Freiberufler or Gewerbe: what's the difference?

Freiberufler or Gewerbe: what's the difference?

Learn the differences between being a freelancer (Freiberufler) and a tradesman (Gewerbetreibende). It's not as easy as it seems!

In Germany, there is a legal difference between a freelancer (Freiberufler) and a tradesperson (Gewerbetreibende). If you are starting a business in Germany, you need to understand this difference.

There are three types of businesses you need to know about:

  • Kleinunternehmer (small business): a Gewerbe or Freiberufler with a low revenue
  • Freiberufler (freelancer): a freelance professional selling his or her services
  • Gewerbe/Gewerbetreibende (trade/tradesperson): a business, or a freelancer with a common job

The Finanzamt will decide which one you are when you submit the Fragebogen zur steuerlichen Erfassung.

Kleinunternehmer

A small business (Kleinunternehmer) is a Freiberufler or Gewerbe with a revenue of less than 17 500€ in the first year, and a revenue of less than 50 000€ in the following years1,2. Note that we wrote revenue, not profit. The law that defines small businesses is called the Kleinunternehmerregelung.

The main benefit of being a Kleinunternehmer is that you don't need to charge VAT to your customers1. You can choose to charge VAT, but you don't have to.

Freiberufler (freelancer)

In Germany, this title is for self-employed professionals with special qualifications who sell their services. Self-employed doctors, lawyers, accountants, engineers, IT professionals and architects are usually Freiberufler1, 2. Common jobs like food delivery driver or tour guide do not qualify as Freiberufler.

There are a few benefits to being a freelancer:

  • You do not need to register in the Handelsregister, the German Trade Register1.
  • You do not need a Gewerbeschein (trade licence)
  • You do not need to pay the Gewerbesteuer (trade tax)12.
  • You do not need to use double entry bookkeeping1.

The Finanzamt will decide if you are a Freiberufler when you submit the Fragebogen zur steuerlichen Erfassung.

Gewerbe (trade)

If you are self-employed but you are not a Freiberufer, then you are a Gewerbetreibende (tradesperson). Websites and businesses that sell physical products are definitely in this category. Independent delivery and call centre employees must also apply as a Gewerbe, since they don't qualify as freelancers.

Compared to freelancers, businesses have a few special obligations:

  • They must register in the Handelsregister, the German Trade Register.
  • They must apply for a Gewerbeschein (trade licence) and pay the Gewerbesteuer (trade tax).
  • They must use double entry bookkeeping.

Special rules for small businesses

Small businesses (Kleinunternehmer) do not need to register in the Handelsregister, and they do not need to use double entry bookkeeping1. This makes things much easier for them. However, they still need to obtain a Gewerbeschein (trade licence) and pay the Gewerbesteuer (trade tax)12.

Small businesses do not need to charge VAT, but they can choose to charge it anyway1. Not charging VAT saves you a lot of work, but it prevents you from claiming VAT refunds. See this guide to understand the pros and cons of not charging VAT.

The Handelsregister (trade register)

handelsregister-required-germany.png#asset:585:contentFullwidth2x

All businesses except small businesses and freelancers must be listed in the Handelsregister, the German Trade Register.

Small businesses are not required to be listed in the Handelsregister1, but they can do so voluntarily. This has some benefits, but it comes with lots of fees and responsibilities1. For most small businesses, it's not worth it.

You can request an entry in the Handelsregister when filling the Fragebogen zur steuerlichen Erfassung.

The Gewerbeanmeldung (business registration)

You must register your Gewerbe with the city's Gewerbeamt1 and obtain a Gewerbeschein. This process is called the Gewerbeanmeldung. Small businesses (Kleinunternehmer) are not exempt from this1.

In Berlin, the Gewerbeanmeldung can be done online, and costs 15 to 26 euros.

The Gewerbesteuer (trade tax)

All businesses must pay the Gewerbesteuer1,2, unless they make less than 24 500€ in profit per year1. See this guide for a detailed explanation of the trade tax.

Small businesses (Kleinunternehmer) are not exempt from the trade tax1, unless they make less than 24 500€ in profit per year.

