1

Self-employment

2

Review your business idea

3

Prepare a business plan

4

Financing & public support

5

Business or liberal profession

6

Legal structure

7

Taxes & Accounting

8

Company insurance

9

Social insurance

10

Networks & contacts

Business or liberal profession

Right at the beginning, you need to clarify whether your planned self-employed activity is classified as a business or a liberal profession. The decision has a number of legal and tax-related consequences.
  • 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?

Information and advice:

Video: Business or liberal profession

www.startup-in-munich.de

City of Munich startup assistance

www.startup-in-munich.de

Business start-up portal  (BMWi)
Starting a business as a freelancer

www.existenzgruender.de
Liberal professions

Liberal professions

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!

Impact

  • 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!

Registration

  • You do not need to register your business
  • Register your self-employment directly with the tax office by completing and submitting the “Fragebogen für die steuerliche Erfassung” (“Tax Assessment Questionnaire”).
  • The tax office will then give you a tax number which you will need to write invoices for your self-employed activity.
  • Learn more here

Lassen Sie sich beraten:

Go here for advice:
Institute for Liberal Professions (IFB)
Phone: 0911 23 565-28

www.ifb.uni-erlangen.de/en/

Register your freelancing activity with the tax office

www.startup-in-munich.de
Businesses

Businesses

In Germany, everyone is essentially free to register a business. But: Some trades or businesses require special permits, monitoring and/or licenses such as for skilled crafts.

Impact

  • You have to pay trade tax.
  • You must prepare a net income statement or double-entry bookkeeping (depending on the legal structure and/or the amount of revenue/profit).
  • Membership of the Chamber of Commerce and Industry (IHK) or the Chamber of Skilled Crafts (HWK) is compulsory.
  • Please note: Pension insurance may still be compulsory for you even if you are self-employed with a business.
  • You may need to register with a professional association (“Berufsgenossenschaft”). Please contact the relevant association directly!

Registration

Register your business with the local trade and tax office. Learn more here

Skilled crafts (“Handwerk”)

There are many crafts that require a license before you can start a business in this field. And you can only obtain a license if you yourself have the required qualifications, or if you employ suitably qualified management. The German Trade and Crafts Code “Handwerksordnung” determines  which activities belong to a craft or skilled trade. A distinction is drawn between:

Do you need official recognition of a certificate, diploma, or professional training in your home country in order to work in Germany? Contact the municipal Foreign Qualification Advisory and Support Service “Servicestelle zur Erschließung ausländischer Qualifikationen” for help.

More information

Video: Starting a business – General formalities

www.startup-in-munich.de

Munich Chamber of Skilled Crafts,
Startup Agency
Phone: 089 5119 167

www.hwk-muenchen.de

How to register your business with trade and the tax office

www.startup-in-munich.de
Mixed employment – business and liberal professions

Mixed employment – business and liberal professions

It is possible to have a combination of employment activities that are classified both as business and liberal profession. This mixed form of  self-employment might be the case, for example, if a alternative health practitioner (liberal profession) also sells food supplements, dietary or other health-related products (classified as a business). Anyone who does not want to risk losing their status as a liberal profession should separate taxation matters concerning their self-employed activities as a business and a liberal profession. This means creating separate invoices for the two different types of self-employment, or making sure they are listed separately on invoices. In any event, it is essential that the income for each type of self-employment is reported separately on one’s income tax declaration. Otherwise, there is a risk that the income for the liberal profession work will be classified as business and thus subject to trade tax.

So make sure to check which self-employment activities should be classed as liberal profession and which as business, and indeed whether the activities can be clearly separated (“trennbar gemischte Tätigkeit”) or not (“untrennbar gemischte Tätigkeit”).

The Institute for Liberal Professions can answer questions about the difficulties of separating the different forms of self-employment. For individual taxation advice contact a tax advisor of your choice.

More information

Existenzgründungsportal: Überblick gemischte Tätigkeiten

www.existenzgruender.de

Existenzgründungsportal: praktische Beispiele

www.existenzgruender.de

FAQ

How do I register my freelancing activity

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.

Schmuckbild

Since January 1st,  2021 you are obliged to submit the tax assessement questionnaire without prior notice from the tax office.

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, as all forms relating to tax registration are now only available via ELSTER, the online portal used by the government’s financial administrative authorities.

