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What NOT to do when you’re freelancing in Germany

Thanks to a mountain of bureaucracy, a tricky healthcare system and a complicated language, freelancing in Germany can seem overwhelming at times, but there are ways to make it work. Here's our tips on what you should avoid doing when you decide to go 'Selbstständig' or self employed.

What NOT to do when you're freelancing in Germany
Is the freelance life for you? Photo: Depositphotos/Vinnstock

Don’t fill out the forms without help

When I decided to move to Germany from my home country of Scotland and enter the world of freelancing, I knew it wouldn’t be an easy gig.

Arriving in another land where I struggled to get to grips with a new system – as well as a new language – was a bit of a culture shock to put it mildly.

This was a country where people had warned me you might be told off for crossing the street when it's not a green light. Although it’s true that Germans are more direct, and this sometimes comes off as a bit rude through the eyes of native English speakers, my general experience is that German people are helpful.

Or maybe they just love bureaucracy because every German person I’ve asked to help with some of the massively complicated forms you’re dealt here – whether it’s to register your address (Anmeldung) or register as a freelancer – have happily helped.

And that’s the first thing I’d say to anyone who’s new in Germany: don’t suffer alone. You don’t have to and it’s not worth it. Even if your German language skills are good, some of the terms in the forms are difficult to digest.

SEE ALSO: Everything you need to know about becoming a freelancer in Germany

Bureaucracy in most countries can be tricky to understand because it’s always full of jargon so don’t feel embarrassed to ask a German acquaintance to take a look, or get in touch with a consultancy service who can assist.

That way you won’t make any mistakes when it comes to establishing if you should tick the Gewerbetreibende (tradesperson) box, which usually means you are offering a product, and either building, selling or trading things. If you are in this self-employed camp then you have to register your business, too.

Or you can choose the Freiberuflicher (freelancer) option which means you have a bit less paperwork because you don’t have to register a business. The kind of jobs that usually fall under freiberuflich include qualified computer programmers, translators, foreign language teachers and writers.

Similarly when you’re filling out your form (Fragebogen zur steuerliche Erfassung) to give to the the tax office (Finanzamt) so you can receive your tax number, you don’t want to accidentally set up a direct debit (it will be the ‘SEPA’ section in the form) to pay tax when you’d rather transfer it yourself, or tick a box that means you have to pay church tax (Kirchensteuer) if that’s not what you intended to do.

Don’t forget about your tax declaration form even if you think you won’t have to pay any tax

This brings us to the next point. Kathleen Parker, of Red Tape Translation, a consultancy service that helps people from abroad with their queries about settling in Germany, says expats often make the mistake of not filling out their profit and loss statement for self-employed people (Einnahmeüberschussrechnung) because they think they haven’t earned enough to pay tax.

But Parker, who’s from Queensland, Australia and arrived in Germany in 2009, says freelancers shouldn’t make this error because they could be billed for tax at a higher amount. This could be the case if they’ve written an estimated figure, which is more than what they've earned in reality, in the questionnaire they filled in to receive their tax number.

“When you register as a freelance and tell the Finanzamt what you’re doing you fill in this big long form and you tell them how much you think you’re going to earn,” Parker,  a registered freelancer who also works as an opera singer and translator, told The Local.

“Then time goes by, you get caught up in life and you forget to submit your profit and loss form, and perhaps you didn’t really earn very much so you don’t think it’s necessary.

“But then you get a massive bill from the tax department based on the prediction that you made in the form that you forgot you filled out more than a year earlier.”

Tax office. Photo: DPA

Parker explains that the tax office will presume you’ve earned what you’ve predicted if you don’t submit your profit and loss.

“If you’ve made a lot less money than that it can be a disaster,” she says. Previously, the deadline for submitting your tax return was May of the following year if you did it on your own, or the end of December of the following year if you hired a tax advisor to do it for you. 

However, from this year the deadline is July 2019 for 2018 earnings if you're doing it alone, and February 2020 with a tax advisor, explains Parker.

Don't write invoices incorrectly

It seems a simple enough concept: you charge people or companies for your work and they pay you the money. But if you don’t submit your invoice properly to them then there’s a chance you won’t get your money.

That isn’t fun so it’s essential to do some research, ask around and prepare your German invoice templates in advance.

