Step 1: Register an address in Germany
You need an officially registered address in Germany. This is done at your local Bürgeramt. The process is called Anmeldung and we explain everything in detail in our How to register an address in Germany article. The Anmeldung only takes 15 minutes but you might have to wait several weeks to get an appointment at the Bürgeramt.
You get a tax ID after registering your address which you need to open a business with the tax office (Finanzamt).
- ID or passport.
- Birth certificates and/or marriage certificates, especially if this is the first time you register a German address.
- The filled form is called Anmeldeformular. You can download the Anmeldeformular for Berlin here or use Appmeldung. Note that you have to pay church tax if you affirm affiliation to one of these 9 religious groups. Remember that you might be subject to a fine if the date of moving into the flat is more than 14 days older than the date of your appointment at the Bürgeramt.
- Confirmation of residence (Wohnungsgeberbestätigung).
Step 2: Determine the legal form of your business
Check whether you are Freiberufler or Gewerbetreibender
It's important to distinguish between freelancers (Freiberufler) and tradesmen (Gewerbetreibender). The tax office ultimately decides for which of these categories your activity qualifies. This is not necessarily based on your studies or qualifications but based on the tasks you invoice.
This term is reserved for specific professions.
Examples of Freiberufler can be doctors, architects, artists including designers and musicians, engineers, economists, interpreters, midwives, journalists and generally professions that are consulting.
Examples of Gewerbetreibende are software engineers, craftsmen and generally businesses that produce things including gastronomy.
Step 3: Register your trade
Skip this step if you are a Freiberufler. You have to do the following if you qualify as a tradesman:
A. Mandatory: fill out a form to officially open your trade. This can be done online in Berlin. Most other cities let you download the form and mail it to them. The recipient address is in the PDF in this case. Please google Gewerbeanmeldung and the name of the nearest city if your location is not on the list.
- Use this online form to open a trade in Berlin
- Use this form to open a trade in Hamburg
- Download this print form to open a trade in München
- Use this print form to open a trade in Frankfurt
- Use this print form to open a trade in Köln
B. Some tradesmen but not all have to register in the trade register. This is the case if you qualify as Kaufmann. A Kaufmann is somebody who sells goods. The chamber of commerce can help you with this. Tradesmen who don't have a shop or similar where they sell things usually don't have to register in the trade register.
Step 4: check regulations or necessary certificates for your profession
Examples are health permits (Gesundheitszeugnis) from the Gesundheitsamt for opening a cafe or restaurant, and a criminal record for jobs involving children. Contact the IHK for more information.
Step 5: open a bank account
Your clients in Germany will expect to pay you to a checking account at a German bank although in my experience many clients don't care about sending money to a foreign bank.
Most big German banks offer dedicated business checking accounts which usually cost a monthly fee. Kontist has a free business account. Invoicing to your private account is technically possible but some banks might close your private account if you use it for business. I recommend some free business accounts in this article.
Step 6: Sign up with the tax office
There are two ways how you can do this:
- Fill out the form on the Elster web portal. Elster is the official German tax portal. You need to register first. German language only.
- Fill out the form on the Sorted website and let them submit it for you. This is the easiest and fastest way to sign up and is included in their free plan. The form is all in the English language.
Please note that sending the printed form to the tax office is not accepted anymore.
Step 7: inform yourself about German taxes
These are the most common German taxes:
- Income tax: between 14% and 42% depending on your income.
- You have to pay church tax if you are a member of the Catholic, Evangelical, Jewish or any of these nine religious groups. This is also depending on whether you affirmed religious affiliation in the form when registering your address.
- Value-added tax: only applicable if you make repeatedly more than 22.000.- Euro per year.
- Trade tax: every business or self-employed person with an annual net profit of more than 24.500.- Euro has to pay a trade tax. Exceptions are Freiberufler professions such as artists including designers, scientists, authors, lawyers, business consultants, doctors, engineers and architects.
Read more in our article about taxes for self-employed.
The tax declaration is due on the 31st of July each year and is mandatory once you sign up with the tax office. The deadline for the tax declaration is the 31st of December if you work together with a tax consultant.
Step 8: update your health insurance plan
You must inform your health insurer about your freelance plans. The public health insurers make a difference between Hauptberuflich selbständig (full-time freelancer) and Nebenberuflich selbständig (part-time freelancer). The latter means that you keep your main job as an employee but freelance on the side.
You have to pay all of the health insurance yourself if freelancing is your main occupation. In this case, private health insurance can be cheaper. You do not have to pay contributions to public health insurance if your freelancing activity is not more than 20 hours a week and is not your main income. Please contact your health insurer for more details.
Step 9: Invoice
These are the mandatory fields every invoice in Germany must have:
- your full name or company name and address
- the full name or company name of the receiver
- invoice date
- invoice number. Each of your invoices must have a unique and consecutive invoice number. The format is up to you, the easiest format is year-consecutive_number, for example 2023-01
- your business tax ID but not your personal Steueridentifikationsnummer
Only add a VAT ID and VAT amount to invoices if you qualify for Value Added Tax (Umsatzsteuer). An error I often see on invoices from freelancers is that they charge Value Added Tax without being qualified for this. You only need to charge VAT if you earn more than 22.000.- Euro per year two years in a row.
You can apply at the tax office to be eligible for VAT if you want to hide from your clients that you are a small business or if you want to get the VAT back from your initial investments.
The easiest way to write a compliant invoice is by using an online invoicing service like Free Invoice Builder.
Step 10: Collect all invoices for expenditures
Collect all invoices in print or digitally for any business-related expenditure like a computer or other office hardware, travel etc and store them together with your monthly account statements. I recommend doing this at the end of each month so you have it ready when it is time to hand in the tax declaration.
We have a list of the best tax return software and services here.