If you write your own invoices, if you have multiple clients and if you make your own hours then you are self-employed (selbstständig) in Germany. So far, so good. But the tax office (Finanzamt) divides self-employment up into two further categories: you’re either a freelancer (Freiberufler) or you have a trade (Gewerbe). We help you find your true self (from a tax perspective, anyway).
What do freelancers do?
Freelancers are in professions that rely on the transfer of knowledge, fields like humanities, arts, science, law. Most freelance professions require a university degree or special qualification, and they are usually providing a service rather than manufacturing a product for a customer. So, for example, if you’re a dentist or a musician, or a doctor, a writer, translator, language teacher you’re probably a freelancer.
Here are some examples of typical “freelance” lines of work.
Cultural professions: certified teacher/educator, designer, journalist/photo-journalist, interpreter, translator, writer, yoga teacher, musician, actor, dancer.
Legal, tax and business consultancy-related professions: attorney, auditor, chartered accountant, economic advisors, management consultant, notary, patent attorney, tax advisor, tax agent
Medical professions:, dentist, doctor, homeopathic practitioner, pharmacist, physiotherapists, veterinarian
Scientific and technical professions: architect, biologist, chemist, computer scientist, engineer, environmental expert, industrial chemist, pilot, surveyor, sworn expert.
What does ‘gewerblich’ mean?
Any profession that isn’t “freelance” is considered a trade activity (gewerblich). It’s considered as earning money based on a repeated action, such as selling a product. Some services are also considered trades – e.g. if you clean houses, babysit, or work as a bike courier or a coach. If you make money from advertising on websites, that’s a trade too. Here is a list of “Katalogberufe” – a catalogue of freelance professions, if you will. If your profession isn’t on it or isn’t similar to something on this list, then you’re most likely a tradesperson.
If your profession is considered a trade, you need to register your trade (you can read our guide on this registration process here!) and get a certificate called a Gewerbeschein. You will also be treated differently for tax purposes: if you earn more than 24,500 EUR, you will be charged trade tax.
Can I be both?
Do you have two lines of work? Do you work in a grey area? Are you a content writer who also has a stream of income from people who place ads on your blog? It is possible to be both a freelancer and a trader at the same time. You might need two different tax numbers. It might also mean double bookkeeping: allocating your freelance income and expenses to one tax number and your trade income and expenses to the other.
How do I figure out where I fit in?
If you’re confused, that’s completely understandable – there are all sorts of grey areas. Here are some typical ones that leave everyone scratching their heads:
- IT and software developers with university degrees or relevant vocational training might be considered freelancers even some self-taught. Those who can’t demonstrate a level of knowledge comparable to a university degree sometimes get classified as a trader.
- Photographers: advertising photography (trade) vs. artistic photography (freelance)
- Filmmakers who spend more time producing /marketing their films than they spend creating them
- Advisors/coaches
- A driving instructor who doesn’t have a driver’s license (you gotta laugh)…
Sometimes the Finanzamt gets it wrong and sometimes the foreigner’s office can’t figure it out! A good first step is to take a look at this list of freelance professions. Your second step could be either to consult with a tax advisor or simply contact the Finanzamt, describe your work and see what they say.
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