SEE ALSO: How one piece of paper holds the key to your future in Germany

Parker says she often finds internationals use the wrong number on their invoice. You receive an 11 digits-long tax identification number called a Steueridentifikationsnummer when  you register your address. But this number, although it has the word ‘tax’ in it, does not belong on your invoice.

Keep it safe and store it away for when you might need it, such as for an employment contract.

What you need on your client invoices is the Steuernummer. That’s the 10-digit number that you received after you submitted your form to the Finanzamt.

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

Parker also explains that if you’re classified as a ‘small business’ in Germany (and that can apply to freelancers too who are not earning vast amounts of money) it means you neither charge VAT on your invoices or claim VAT on your expenses. The current limit for charging VAT is €17,500 per year. So you need a legal statement at the bottom of your invoice that explains that.

The paragraph should look something like this: 'Gemäß § 19 UStG wird keine Umsatzsteuer berechnet' and means 'In accordance with Paragrah19 of the German VAT law, no VAT has been added to this invoice.'

If you’re changing anything else to do with VAT – for example because of the client you’re doing business with – you must explain it in your invoice.

Don’t sell yourself short

When you’re freelance, it can be quite easy to accept payment even if it isn’t high enough because you’re worried about not having enough work.

Plus if you’re in a competitive industry –  such as foreign language teaching – you might feel the need to lower your rates to attract customers.

But experts advise something different.

“The worst thing you can do is to ask for too little money, to be too cheap,” Chris Pyak, expat recruitment expert and author of How to Win Jobs and Influence Germans, told The Local.

“This is particularly common when people are just starting out because they’re unsure as a freelancer and they’re not sure how much to ask.”

Working from home, or 'home office' as the Germans call it. Photo: Depositphotos/Igorvetushko

Pyak says it’s untrue that people always go for the cheapest option.

“Deliver the best solution to the customer, make a profit and invest in your future business and retirement,” says Pyak.

“People will doubt that it’s a good service if it’s cheap,” he adds.

Parker agrees. “Germany isn’t set up very well to accommodate freelancers who don’t earn a lot of money,” she says. “If you’re a freelancer in Germany you the system expects you to earn €700 net per day. That’s not realistic for most freelancers especially when they start out.

“My general advice to freelancers is that you should find out what a normal salary in your industry is for an employee and then double or triple it and find out your hourly rate based on that.”

Don’t bury your head in the sand

When concerns are piling up, it can be easy to ignore them and hope everything will be fine. But at some point you have to address it.

A common problem that many freelancers face is finding health insurance that they can afford. This is a tricky one because health insurance is a must – it’s illegal not to have it – so you can’t skip it.

Talk to a health insurance broker to find out your options. They’ll provide advice for free.

British freelancers (while the UK is still in the EU) can get onto public health insurance (Krankenkasse) within three months of arriving in Germany because the NHS system is a public health system. After that you lose your eligibility for voluntary membership in German public health insurance, and must opt for private health insurance.

There are pros and cons for both so it’s best to talk through your healthcare situation with a professional who can detail the different plans.

“People who decide they want to stay in Germany long-term might decide to go for the cheapest private health cover but it becomes a problem further down the track when it’s more expensive,” says Parker.

“It’s difficult to get out of private health insurance once you’re in it so I would recommend freelancers to talk to an insurance broker before jumping into anything.”

Parker adds that freelancers should remember to count health insurance payments as a personal expense that you can declare on your personal tax return.

You can often claim business expenses like phone bills, travel cards and coffees with clients, and submit it with your profit and loss statement. Check with a tax advisor or consultant if you're not sure on what counts as expenses. And remember to keep all receipts.

There's also new services, such as SMartDe, which is a Genossenschaft (cooperative) that effectively employs freelancers and contributes to health insurance and other contributions.

Don't limit yourself to other options

If freelancing isn’t working out for you it’s time to diversify, or look for clients in different ways. In Germany there’s plenty of opportunities to try different things or ways to gain new customers. For example, if you’re a freelance editor or translator you can advertise on sites like Ebay Kleinanzeigen or Craigslist, among other sites.

Perhaps you could try doing a training course. In my own experience, taking part in an English language teaching course was a brilliant way to meet new people when I arrived here and it gave me an extra skill that I could use while writing.

There are also coding classes, as well as English language university courses if further education is something you’re interested in.

Pyak advises taking time out and analyzing your business.

“If people are struggling then there are two possible problems: either the service they are selling is not right for the market. Or they didn’t ask for enough money,” he says.

