Merkel’s conservatives gird for election fight

German Chancellor Angela Merkel's conservatives hammered out an election manifesto on Sunday that they hope will secure her a second term in September at the head of a new-look coalition.

Merkel's conservatives gird for election fight
Chancellor Angela Merkel and CSU boss Horst Seehofer. Photo: DPA

“We have the power to lead our country out of the crisis, the likes of which the Federal Republic has never seen before. We also have the power to make it stronger than it was before the crisis,” Merkel told reporters. “We can drive the history of Germany, and in a direction that makes sense for people.”

Merkel’s Christian Democrats (CDU) and their Bavarian CSU allies hope that their programme will be such a vote-winner as to enable them to ditch their current “grand coalition” partners, the Social Democrats (SPD).

Unable to secure a majority on its own, the party wants to govern instead with the Free Democrats (FDP), who with their fondness for small government and tax and spending cuts are ideologically much closer to the CDU.

“We are convinced that our programme can be best implemented with the FDP. That means that we want to end the ‘grand coalition’ and form a coalition with the FDP,” Merkel said Sunday.

Although 54-year-old Merkel herself, chancellor since 2005, remains popular, poll ratings indicate that the CDU/CSU and the FDP will have their work cut out winning a majority of seats in the September 27 vote.

Merkel was due to present the manifesto, which includes €15 billion ($21 billion) in tax cuts despite Germany’s worst recession in decades torpedoing its public finances, at a party conference in Berlin on Monday.

“We have to prevent every cent that people get through wage increases going straight to the taxman,” she said.

Merkel declined to say when the tax cuts would happen, which involve cutting the tax rate for low earners and raising the limit at which the highest tax rate kicks in, saying only that they will come in the next parliament.

She also ruled out increasing value added tax (VAT). Mindful of the public anger at the efforts of her predecessor, the SPD’s Gerhard Schröder, the manifesto was short on root-and-branch reform proposals for the labour market, the social security system or healthcare.

With less than 100 days to go until the election, the biggest issue in the campaign will be the sorry state of the German economy.

Despite two stimulus packages worth a combined €70 billion ($98 billion), the economy is on course to slump six percent this year, and unemployment is expected to rise above four million in 2010.

Despite a €480-billion rescue package for the financial sector and record low eurozone interest rates, banks remain wary about lending money to firms already struggling with the stormy economic conditions. Half a million people angered and worried by the recession rallied across Germany on May Day, and there have even been warnings in some quarters of social unrest.

The slump has also blown a “monstrous” hole in the country’s public finances, putting it on course to be in breach of European Union rules until 2013 or 2014, Finance Minister Peer Steinbrueck said last week.

The SPD meanwhile is in disarray, notching up its lowest-ever score in European elections on June 7. Its chancellor candidate, Foreign Minister Frank-Walter Steinmeier, is well behind Merkel in surveys of voters.

The latest poll on Sunday from ARD public television showed just 14 percent of voters thought that the SPD was the best party to steer Germany through the recession. The CDU/CSU scored 42 percent.

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7 tips for how to survive as a freelancer in Germany

Taking the decision to go it alone and freelance in Germany can be a daunting prospect. But, if you do it right, it can be an exciting and liberating path. Here are some of our top tips on how to survive.

7 tips for how to survive as a freelancer in Germany

1. Get a tax advisor

The German tax system is complicated, even for Germans. All the associated paperwork uses the Amtsprache (authority language) which is more like legalese than ‘normal’ German, and mistakes when filling out tax forms can cause you, at best, a massive headache and, at worst, a costly fine. So it’s best that you employ someone who knows what they’re doing to help you out.

That person is called a Steuerberater (tax advisor) in Germany. They will help you register with the tax office, correspond with them and submit your tax declarations.

Be aware that, in Germany, different deadlines apply for tax returns depending on whether you employ an official tax advisor or not. If you are doing the tax return on your own, the deadline for submitting your annual tax return is earlier than if you use a tax advisor’s services. 

READ ALSO: What NOT to do when you’re freelancing in Germany

When looking for a tax advisor, a top tip is to use your network to get recommendations. Ideally, you want someone who will do more than just fill in the forms for you, but who will actually advise you on how best to manage your business finances so that you can make tax savings.

2. Keep your accounting in order

The better you keep your own accounts in order, the easier it will be for your tax advisor to compile your tax declarations and therefore the cheaper their services will be.

As a freelancer, there are a lot of costs you can deduct from your taxes – from train tickets, working materials, to meals out – so it’s best to keep hold of all your receipts and to keep them in good order.

