While applying for freelance roles in Berlin, I had to tell my potential clients how much I charged. As a foreigner, I didn't know what to charge them, or even how to calculate my hourly and weekly rates. This post is a compilation of all the answers I have found.

What to consider

Expenses and taxes

When you are an employee, your employer gives you an office, a desk, a computer, and many other perks. Your employer also pays half of your health insurance contribution. In total, you cost your employer around 20% more than you get paid1.

When you are a freelancer, you pay everything yourself. You lose a larger part of your salary to taxes, insurance and business expenses.

Here are some expenses to think about:

  • Income tax
    You will pay 8% to 42% of your salary as income tax (Einkommensteuer). Income tax is the same for employees and freelancers.
  • Health insurance
    If you were an employee, your employer would pay half of your contribution. As a freelancer, you pay it alone. This means your health insurance will cost you twice as much. Since public health insurance costs a percentage of your salary, it can get very expensive. Private health insurance charges according on your health condition, so it can be much cheaper if you are young. How to choose German health insurance.
  • Liability insurance
    If you make an expensive mistake, liability insurance will cover the legal fees and reparations. This is optional, but highly recommended. Personal liability insurance does not cover your business activities. You need a professional liability insurance. What is liability insurance, and what does it cover?
  • Trade tax
    If you are a Gewerbe, you must pay trade tax (Gewerbesteuer). In Berlin, this is 1.05% of all profit above 24500€. — What is the trade tax?
  • VAT
    If you are not a Kleinunternehmer, you must charge VAT on your products and services, and make VAT payments to the Finanzamt. You take that money from your clients, and give it to the Finanzamt. If you are a Kleinunternehmer, you can decide to charge VAT, but you don't have to. — How does VAT work?
  • Pension and savings
    You must save some money for emergencies, and for retirement. As a freelancer, you don't have unemployment insurance. If you lose your income, you get nothing. You must also plan for your retirement yourself.
  • Office space, equipment and software. You will need to use your own equipment. You might also want to rent a co-working space. If you were an employee, your employer would pay for those. You must include these costs in your calculations.
  • Tax advisor
    You will probably need a tax advisor (Steuerberater) to help you with your taxes. Tax advisors are really expensive Germany. You can easily pay 100€/month for a good one. You can also use tax software for freelancers.
  • The cost of living in Berlin

How to start a business in Germany ➞

German tax calculator ➞

No paid vacations

As a freelancer, you don't have paid vacations, paid holidays or sick days. When you don't work, you are not paid. If you remove the weekends, the national holidays and 30 vacation days, will only work around 210 days per year1. You must take this into consideration when you calculate your salary.

Your work isn't always billable either. The time you spend looking for clients, doing your taxes or updating your website isn't billable. You must also include that in your calculation.

Lower rates for long contracts

Freelancers usually charge more for short gigs, and less for longer contracts. This is because one long contract requires less overhead than many short contracts. You will spend less time looking for clients, interviewing, writing contracts and invoicing clients.

VAT is not included in the price

Software developer rates usually exclude the VAT. If you say that you charge 500€ per day, your client will expect to pay 500€ per day plus 19% for the VAT1.

Cost of living

The cost of living in Berlin can be different from what you are used to. You could need more money (or less) to have the same lifestyle.

Cost of living in Berlin ➞

Taxation for freelancers

How to start a business in Germany ➞ Taxes

Answers from the community

"500€ a day is really low. It's on the border of not being worth the hassle of being a freelancer and just accept a full time position. Of course it depends on the person, so assuming an experienced software developer. For me ideally 600-800€ depending if there's remote options, part time, or it is 100% on site. 500€ a day would be ok for me if it had full remote possibilities and it was an amazing project, otherwise too low and would not take it." — /u/acid2do, October 2018

"I was just offered up to 1200€ per day (~250k) for a freelance consultant position with the requirement of strong knowledge of AWS. And I live here in Berlin." — /u/forsgren123, October 2018

"If you're a contractor with experience and clean reputation, you can easily get 6 month contracts for 500€ brutto per day." — /u/GuyWithLag, October 2018

"Never talk about hourly rates, thats not the kind of work you want, talk about day rates and discounts for taking 20 day packages. Whether your day rate is 350 or 1200€ depends a lot of what exactly you are doing. I pay designers 350-550€ and devs 450-1200€ per day." — Anonymous, September 2018

"I guess 500€ per day would be a middle ground [for contractors]" — Anonymous, September 2018

"Charge whatever you think is appropriate and won't screw over other freelancers in your industry. Do not charge an hourly rate of less than €50 — that goes for any freelancer. Expect to reserve half of your total income for taxes and health insurance — so basically charge double what you'd like to receive, all your expenses and cost of living considered." — /u/pikachewits, August 2018

"Maybe the math should be something along these lines: if your gross salary is X, that means you cost the company 125% X (an extra 25%) (of course after taxes you only get part of X, maybe as little as 70%, but that's not the point) an agency will charge your employer some 30% at the very least over your cost, or the cost of employing a freelancer. so you can easily charge 130% of your current gross, which should go a distance to cover your expenses as a freelancer, although not so much the risks…" — /u/basketblog, July 2018

"If its a remote job, it does not matter much what the Berlin rates are as countries like Poland are very close and I can get good devs there with day rates of 250€. If you pay taxes in Germany as a self-employed person, I would recommend not to go below 300€ per day. The upper limit is huge, for some very specific React stuff some frontend devs ask day rates over 1000 euro." — /u/cYzzie, June 2018

"As a rule of thumb, take what you want to earn per hour after taxes, double it, sum up to the contract time, and add 5-25% on top based on whether you think the client will pay it or not. Roughly half your income will be eaten by taxes, health insurance, and a tax consultant (Steuerberater) and maybe the IHK Beitrag cause you probably need a Gewerbe." — /u/cYzzie, November 2016

"I am kind of a freelancer (Arbeitnehmerüberlassung — basically I do a full time on a fixed contract at a client's place) and I get something like 55€ per hour, before all taxes/health/social security contributions." — /u/popcorp, November 2016

"Currently the yearly wage of a software engineer here in Berlin is around 50k EUR gross, seniors earning around 10k more. This is what the employee will receive gross, minus tax and insurances. The employer has his own share that he needs to pay in addition. That would be around 21% on top." — Andreas Böhrnsen, January 2016

"What you charge is a mixture of (1) what customers will pay — the cheaper you are the easier it is to find customers — and (2) what you need to live. My guess to calculate maintaining your current lifestyle is your current gross pay, plus 20% for additional social contributions (that your employer pays today) plus another 20% as you'll have to pay your own holidays, and maybe another 19% VAT… (just made up numbers)" — 8420PR, May 2014

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