“Every year in December I take one month off to think about my business strategy and what I want to achieve in the next year. Every year the outcome is: raise my prices.

“You need to really deeply analyze your business and to understand, not only your customer in deep detail, but also your own goal and what you want to achieve.”

Are you a freelancer in Germany? What's your experience? Let us know. 

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For members

BREXIT

EXPLAINED: How can Brits visit or move to Germany post-Brexit?

Many Brits may be considering spending time in Germany or even moving for work or to study. Here's a look at the rules.

EXPLAINED: How can Brits visit or move to Germany post-Brexit?

The Brexit transition period ended on January 1st 2021, but it’s been a turbulent few years with Covid-related restrictions, which mean many people may not have travelled abroad since then. Here’s what you should know about the rules for travelling and moving to Germany post-Brexit. 

Can I visit Germany from the UK on holiday?

Absolutely. But you do have to stick to certain rules on how long you can stay in Germany (and other EU countries) without a visa.

“British citizens do not require a visa for the Schengen Member States, if the duration of their stay does not exceed 90 days within any 180-day period,” says the German Missions consular service in the UK. 

You can find a full explanation of the 90-day rule from our sister site, The Local France, HERE, along with the Schengen calculator that allows you to work out your allowance.

READ ALSO: Passport scans and €7 fees: What will change for EU travel in 2022 and 2023

Note that if you were living in Germany before January 1st 2021, different rules apply. People in this scenario should have received a residence permit – known as the Aufenthaltstitel-GB – from the German authorities, which proves their right to remain in Germany with the same rights as they had before Brexit. 

READ ALSO: Reader question: How can I re-enter Germany without my post-Brexit residence card?

Can I move to Germany from the UK after the Brexit transition period?

Yes. But if you are coming to Germany to live and work, you will need to apply for the right documents, like other so-called ‘third country nationals’. All foreigners from outside the EU who want to to stay in Germany for more than three months have to get a residence permit (Aufenthaltstitel). 

As we touched on above, citizens from some countries (including the UK, USA, Canada, Australia, Japan, Israel, New Zealand and Switzerland) are allowed entry into Germany without a visa and can apply for a residence permit while in the country. You can contact the Foreigners Office (Ausländerbehörde) in your area to find out how to get a residence permit.

You’ll need various official documents, such as a valid passport, proof of health insurance and proof that you can support yourself. You usually receive your residence permit as a sticker in your passport.

Passengers wait at Hamburg airport.

Passengers at Hamburg airport. Brits coming to Germany have more things to consider after Brexit. Photo: picture alliance/dpa | Markus Scholz

Germany has a well-documented skilled worker shortage at the moment so there are work permit options to consider that may suit your circumstances. 

For the work visa for qualified professionals, for instance, your qualifications have to be either recognised in Germany or comparable to those from a German higher education facility. 

You may also be able to get an EU Blue Card. This residence permit is aimed at attracting and enabling highly qualified third-country nationals to live in the EU. 

It comes with benefits, including the right to to request and bring family members to the country, and shortcuts for applying for permanent residency. 

READ ALSO: EXPLAINED: How German citizenship differs from permanent residency

When applying for a Blue Card in Germany this year, you have to earn a minimum gross salary (before tax) of €56,400 – down from €56,800 in 2021. 

In so-called shortage occupations (Mangelberufe), where there is a high number of unfilled positions, the minimum gross salary is €43,992 – down from €44,304 in 2021.

Shortage occupations include employees in the sectors of mathematics, IT, natural sciences, engineering and medicine.

If you want to come to Germany from the UK to study then you also need to apply for a visa. For this you may need proof of acceptance to the university or higher education institution of your choice and possibly proof of your German language skills.

Check out the useful government website Make it in Germany for more detailed information, as well as the German Missions in the UK site, which has lots of info on travel after Brexit, and on visas.  

What else should I know?

The German government plans to reform the immigration system, although it’s not clear at this stage when this will happen. 

It will move to a points-based system, inspired by countries like Canada, where foreigners will have to score above a certain threshold of points to get a residence or work permit.

This scoring system will be set by the government, but it will include factors like language skills, family connections to the country, specific qualifications or work-related skills, or the amount of money in your bank account.

Keep an eye on The Local’s home page for updates on the changes to immigration laws. 

Have you moved to Germany – or are thinking about moving – after the Brexit transition period and want to share your experiences? Please get in touch by emailing [email protected] 

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