How to move to Germany and become a freelancer

A step by step guide on opening your business or becoming a freelancer in Germany.

Below is a rough outline of what you need to do to become a freelancer in Germany. This guide was compiled from my own experience as a Canadian freelancing in Germany.

Understand the German system

Language

You can freelance in Germany even if you don't speak German, but it's more difficult.

Most of the paperwork is in German. Most of the information online is in German. Most of the letters you receive will be in German. You must deal with Bürgeramt, Ausländerbehörde and Finanzamt employees who only speak German. Technical support will be in German. If you don't speak German, life can be very stressful.

If you have a German freelance visa, you must have some clients in Germany1. It can be hard to find clients in Germany if you don't speak German.

Related guides: List of English-speaking relocation consultants, lawyers, tax advisors and doctors in Germany.

Taxes

As a freelancer, you will need to pay taxes:

  • Income tax
    The income tax rate depends on your income. The more you make, the higher the tax rate. The maximum rate is 42%. You can use this calculator to calculate your income tax.
  • Trade tax (Gewerbesteuer)
    If you are classified as a Gewerbetreibende, and you make more than 24 500€ per year, you must pay the trade tax. Freiberufler do not have to pay the trade tax. To know the difference between a Gewerbetreibende and a Freiberufler, see this guide.
  • Value added tax (Mehrwertsteuer)
    Most freelancers must charge a 19% tax for their products and services. You don't keep that money; you must give it back to the Finanzamt. If you are a Kleinunternehmer, you are not forced to charge VAT.

Business registration

When you start a business in Germany, you need to do a few things:

  • Register with the Finanzamt
    You register your business at the Finanzamt by filling the Fragebogen zur steuerlichen Erfassung. This is how you receive your Steuernummer and your VAT number.
  • Register with the Gewerbeamt
    If you are classified as a Gewerbetreibende, you must get a trade licence (Gewerbeschein). To know the difference between a Gewerbetreibende and a Freiberufler, see this guide.
  • Inform your health insurer
    When you become self-employed, you must tell your health insurance company. They will take health insurance contributions from your bank account every month.

Related guide: How to start a business in Germany

Health insurance

In Germany, you must have health insurance (Krankenversicherung). It's mandatory.

As an employee, your employer pays 50% of your health insurance, and you pay the other 50%. As a freelancer, you pay 100% of your health insurance yourself. This means your health insurance will be twice as expensive.

You can choose between private and public health insurance. The cost of public health insurance is based on your income. The cost of private health insurance is based on your health condition. If you never had German health insurance before, you might be forced to get private health insurance. Public health insurers often refuse to cover freelancers with no history in Germany.

If you already have German health insurance, you must tell your insurance company that you are now self-employed. Normally, they take health insurance contributions from your paycheque. When you are self-employed, they take the money from your bank account. If you have public health insurance, your monthly payments are based on your estimated income.

Related guide: Health insurance in Germany

Liability insurance

Most Germans have private liability insurance (Haftpflichtversicherung). If they cause an accident and they are sued by the victim, the insurance company will pay the legal costs and the reparations. This only costs a few euros per month, but it's really worth it.

However, private liability insurance does not cover your business activities. As a freelancer, you need professional liability insurance. If you cause an accident at work, the insurance company will pay the legal costs and the reparations. Professional liability insurance is more expensive, but it's also worth it.

Professional liability insurance is required in some professions1.

Related guide: What is Haftpflichtversicherung, and what does it cover?

Legal insurance

Legal insurance (Rechtschutzversicherung) will cover your legal costs if you need to sue someone, or if you get sued. This is not necessary for most businesses.

Accounting costs

Accountants in Germany are expensive, but they are worth the money. During your first years as a freelancer, you will need the help of a tax advisor to handle VAT payments, tax declarations and other financial matters. A tax advisor can also help you register your business with the Finanzamt.

Accounting for freelancers is not that complicated. You can do most of it yourself and save a lot of money. I use Debitoor to write my invoices, log my expenses, calculate my VAT payments and prepare my profit and loss statements.

Related guide: List of English-speaking accountants and tax advisors in Berlin

Build some savings

If you need to apply for the German freelance visa, you need enough savings to last 3-4 months without working. You can't work until you get the visa, and it takes a few months to get it1.

As a freelancer, you will not always have enough work, and your clients will not always pay you on time. Sometimes, they won't pay you at all! You need to have enough savings to feed yourself and pay the rent even during the bad months.

Set your rate

As a freelancer, you don't get paid vacations, your employer does not pay half of your health insurance, and you must save for retirement by yourself. The time you spend managing your business and finding clients is not paid either. This is why you must charge more than regular employees.

The rule of thumb is to take your desired hourly rate, and multiply it by two1, 2. This rule varies a lot between different industries.

Will you bill per hour, per day or per project? Will you send an invoice bi-weekly, monthly, or at the end of the project? It's better to ask freelancers in your field how they do it.

Related guide: How much should a freelance developer charge in Berlin?

Find your first clients

If you need a freelance visa to work in Germany, you can't get it without clients in Germany. You must prove that German companies want to use your services. If you can't prove that, you won't get the visa.

This means you must approach German companies and get them to sign letters of intent. This is not a contract, just a letter that says they are interested in hiring you. German companies know about this, and won't mind signing those letters. You need at least two letters of intent for your visa application.

It's easier to find clients if you are already in Germany. You can attend meet ups, network and meet potential clients in person. This is why it's easier to apply for the visa from Germany, and not from abroad.

Related guide: Letters of intent for the German freelance visa

Apply for the German freelance visa

Once you have found a few potential clients and planned your move, it's time to apply for the German freelance visa. Getting the visa can take between 1 and 4 months. You can't freelance in Germany until you have your freelance visa.

You can apply for the German freelance visa in Germany, or at the German consulate in your home country. If you can enter Germany without a visa, it's easier to apply in Germany. If you can't, you need a National Visa like the job seeker visa to enter Germany. It takes more work, so it might be easier to apply from your home country.

Getting a visa appointment can take up to 8 weeks in Berlin. You might get the visa immediately at the end of your appointment, or you might receive it 3-4 months later. You need enough savings to survive until you can start working.

Related guide: How to apply for the German freelance visa

Useful resources

If you are moving to Germany to freelance, the "Working and Living in Germany" hotline can answer your visa questions. It's an official hotline that that offers help in English and in German.

Useful websites

  • Existenzgründer.de - an official resource for startups and freelancers in Germany. The German website has a lot of very detailed articles. This should be your starting point.

Useful communities

Useful contacts

Comments

  • Nadja

    We have some insightful posts on this matter: https://medium.com/@Kontist
    Hopefully, it helps!

    Reply

    • Reply to Nadja

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