  • Step 1: Start by registering at www.elster.de – it only needs to be done once, is free, and requires no software installation.
  • Step 2: Your login details will then be sent to you, for security reasons, in two stages (by email and by post). Step 2:  Registration is then complete.

Via your user account you can go to the “Formulare & Leistungen > Alle Formulare” (“Forms & services > All forms”) section, fill out the “Fragebogen zur steuerlichen Erfassung” (“Tax Assessment Questionnaire”), and submit the completed form online to the tax office using ELSTEROnly after the tax office has received the completed questionnaire and the necessary documents can the tax number be issued and a VAT value-added tax assessment be made. You need the tax number in order to write invoices. Learn more in our post “Taxes & Accounting“.

English language information:

SchmuckbildMunich Tax Office: Important information on tax registration when starting an entrepreneurial activity (PDF, 150 KB)

Munich Tax Office: Glossary of Tax Terms (PDF, 855 KB)

German language information, please use a translation tool of your choice:

SchmuckbildAnleitung zur Anmeldung beim Finanzamt (PDF, MB)

 

Munich Tax Office: Tax Assessment Questionnaire [Finanzamt München: Fragebögen für die steuerliche Erfassung]

Munich Tax Office:  Contact persons for founders [Finanzamt München: Ansprechpartner für Gründer*innen]

Munich Tax Office: Tax information for founders [Finanzamt München: steuerliche Infos für Gründer*innen]

Online portal “Mein ELSTER”: instructions for the Tax Assessment Questionaire [Anleitung zum Fragebogen für die steuerlichen Erfassung]

Federal business startup portal: tax offices [Bundesexistenzgründungsportal: Finanzamt]

 

FAQ: What is the difference between “Steuer-ID”, “Steuernummer” and “Umsatzsteuer-ID”?

  • The “Steuer-ID” (tax identification number) consists of 11 digits, is specific to an individual, retains life-long validity, and is issued by the Federal Central Tax Office.
  • The “Steuernummer” (tax number) consists of 10 or 11 digits, usually divided by two forward slashes. It is issued by your local tax office when registering for taxation, for example if you are an employee or starting self-employment work . It is possible to have multiple tax numbers, for example if you are employed but also have a self-employed sideline job.
  • The “Umsatzsteuer-ID” (VAT identification number, abbreviated as USt-IdNr.) starts with the EU country abbreviation, DE for Germany, followed by up to twelve digits. Entrepreneurs are given this number in addition to the above-mentioned tax number for their work as a tradesperson or freelancer. It is issued by the Federal Central Tax Office. Entrepreneurs can apply for the VAT identification number via the “Fragebogen zur steuerlichen Erfassung” form (“Tax Assessment Questionnaire”). It is important for business transactions between companies in different EU countries.

Tip

Plan up to two weeks to complete your registration using the ELSTER portal. It can take a few weeks from submitting your “Fragebogen zur steuerlichen Erfassung” via Elster to receiving your tax number.  You might consider to start the ELSTER registration process before taking any other important starts to set up your business. If you have any technical difficulties, contact the ELSTER hotline here. Contact the tax office service desk here for general information over the phone. Contact a tax consultant of your choice for advice relating to taxes.

Tip

If you decide to start self-employed work as a member of the liberal professions , the tax office may well want to see proof of relevant qualifications such as completed degree course or comparable vocational qualification. To speed up the process of having your tax registration form checked, you can submit such documents when registering.

It is not always easy to determine which professions are classified as Freie Berufe (liberal professions) and thus qualify for freelance status. The tax office has the final say on whether your work is classified, from a taxation perspective, as freelance or trade. It often happens that people who see themselves as freelancers successfully register with the tax office without any questions arising. These people then frequently and incorrectly assume that they are now recognized as freelancers. If, despite doubts, you register as freelance (in German taxation language selbständig), no harm will be done as long as you are not subsequently classified as a tradesperson following an audit. It can be very expensive if you are later classified as a tradesperson and have to pay trade tax retrospectively.

In some cases it might even occur that the tax office accepts freelance status while the trades’ office (Gewerbeamt) demands that you register as a tradesperson. For example, the trades’ authorities recognize teaching as a freelance activity only if you can prove you have a degree from a university or university of applied sciences. Please see our special information for coaching, teaching and consulting activities.

Further Steps

Please check, if you are obliged to register with other institutions and authorities such as the social insurance agencies, if you require any offical licenses or permits and which rules and regulations might be important when running your business.