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Business or liberal profession
- What special rules and regulations do you need to comply with?
- What is the impact on taxes and compulsory memberships?
- Where do you have to register your self-employment?
Video: Business or liberal professionwww.startup-in-munich.de
Overview by the federal startup portalwww.existenzgruender.de
Doctors, lawyers, tax advisers and engineers are all examples of liberal professions. Scientific, artistic, writing, teaching, child education and consulting activities can also be liberal professions. It is important to clarify whether your planned activity genuinely belongs to the liberal professions. Classification can be difficult and depends on the individual case! Some liberal professions have to observe special rules of their profession. To find out if the qualifications which you acquired in your home country meet with these requirements, please go to the Federal Recognition Portal or book an appointment with the city’s Foreign Qualification Advisory and Support Service “Servicestelle zur Erschließung ausländischer Qualifikationen”, the local Chamber of Commerce and Industry or the Chamber of Skilled Crafts.
- You do not have to pay trade tax.
- A statement of net income is always sufficient regardless of turnover or profit.
- Membership of professional chambers may be compulsory, such as for architects, doctors, lawyers and tax advisers.
- Please note: Pension insurance may still be compulsory for you even if you are self-employed in a liberal profession.
- You may need to register with a professional association (“Berufsgenossenschaft”). Please contact the relevant association directly!
- You do not need to register your business with the Trade Office
- Register your self-employment directly with the Tax Office in two steps and complete the “tax assessment questionaire” [Fragebogen zur steuerlichen Erfassung]
- The Tax Office will then issue a tax number which you will need to write invoices for your self-employed activity.
In general, there is freedom of trade in Germany. But: There are trades requiring a permit, trades requiring supervision and trades requiring a licence (= craft), for which you need a special permit or licence.
- There is a trade tax liability.
- Income statement or double-entry bookkeeping (depending on legal form or amount of turnover/profit).
- Compulsory membership of the Chamber of Industry and Commerce (IHK) and/or Chamber of Crafts (HWK).
- Please note: even if you are self-employed in a trade, you may be subject to compulsory pension insurance.
- Registration with the statutory accident insurance [Gesetzliche Unfallversicherung] may be required. Please enquire directly with the insurance association!
Register your trade with the trade authorities and the tax office.
In general, there is freedom of trade in Germany. However, there are trades that require a permit or supervision for which you need special documents or a permit to register. For trades in the skilled trades that require a licence, you need a licence from the Chamber of Skilled Crafts. In addition, there are activities in the skilled crafts sector that are not subject to licensing and activities similar to skilled crafts or activities that are not classified as skilled crafts at all.
Particularities in the skilled crafts sector
Many craft activities may only be carried out if you have a corresponding licence. The prerequisite for this is that you yourself meet the necessary qualifications or employ a qualified company management. The Crafts Code determines which professions belong to the crafts and distinguishes between them:
- Crafts requiring authorisation, such as bakers, confectioners, tilers and others listed in Annex A of the Crafts Code.
- Crafts that are not subject to licensing, such as photographers, building cleaners and others in Annex B1 of the Crafts Code.
- Crafts similar to crafts such as beautician, alteration cutter, ice-cream maker and others in Annex B2 of the Crafts Code.
- These activities do not count as crafts
It is possible to be both a freelance and a commercial practitioner. These so-called mixed activities can be the case, for example, if a freelance alternative practitioner also sells food supplements, dietary or other health products (trade). Further examples are described here. If you want to avoid losing your status as a freelancer, you should separate the freelance and commercial activities for tax purposes. This means: either separate invoices are issued for the freelance and commercial activities or they are listed separately in one invoice. In the income tax return, however, the income must be declared separately. Otherwise there is a risk that the freelance income will be classified as commercial and thus liable to trade tax.
Therefore, check which of the mixed activities is to be classified as commercial or freelance. And whether the activities can be clearly separated from each other (“separable mixed activity”) or not (“inseparable mixed activity”).
The Institute for Liberal Professions (Institut für Freie Berufe) will answer any questions regarding difficulties in delimitation. For individual tax advice, contact a tax advisor of your choice.
The terms “Freiberufler“, “freelancer” and “self-employed” are often confused and used as synonyms.
Please note: Self-employed people in Germany are
- either business people [Gewerbetreibende] with an activity that is classified as a trade or a business [Gewerbe]
- or members of the liberal professions [Freiberufler] with an activity that is classified as a liberal profession [Freier Beruf]
Different rules apply to these two categories.
It is very important that you distinguish between these two types of new businesses and find out which one is right for you. Read on here
The terms “Freiberufler“, “freelancer” and “self-employed” are often confused and used as synonyms. Please note: Self-employed people in Germany are
- either business people [Gewerbetreibende]
- or members of the liberal professions [Freie Berufe].
Different rules apply to these two categories. It is very important that you distinguish between these two types of new businesses and find out which one is right for you. Read on here
Are you a member of the liberal professions? Register with Tax Office no later than one month after starting your self-employment.
The tax office responsible for you is determined by where you generate your income. In Munich turn to the Munich Tax Office [Finanzamt München].
Registering at the tax office is done digitally. All forms relating to tax registration are free or charge and available via ELSTER, the online portal used by the government’s financial administrative authorities. You may also use the forms provided by a commercial accounting software that is able to integrate with ELSTER. Please note, that in any case you are required to register once with ELSTER. The certificate file required for electronic authentication is created free of charge during registration. A domestic classification criterion (tax number) is essential for registration on the ELSTER portal.
Learn how to register with the tax office in two steps.