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WORKING IN GERMANY

7 tips for how to survive as a freelancer in Germany

Taking the decision to go it alone and freelance in Germany can be a daunting prospect. But, if you do it right, it can be an exciting and liberating path. Here are some of our top tips on how to survive.

A woman works on the floor of her living room.
A woman works on the floor of her living room. Photo: picture alliance/dpa/dpa-Zentralbild | Sebastian Kahnert

1. Get a tax advisor

The German tax system is complicated, even for Germans. All the associated paperwork uses the Amtsprache (authority language) which is more like legalese than ‘normal’ German, and mistakes when filling out tax forms can cause you, at best, a massive headache and, at worst, a costly fine. So it’s best that you employ someone who knows what they’re doing to help you out.

That person is called a Steuerberater (tax advisor) in Germany. They will help you register with the tax office, correspond with them and submit your tax declarations.

Be aware that, in Germany, different deadlines apply for tax returns depending on whether you employ an official tax advisor or not. If you are doing the tax return on your own, the deadline for submitting your annual tax return is earlier than if you use a tax advisor’s services. 

READ ALSO: What NOT to do when you’re freelancing in Germany

When looking for a tax advisor, a top tip is to use your network to get recommendations. Ideally, you want someone who will do more than just fill in the forms for you, but who will actually advise you on how best to manage your business finances so that you can make tax savings.

2. Keep your accounting in order

The better you keep your own accounts in order, the easier it will be for your tax advisor to compile your tax declarations and therefore the cheaper their services will be.

As a freelancer, there are a lot of costs you can deduct from your taxes – from train tickets, working materials, to meals out – so it’s best to keep hold of all your receipts and to keep them in good order.

2 euros and 50 cents lie on a receipt in a beer garden. Photo: picture alliance/dpa | Peter Kneffel

In Germany, you’re obliged to keep hold of receipts for two years, in case of a tax inspection, so it’s a good idea to photocopy the type of machine-printed receipts you get from restaurants so that they stay legible for a long time.

There are also a few things to be aware of when writing your own invoices. Firstly, make sure that you include your tax number. This isn’t the 11-digit Steueridentifikationsnummer that everyone gets when registering in Germany, but the 10-digit Steuernummer you get from the Finanzamt after registering yourself as a freelancer. 

Most companies won’t pay you if you don’t have this on your invoices so make sure you include it.

You should also make sure that you number your invoices properly – ideally in ascending order so that you can easily keep track of them. You are not allowed to issue two invoices with the same number and if you do so and the finance office notices, you could face an inspection of your whole accounting system.

There are numerous great accounting software programmes you can use to help you, such as Lexoffice and Sevdesk and, even if you have to pay for them, the costs will be tax deductible!

3. Find out if you’re eligible for financial support

In Germany, there are several opportunities for freelancers to gain financial support and to cut their outgoings, and its worth finding out if you’re eligible for them.

If you’re claiming unemployment benefits under ALG 1 and are thinking about becoming a freelancer, the employment office offers a special type of financial support to help you to get your freelance business off the ground.

Called the Grundungszuschuss (“foundation grant”) the payment is a six-month grant equalling your monthly entitlement under ALG 1 plus €300 towards your insurance costs can be applied for those in receipt of this unemployment benefit.

READ ALSO: Will freelancers benefit from Germany’s €300 energy allowance?

If you are engaged in some form of artistic profession in Germany – which can include journalism to pottery – you may be entitled to membership to the Kunstlersozialkasse (artists’ social insurance).

Being a member of the KSK means you only have to pay half of your health insurance and pension contributions, and the KSK will pay the rest.

4. Work out how much you think you will earn

As with starting any business, you need to have some idea of your expected earnings from the outset.

If you’re just starting out as a freelancer, or have some freelance gigs on the side of an employment position, then it might be worth considering registering yourself as a Kleinunternehmer (“small business”).

As a Kleinunternehmer, you can currently earn up to €22.000 per year without having to charge VAT and having to submit only yearly tax declarations. 

An income tax declaration form lies on a table. Photo: picture alliance/dpa/dpa-Zentralbild | Hans-Jürgen Wiedl

Be aware that if you are registered as this kind of freelancer, you must include the following sentence in your invoices: ‘Gemäß § 19 UStG wird keine Umsatzsteuer berechnet’ which means ‘In accordance with Paragrah19 of the German VAT law, no VAT has been added to this invoice.’

READ ALSO: Everything you need to know about your German tax return in 2022

If you think you will earn more than €22.000 per year, you will need to pay Umsatzsteuer (VAT) and will have to submit tax declarations in advance and more often. Depending on how much you earn, this could be every month or every quarter. 

5. Get your insurance in order

In Germany, it’s a legal requirement to have health insurance.