Double entry bookkeeping

Gewerbe that generate more than 60 000€ in profit or more than 600 000€ in revenue and that are listed in the Handelsregister must use double entry bookkeeping123.

See this guide or this guide for an explanation of what double entry bookkeeping is. In essence, it's a lot more work, but it makes sense for larger businesses with a lot of customers and suppliers.

Small businesses (Kleinunternehmer) don't need to use double entry bookkeeping, since they have a lower revenue and are not listed in the Handelsregister.

You can also request an exemption from double entry bookkeeping under §148 AOende : The revenue authorities may in individual cases or for certain groups of cases authorize simplifications where adherence to the accounting, recording and storage duties set out in the tax laws causes undue hardship and where taxation is not hampered by the simplifications.

If you think this applies to you, ask a tax advisor about it.

Still need help?

If you still have questions about starting a business in Germany, ask our English-speaking tax advisors, lawyers or relocation consultants. We list more resources in our other guide, "How to start a business in Germany".

Comments

  • Saidi Namur

    Hi, I`m a photographer without diplomas and would like to start a freelance bussiness without studio or workplace, to which category I apply? Thank you.

    Reply

    • Reply to Saidi Namur

  • Marzia

    Hi,
    I am registered as a freelancer without VAT because I work exclusively for US companies. Do I have to submit a Gewerbeanmeldung? Will I have to pay trade taxes?
    I work as a consultant and I do not qualify as a professional with special qualifications (doctor, lawer etc.).

    Reply

    • Reply to Marzia

  • Robert

    Hi, I want to start my own business as a Freelancer for Event/Artist Management. I need to register for the Trade License, however, can I expand the portfolio at a later time to include the selling and marketing of Artist Souvenirs, or do I need to state this when I initially register? My concern is that does the marketing and selling of become a "trade"?
    Thanks in advance.

    Reply

    • Reply to Robert

  • Woody

    Hello,

    1st of all, thank You for sharing these informations, truly helpful!

    furthermore, id like to become a Kleinunternehmer. my field is custom designed furniture/woodwork. the idea is to pick an option (art related) in order to get KSK insurance later. Could anyone advice me on this matter or recommend someone who could help me choose the right option? Thx, W.

    Reply

    • Reply to Woody

    • Nicolas Bouliane

      Hi Woody,

      Check out our list of English-speaking tax advisors. They would be better suited to help you.

      Reply

      • Reply to Nicolas Bouliane

  • Naveed

    Hi,

    I have a permission to work as self employed and I would like to setup a small recruitment website and I expect a revenue will not go over 24000 for first year and also do part time delivery less than 450 euros a month, can I do that with Kleineunternehmen? and if not which business type do I have to apply?

    Look forward to hearing from you.

    Regards,
    Naveed

    Reply

    • Reply to Naveed

    • Nicolas Bouliane

      Hi Naveed,

      I had the same question last year, so I asked my tax advisor. You are not a Kleinunternehmer if all your businesses together make more than that. Otherwise, everyone would have 10 small businesses.

      Reply

      • Reply to Nicolas Bouliane

      • Abdul Naveed Khan

        Thanks Nicolas.. so it means if but if my 2 business together make less than 24000 euros per year I am still be kleineunternehmen right?

        Thanks
        Naveed

        Reply

        • Reply to Abdul Naveed Khan

  • Zarrina

    Hi there! I am not an EU citizen,I'm from Tajikistan and doing an ausbildung in Germany,so I'm going to make makeup on my free time for custemors,do I need any kind of gewerbe?Can I apply for gewerbe even if I'm not an EU citizen?
    Thanks

    Reply

    • Reply to Zarrina

    • Nicolas Bouliane

      Hello Zarrina! If you are from a non-EU country, you need a visa that allows you to freelance. You will then need to register your activity with the Finanzamt. As a student, it could make your health insurance more expensive.

      Check out our guide on how to start a business in Germany (linked below these comments) for more information. Our guide on getting the German freelance visa also tells you what you need to start your business.

      Reply

      • Reply to Nicolas Bouliane

  • Leave a comment