that will differentiate you from other freelancers, fostering your chances to be hired.

Different virtual freelance jobs are available starting from web design, graphic design, writing, photography, research, data analysis, web programming, seo, online marketing, consulting, IT and many others. Try to match a job that fits your skills, experience, and boost your readiness to create fruitful relations with clients. Consider finding more than one job, as having just a sole client over a year might declassify you as a freelancer.

If you are not a computer-friendly individual who aspires to have an offline freelance job then reaching preferred job vacancies can be done over usual job-hunting channels such as newspapers, career online portals, Facebook and different specialized job-posting groups. Search if there are specific Facebook, Google, Yahoo or Twitter groups, where you might commerce your availability to work on specific freelance jobs (i.e. writing, teaching, trainings, designing, photographing). Consider also searching for local freelance groups and attend their meetings to catch up interesting jobs.

Paying Taxes and other fees

The next step forward for you when starting the freelance job is paying taxes and other fees as of the commercial operations you make.

Income taxes

In difference to contractual jobs where the employer pays tax incomes on behalf of the employee, as a freelancer you do not have an employer so you have to pay them on your own and payable income taxes must include one calendric year of commerce activity. Your Incomes declaration as a freelancer must be done in the form of profit/loss assessment, which is so much simpler compared to declaring the annual financial statements.

To declare incomes and pay income taxes in Germany there is an electronic system called “ELektronische STeuerERklärung – ELSTER” or electronic tax declaration. There is software that helps on this regard where you will need to fill in your tax form “Mantelbogen” including your name, address and bank details, as well as other tax forms “Anlagen” which differs based on the level of your income. As a freelancer, you must fill-in the “Anlagen S” while health Insurance payments must be paid through “Anlage Vorsorgeaufwand”, and so on.

In respect to value added tax (VAT) if you make annual incomes up to 17,500 € you are not called to charge VAT to your clients but you can do so, while if you exceed making more incomes than that you are obliged to do so.

You might find some explanations about how ELSTER functions as presented here.

Social Security Fee

If your monthly net revenues exceed 450 €, as a freelancer you also need to pay for the Social Security Pension Scheme. For 2015, 18.7% is the rate applied over the monthly income, to be paid entirely by you, as you do not have any contractual employer. If being a junior freelancer, in your three first years of freelance activity you can require 50% reduction of Social Security Pension rate. In addition, if you leave Germany inside 60 months of freelance work you can require pulling out the generated pension trust.

Become a successful freelance story

Being inside the freelance world implicates the need for possession of the knowledge, skills as well as enjoyment perfected by readiness to self-manage diverse aspects of your own job. Being a slow-beginner and waiting for results to come perhaps will never grow any substantial income. As a freelancer, you must own a complex set of skills assuring your achievement, consistency and sustainability. These skills are research, accountability, communication, interactivity, marketability, self-discipline, negotiation, contact making, problem solving, project management, time management, risk estimation, writing, proofreading and so on.

Ergo, launching a good-freelance career you must plan ahead with the preparation of business plan. Not exceeding deadlines by preparing and following a strict working hours-timeframe for each project, will surely grab the attention of your clients and readiness to cooperate in longer terms. Launching a blog or personal website where you can be more close to the audience and using a logo –will distinguish you from the others and will straightforward your uniqueness. Being creative and flexible and not sticking to your idea by using also clients’ advices will surely help making your clients feel safer with your work. Expanding your contacts, using LinkedIn, Facebook and other virtual social and professional networks will increase your chances to get your freelance work promoted.

Moreover, the last advice to you: Do not ever underestimate working opportunities, but do not sell your work cheap, as this sometimes can be understood as a lack of quality.

The best of luck!