Freelancing Work in Germany
Be Sure to Hire a Tax Consultant
by Stephanie Barton
As the spouse of a military person in Germany the procedure I followed to register as selbststandig (self-employed) was the same as for any American who wants to start freelancing in Germany: get a work visa. The easiest
way to do it is to get a job at one of the U.S. military bases, which are mostly clustered near southern cities such as Heidelberg, Wiesbaden, Ramstein, and Wurzburg.
With a government job secured, you then receive a Status of Forces Agreement (SOFA) stamp for your passport and a government ID.
The stamp and ID let you register as self-employed without a work visa. You can build your business from there until you’ve achieved financial stability—and can dispense with the government ID.
A German company hired me as a project manager for a yearly publication. The owner of the company told me to register as selbststandig with the Finanzamt—the
tax and finance arm of the local government. I needed a steuernummer (tax number) for invoicing and the German company needed me on record in case they got audited. They did.
I completed the simple form; the Finanzamt officer photocopied my government ID and SOFA passport; and I left with my own German steuernummer.
I then received a thick packet in the mail, the Vorsteuererklarung, requesting background information and much more specific information about me and my family. I consulted a German friend, who was also selbsttanding,
and he worked with me through the material.
I expected to make less than e7,000, so I would not have to pay any taxes. That also meant that I did not have to charge the standard German Value Added Tax of 16 percent on my invoices.
But despite the information in the Vorsteuererklarung, the Finanzamt went ahead and estimated my taxes for me—based on the first invoice that I had issued. The Finanzamt simply took that invoice (it
was a big one) and multiplied it by 12. I received a tax bill for e1,100.
A steuerberater—a tax consultant—is highly recommended if you run a business or are self-employed in Germany. Another freelancer gave me the name of his steuerberater and I made an appointment.
I brought my copies of the Vorsteuererklarung to the steuerberater along with my subsequent (and much lower) invoices. The steuerberater cleared up the matter in about 10 minutes with a phone call.
The next year the same company hired me for regular projects and at a higher rate. I now add a VAT fee to my invoices and pay my yearly taxes based on those accumulated VAT fees.
If you plan to open a business in Germany, you also need to buy insurance, or Anwalt, in case someone sues you. Although the U.S. is famous for its law suits, Germany can be just a litigious. For example, if you put
an ad in the paper with no address, you are breaking the law, and your competitors can take you to court over it.