Freiberufler or Gewerbe: what's the difference?

There is a legal difference between a freelancer (Freiberufler) and a tradesperson (Gewerbetreibende). If you start a business in Germany, you must understand the difference.

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

Freiberufler (freelancer): a self-employed professional who sells their services
Gewerbe/Gewerbetreibende (trade/tradesperson): any other business

The Finanzamt decides which one you are when you register your business.

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, architects and teachers are usually Freiberufler.¹⁵ Food delivery drivers and tour guides are not Freiberufler.

If you sell products, you are not a Freiberufler. For example, software developers are a Freiberufler if they sell programming as a service, but a Gewerbe if they sell software licences. Websites that are financed by ads or affiliate links are almost always a Gewerbe.

Benefits of being a Freiberufler:

You do not need to register in the Handelsregister, the German Trade Register.¹
You do not need a trade licence (Gewerbeschein)
You do not need to pay the trade tax (Gewerbesteuer).²
You do not need to use double entry bookkeeping.³

The Finanzamt decides if you are a Freiberufler when you register your business.

Gewerbe (trade)

If you are self-employed but you are not a freelancer (Freiberufer), then you are a tradesperson (Gewerbetreibende). Websites⁴ and businesses that sell physical products are usually Gewerbe. Independent delivery and call centre employees must also apply as a Gewerbe, because they are not Freiberufler.

Compared to freelancers, businesses have a few special obligations:

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

What is the trade tax (Gewerbesteuer)? ➞

Is a website a Gewerbe? ➞

Special rules for small businesses

Small businesses (Kleinunternehmer) do not need to be in the Handelsregister, and they do not need to use double entry bookkeeping.⁷ They must still get a trade licence (Gewerbeschein) and pay the trade tax (Gewerbesteuer).⁵

Small businesses can choose not to charge VAT.⁶ Not charging VAT makes accounting easier, but it's not always a good idea.

How being a Kleinunternehmer works ➞

The Handelsregister (trade register)

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

Small businesses can choose to be listed in the Handelsregister,⁷ but they don't have to. A Handelsregister has benefits, but it comes with lots of fees and responsibilities.¹⁴ For most small businesses, it's not worth it.

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

The Gewerbeanmeldung (business registration)

You must register your Gewerbe with the city's Gewerbeamt⁸ and obtain a Gewerbeschein. This process is called the Gewerbeanmeldung. Small businesses (Kleinunternehmer) are not exempt from this.⁹

In Berlin, the Gewerbeanmeldung can be done online. It costs 15 to 31€.

The Gewerbesteuer (trade tax)

All businesses must pay the Gewerbesteuer¹⁰,¹² unless they make less than 24,500€ in profit per year.¹¹ See this guide for a detailed explanation of the trade tax.

Small businesses (Kleinunternehmer) are not exempt from the trade tax,¹² unless they make less than 24,500€ in profit per year.

What is the trade tax? ➞

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 bookkeeping.¹³

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 AO : 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.¹⁶

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

Kleinunternehmer

A small business (Kleinunternehmer) is a Freiberufler or Gewerbe with low revenue. Small businesses can choose not to charge VAT. This has benefits and disadvantages.

How being a Kleinunternehmer works ➞

Need help?

Where to find help ➞ Business questions

Sources and footnotes