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Everything You Need To Know About Freelancing in Berlin


Today, more than ever, professionals are abandoning office life in search of freedom and freelancing. Equipped with a passport and a laptop, digital nomads choose to go abroad and make their office on a Bali beach, a coworking space in Mexico City, or a cafe in the heart of Europe. And when it comes to Europe, there is no better city than Berlin for freelancers. Why? Simply because Berlin is a city bursting with a creative spirit, low living costs, a diverse ex-pat community, and a ream of opportunities to work across many different industries and areas.

That said, if you are considering moving to Berlin and freelancing, let us guide you to the must-know starting points for going solo in the German capital. 

#1 Freelance Visa (Aufenthaltserlaubnis für selbständige Tätigkeit)

Eligibility for working as a freelancer in Berlin depends on the country of origin of the individual. Namely, citizens of the European Union, Iceland, Norway, Switzerland, and Liechtenstein do not need a freelance visa to freelance. Citizens of Australia, Canada, South Korea, New Zealand, Israel, Japan, and the United States can apply for a freelance visa directly in Germany. And non-EU nationals who are subject to visa restrictions for entering and working in Germany should obtain one in the German Embassy or Consulate in the living country. However, getting a freelance visa Berlin-based will ultimately depend on the Federal Employment Agency (Bundesagentur für Arbeit), as they evaluate each work visa application.

#2 Freelancer vs. Self-employed

German law recognizes two different categories of self-employment. Freelancer (Freiberufler) is the first one, which refers to independent professionals such as software developers, engineers, scientists, artists, interpreters, teachers, etc. The other is Self-Employed (Gewerbliche Tätigkeit), which is open to all other occupations that don't qualify for the official freelancer definition. It is essential to know that your local tax office will decide whether your profession is considered freiberuflich or gewerblich, once you register your business.

#3 Registering at the Finanzamt

To start your freelance work in Berlin, you need to register at your local tax office (Finanzamt). Assuming that you have your visa (or residence permit), a registered address in the city, and a tax identification number (Steuer-Identifikationsnummer) - which you received when you registered your address in the city, you can start completing the tax registration form or the Fragebogen zur steuerlichen Erfassung online.

Once you are done, print the form and send it by post or take it to your local Finanzamt. The document is only available in German, so if you need help filling it out, plan for it. After you submit your registration, a few weeks later, you will receive a tax number (Steuernummer) in the post. That is the number you need to include on all future invoices to your clients. 

#4 Opening a Freelance Bank Account

As a freelancer, you will need a bank account for receiving payments from clients. There are different options for opening a bank account (and there are specific accounts for freelancers). That said, do your homework and gather information either online or directly from local banks to bring an informed decision when choosing the most suitable option for your situation. Alternatively, you can also use your personal bank account if you already have one.

#5 Find the Right Health Insurance 

Having health insurance (Krankenkasse) is mandatory in Germany. As a freelancer, you need to cover your health insurance cost, so once you register, you will also need to enroll in a health insurance plan. There are two kinds of health insurance:

  • Public health insurance (Gesetzliche Krankenversicherung) – the most typical coverage and mandatory for people earning less than €56,000 a year.
  • Private health insurance (Private Krankenversicherung) – for people who do not qualify for the public system for various reasons - or those who choose it as an option when earning more than €56,000 a year. 

#6 Paying Taxes

As a freelancer, you need to get yourself familiarized with the German tax system, above all because you will have to pay your income taxes (Einkommensteuer) on your own. The German financial year runs from the 1st of January to the 31st of December. Once the year is through, you need to prepare your income tax return, which is usually due by the following year's 31st of July. Keep in mind that the Finanzamt needs to see your year's worth earnings before it can assess how much you owe them. If you do not have a tax accountant (and your German is good), to declare incomes and pay income taxes in Germany, use the electronic tax declaration system called Elektronische SteuerErklärung – ELSTER.

When it comes to the value-added tax (VAT)or Umsatzsteuer, if you are a freelancer running a business that is not VAT registered, you must not charge or state VAT. However, if you are, then any VAT you collect must be paid to the tax office. That is done via the Umsatzsteuervoranmeldung.

#7 Paying Social Security Fee 

As a freelancer in Germany, you can choose whether to opt into the statutory pension insurance scheme or start a private pension plan. However, some freelancers, such as artists and publicists or farmers, are subject to compulsory insurance for social security. In case you opt for the statutory pension insurance voluntarily, this will entitle you to benefits from the statutory pension insurance at retirement age. The statutory contribution is currently 18,7% of your salary.

#8 Keeping Flawless Administration

To work efficiently and without headaches, you need to keep your business affairs in excellent shape. If you are audited, the tax office can request records going back ten years, so keeping a flawless administration is imperative.

All self-employed that reach 60K€ of profit or 600K€ of revenue two years in a row must use a double-entry accounting system. Freiberuflich people can use a simple entry accounting system, no matter their income or revenue level.

So, to be on the safe side, we advise you to hire an accountant or a tax advisor to help you out. They are expensive but, believe us, are worth the money. As an added value, a tax accountant can also help you submit your tax return.

#9 Properly Invoicing

To get paid, you'll need to invoice your clients, so your invoices should include:

  • Your address
  • Your client's address
  • Your client's registration number
  • The date of issue
  • A description of the provided product or service
  • Unit price
  • Total price
  • Total VAT (if you're charging it)
  • Your bank account details
  • Your Steuernummer
  • Your VAT ID (if you're charging it)

#10 Learning the Language

To launch a good-freelance career in Berlin, it's best to learn German. Germany is a bureaucratic country. Most of the paperwork and information online and most of the letters you receive will be German. You must deal with different state institutions, Bürgeramt, Ausländerbehörde, and Finanzamt and their employees only speak German. Additionally, suppose you have a German freelance visa. In that case, you must have some clients in Germany, so not speaking German will mean a lot of added stress.

In the end, building a robust professional network is key to succeeding as a freelancer in Berlin. The city is relaxed and dynamic, so try networking beyond typical business gatherings. Who knows, you might find your next work opportunity on a crazy night out. 

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29 November 2022

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