If you’ve just made the move from employment to being a freelancer and want to keep the same health insurer, you should get in contact with your health insurance provider straight away to tell them about your change of circumstances. They will ask you to re-register and to tell them your projected freelance earnings for the year, so they can amend your monthly fees.

If you don’t keep your health insurer provider updated, you could continue to be charged the higher rate that you had from your previous salary.

The insurance cards of the health insurance companies DAK, AOK, Barmer and Techniker-Krankenkasse TK lie with euro notes under a stethoscope. Photo: picture alliance / dpa | Daniel Karmann

It’s not just health insurance you need to think about as a freelancer. It’s also wise to think about protecting yourself from any sort of claims that could arise as a result of any working mishaps. 

If, for example, you lose your laptop which contains confidential client information, you need to be protected against claims.

That’s why it’s good to have both Betriebshaftversicherung (business liability insurance) and Rechtschutzversicherung (legal protection insurance).

6. Plan your time wisely

All of these bureaucratic obligations take time. So it’s really important that you take account of that when planning your time. For example, planning half a day a week to deal with your invoices, filing, emails to clients, and conversations with authorities can be really beneficial when scheduling your working time. 

7. Grow your network

As a freelancer, networking is absolutely crucial to success. 

Keep an up-to-date profile on websites like LinkedIn and German equivalent XING and keep in contact with anyone you’ve ever worked with, no matter how brief the contact was. 

Having a network is not only about getting more clients, but also about building a support network in your field to exchange advice, tips and generally for your own enrichment. 

Participating in workshops related to your field, going to seminars, and meet-ups, can be great ways of broadening your network. 

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For members

JOBS

Which sectors are looking to hire in Germany?

Despite growing concerns that Germany could face a recession in 2023, some sectors are increasingly optimistic and even looking to hire more staff.

Which sectors are looking to hire in Germany?

What’s going on?

Last week, Federal Economics Minister, Robert Habeck (Greens), presented Germany’s annual economic report for 2023, which showed that gross domestic product is expected to grow slightly – by 0.2 percent – this year.

READ ALSO: Why fears of a recession in Germany are rising

Though Habeck said that the figures were “not good”, he said that the situation is better than had previously been feared – particularly for the jobs sector.

At the end of 2022, the number of people in employment reached a record high of around 45.7 million, and the labour market is expected to continue its upswing.

“This trend of job creation is expected to continue this year,” the German government’s annual economic report said and “labour demand is high in many sectors” despite the economic slowdown.

In line with this optimistic outlook for jobs, the latest employment barometer from the Ifo Institute for Economic Research rose in January to 100.2 points from 99.6 points in December.

The Ifo’s employment barometer is a survey which asks around 9,500 businesses in the manufacturing, construction, wholesaling, retailing and services sectors to report on their employment plans for the coming three months.

“The fading pessimism in the German economy is also reflected in the labour market,” said the head of Ifo surveys, Klaus Wohlrabe.

Which industries are looking to hire?

According to the Ifo’s Employment Barometer, the demand for staff rose most sharply in the manufacturing industry and is particularly strong among manufacturers of machinery and in the electrical and electronics industry.  Examples of those affected in the manufacturing industry include companies which manufacture vehicles and parts, chemicals and metal products as well as food and animal feed.

“New employees are being sought, particularly in mechanical engineering and the electrical industry,” Wohlrabe said.

READ ALSO: Five well-paid jobs in Germany that nobody wants to do

An example of an industrial company looking for skilled workers at the moment is aircraft manufacturer Airbus.

Airbus plans to recruit 13,000 new employees worldwide this year, the majority of which – 9,000 in total – are to be created at European sites.

The chairman of Airbus’ works council in Bremen, Jens Brüggemann, said that the company also hopes to create new jobs in Bremen, while for the Hamburg site, the company recently announced that it would create 1,000 new jobs this year due to a major order from India.

The need for new staff has also increased among service providers – such as transport and telecommunications companies,  accommodation and event providers, architectural and engineering firms, as well as legal, tax and business consultation services.  

In the IT industry, in particular, there are many open positions.

In fact, the report says that while some major firms are shedding jobs, other firms will want to employ the laid off staff. 

“The layoffs at large IT companies are an opportunity for many small and medium-sized companies to hire new employees,” the Ifo Institute said in its report.

READ ALSO: German software giant SAP to cut 3,000 jobs

In the retail sector, hiring and layoff plans are more or less in balance in the latest employment barometer, though another study by the Ifo last August found that 41.9 percent of companies in this industry reported problems with a lack of staff. 

In the construction industry, the report also showed that more companies are now willing to hire new staff despite the difficult environment – for example, due to rising material and interest rates. Last summer’s Ifo report also found that the 39.3 percent of construction companies were struggling with staff shortages.

READ ALSO: EXPLAINED: The German industries ‘most affected’ by skilled worker shortage

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