I’ve been away from the blog for a while because we moved to Ireland in 2010 for a new job for me. For years I have been working as a technical writer and editor at large corporations (SAP and IBM, to be exact), but as of April, I have returned to my roots in more ways than one. I’m back in Germany and I am back to freelancing, or being self-employed, which are two different things from a tax perspective.
So what is the difference between freelancing and being self-employed? It seems to be complicated — like many things in the bureaucratic German world.
Freelancers
According to www.expatica.com, a freelancer (Freiberufler/-in) is a self-employed person who works in the arts, like a painter or a musician), or in sectors including science, authors, teaching, etc. It also includes people who base their work on personal and specific knowledge like doctors, lawyers, journalists, translators, and all types of consultants. It seems a bit arbitrary to me, because some professions are actually listed in German income tax law and others aren’t.
Freelancers don’t actually produce or manufacture anything. They offer services. All freelancers are self-employed, but not vice versa. Gewerbetreibende, or tradespeople, have to be Gewerbesteuer, which is a sort of local business tax. I am still waiting for the decision on what my many jobs count as, but I am assuming it will be freelance, since I don’t produce anything. Right now I am teaching corporate English, editing papers for a major university, proofreading translations for a major automotive company, and my main job is as a relocation consultant, helping expats brought over to Germany by large corporations find their feet.
When I officially became a freelancer, I went to the local town hall and registered my business. I had to fill out a form explaining what I do and pay something like 20 Euro to the city. Then I waited. About six weeks later I got another very long form from the Finanzamt. I also got a letter welcoming me to the IHK, which is the chamber of commerce. The Finanzamt form intimidated me, so I put it off until another letter came. Right now my tax advisor has the form, because he said I shouldn’t fill it out myself. I guess he is afraid I will get stuck in the wrong category.
The important points for me right now are tax issues and health insurance issues. I need to keep track of every kilometer I drive to perform any of the tasks associated with any of my jobs. So I am writing them down in a little book (Fahrtenbuch). I also need to keep track of anything I buy that is in any way related to my business. Apparently you can write a lot of things off of your taxes here. The next steps include setting up a private pension, because I am no longer required to pay into the German public pension system. That also means that I have no employer to pay the other half of my health insurance, so I am pretty much forced to join the ranks of the privately insured.
I am still not sure if I want to be a freelancer forever, but I am just at the beginning of the path. I am enjoying the flexibility of not having to sit in on office and “be present” all the time. But spending my life in a car is also not exactly a thrill.
I will write more about the tax situation (VAT, income tax, etc.) in a future post. But for now, happy freelancing!
Hi Sarah,
Good luck in your freelancing job!! I hope all goes well. I hope you’re able to find a permanent full time job….if that’s what you want! I think this type of article hasn’t been talked a lot about in this type of forum. When I was living in Germany a couple of years back, I had a very difficult time finding a job there. Best of luck to you!
Mac