Business or liberal profession

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.

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 ELSTER. Only 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:

Munich 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:

Anleitung 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.