2 euros and 50 cents lie on a receipt in a beer garden. Photo: picture alliance/dpa | Peter Kneffel

In Germany, you’re obliged to keep hold of receipts for two years, in case of a tax inspection, so it’s a good idea to photocopy the type of machine-printed receipts you get from restaurants so that they stay legible for a long time.

There are also a few things to be aware of when writing your own invoices. Firstly, make sure that you include your tax number. This isn’t the 11-digit Steueridentifikationsnummer that everyone gets when registering in Germany, but the 10-digit Steuernummer you get from the Finanzamt after registering yourself as a freelancer. 

Most companies won’t pay you if you don’t have this on your invoices so make sure you include it.

You should also make sure that you number your invoices properly – ideally in ascending order so that you can easily keep track of them. You are not allowed to issue two invoices with the same number and if you do so and the finance office notices, you could face an inspection of your whole accounting system.

There are numerous great accounting software programmes you can use to help you, such as Lexoffice and Sevdesk and, even if you have to pay for them, the costs will be tax deductible!

3. Find out if you’re eligible for financial support

In Germany, there are several opportunities for freelancers to gain financial support and to cut their outgoings, and its worth finding out if you’re eligible for them.

If you’re claiming unemployment benefits under ALG 1 and are thinking about becoming a freelancer, the employment office offers a special type of financial support to help you to get your freelance business off the ground.

Called the Grundungszuschuss (“foundation grant”) the payment is a six-month grant equalling your monthly entitlement under ALG 1 plus €300 towards your insurance costs can be applied for those in receipt of this unemployment benefit.

READ ALSO: Will freelancers benefit from Germany’s €300 energy allowance?

If you are engaged in some form of artistic profession in Germany – which can include journalism to pottery – you may be entitled to membership to the Kunstlersozialkasse (artists’ social insurance).

Being a member of the KSK means you only have to pay half of your health insurance and pension contributions, and the KSK will pay the rest.

4. Work out how much you think you will earn

As with starting any business, you need to have some idea of your expected earnings from the outset.

If you’re just starting out as a freelancer, or have some freelance gigs on the side of an employment position, then it might be worth considering registering yourself as a Kleinunternehmer (“small business”).

As a Kleinunternehmer, you can currently earn up to €22.000 per year without having to charge VAT and having to submit only yearly tax declarations. 

An income tax declaration form lies on a table. Photo: picture alliance/dpa/dpa-Zentralbild | Hans-Jürgen Wiedl

Be aware that if you are registered as this kind of freelancer, you must include the following sentence in your invoices: ‘Gemäß § 19 UStG wird keine Umsatzsteuer berechnet’ which means ‘In accordance with Paragrah19 of the German VAT law, no VAT has been added to this invoice.’

READ ALSO: Everything you need to know about your German tax return in 2022

If you think you will earn more than €22.000 per year, you will need to pay Umsatzsteuer (VAT) and will have to submit tax declarations in advance and more often. Depending on how much you earn, this could be every month or every quarter. 

5. Get your insurance in order

In Germany, it’s a legal requirement to have health insurance.

If you’ve just made the move from employment to being a freelancer and want to keep the same health insurer, you should get in contact with your health insurance provider straight away to tell them about your change of circumstances. They will ask you to re-register and to tell them your projected freelance earnings for the year, so they can amend your monthly fees.

If you don’t keep your health insurer provider updated, you could continue to be charged the higher rate that you had from your previous salary.

The insurance cards of the health insurance companies DAK, AOK, Barmer and Techniker-Krankenkasse TK lie with euro notes under a stethoscope. Photo: picture alliance / dpa | Daniel Karmann

It’s not just health insurance you need to think about as a freelancer. It’s also wise to think about protecting yourself from any sort of claims that could arise as a result of any working mishaps. 

If, for example, you lose your laptop which contains confidential client information, you need to be protected against claims.

That’s why it’s good to have both Betriebshaftversicherung (business liability insurance) and Rechtschutzversicherung (legal protection insurance).

6. Plan your time wisely

All of these bureaucratic obligations take time. So it’s really important that you take account of that when planning your time. For example, planning half a day a week to deal with your invoices, filing, emails to clients, and conversations with authorities can be really beneficial when scheduling your working time. 

7. Grow your network

As a freelancer, networking is absolutely crucial to success. 

Keep an up-to-date profile on websites like LinkedIn and German equivalent XING and keep in contact with anyone you’ve ever worked with, no matter how brief the contact was. 

Having a network is not only about getting more clients, but also about building a support network in your field to exchange advice, tips and generally for your own enrichment. 

Participating in workshops related to your field, going to seminars, and meet-ups, can be great ways of broadening your network.