Five hard truths about starting out as a freelancer in Germany
You've given away any clothes that aren't in shades of black, practiced pounding schnitzels paper-thin and are religiously avoiding anything spicier than black pepper. In short, you're ready for your new life as a freelancer in Germany.
Working as a freelancer in Germany isn't all rosy. Complications lurk around every corner, from tricky visas to an endlessly complex tax system. Here are five things you need to know about being a freelancer in Germany.
Obtaining a freelance visa can be tough
EU citizens do not need a visa to live and work in Germany.
Non-EU citizens wishing to freelance in Germany can apply for the
Aufenthaltserlaubnis zur freiberuflichen Tätigkeit
, or freelance visa. Citizens of a few countries can enter Germany visa-free and apply for the visa within the country. The rest will need to apply at a German consulate in their home country.
But getting a freelance visa can be tricky. To be approved, you'll need to prove that you meet certain requirements, including that:
Your work will benefit the local economy – in practice, that you have German clients or employees.
You earn enough to support yourself – in Berlin, that means your rent + health insurance + €563
Your qualifications are recognised if you work in a regulated profession like law or healthcare
You have a pension plan if you are over 45
The relatively stringent requirements are a barrier to many seeking to freelance in Germany. You must also ensure that you continue to meet the requirements when it comes time to renew your visa.
READ ALSO:
What not to do when you are freelancing in Germany
Taxes are no joke
Do you know your
Freiberufler
from your
Gewerbe
? Are you ready to calculate your
Einkommensteuer-Vorauszahlungen
?
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German bureaucracy is famously fiendish. But it can be especially so for freelancers. Many aspects of the tax system are set up with the assumption that workers are full-time employees.
Being a freelancer means negotiating additional layers of bureaucracy, including guessing how much you are likely to earn in the first and second years of work (to determine
whether you have to charge your clients VAT
or not) and submitting pre-payments every quarter based on how much you think you will earn.
READ ALSO:
Everything you need to know about paying taxes in Germany
You'll also need to determine whether you are a
Freiberufler
(freelancer) or
Gewerbe
(self-employed), as the two have different tax implications.
Then there's the matter of filing your taxes correctly, including deductions and expenses. The process can be so complicated for freelancers, especially if they work with clients abroad, that many simply hire a tax adviser to do it on their behalf. Be aware that finding a
Steuerberater
is a mission in itself – many are overbooked and even if you do find one, they do not come cheap.
A good rule of thumb is to assume that 50 percent of your net income isn't yours. Set it aside and don't touch it until you've paid off all the taxes you owe.
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Housing can be a nightmare for freelancers
The housing market in many German cities is increasingly dysfunctional. In Berlin, Munich and other cities popular with expats, many locals and foreigners find it nigh-on impossible to secure a proper contract at a decent price. Some (your correspondent very much included) bounce between sublets for months or years until they find a permanent home.
READ ALSO:
'Always be vigilant' - Expert tips for finding an apartment in Berlin
Unfortunately, this problem can be exacerbated by being a freelancer. Many landlords favour applicants with a stable income and look down on people not in full-time employment.
Be prepared to spend months living in a WG (shared flat) while you hunt for your own apartment.
Heath insurance is pricey
Freelancers in Germany pay 100 percent of their health insurance contribution, whereas most employers pay half. In addition, the cost scales differently from taxes.
In practice, this means that many freelancers, especially those on low incomes, spend a large proportion of their income on health insurance, regardless of whether they are on private or public health insurance.
Options such as low-cost 'expat insurance' are much cheaper but offer only limited coverage. Some creatives can apply to join the
Künstlersozialkasse
(Artists' Social Insurance Fund)
, which pays half of the cost – though applications typically take months to be approved.
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This system can come as quite a shock to people from countries with universal healthcare, where most of the costs are borne out of general taxation. And there's no chance to opt out of the system – being insured is a legal responsibility.
Local clients often require German
English speakers can get by fairly easily in daily life in Germany, especially in big cities. But it's another story entirely on the job market.
Depending on your profession, you may find it tough to find local clients if you don't speak at least professional German.
Of course, requirements vary by profession: many tech companies work in English, but more traditional fields like healthcare or engineering will often require a good grasp of the language.
Having local clients can come in useful, especially for a visa application.
For more on freelancing in Germany visit our dedicated section.
But it's not all bad...
Don't let the difficulties put you off. Freelancing in Germany comes with meaningful upsides.
You'll have easy access to clients across the EU. Germany's big cities are creative business hubs where you can network with potential clients.
And while bureaucracy can be painfully cumbersome, Germany offers extensive legal protections in the case of non-payment of contracts and for protection of your intellectual property.
Share your own experiences of freelancing in Germany in the comments below. Are there any downsides or upsides I missed?
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