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Self-employment

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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

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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.

Lassen Sie sich beraten:

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

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

Deutsche Rentenversicherung Bund
[German Statutory Pension Insurance Scheme]

www.deutsche-rentenversicherung.de

Professional association info line
Phone: 0800 60 50 40 4

www.dguv.de/en

Munich Tax Office –
Information on taxes for start-up entrepreneurs

www.finanzamt.bayern.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

  • Step 1: Use the “Gewerbeanmeldung” form to register your business in person with the Department of Public Order (KVR or the local government office). You must present your ID card. Registration in Munich costs about EUR 50.
  • Step 2: Submit the “Fragebogen für die steuerliche Erfassung” (“Tax Assessment Questionnaire”) to the tax office.
  • The tax office will then give you a tax number which you will need in order to write invoices.

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. Examples include painters, varnishers, electricians, hairdressers, bakers and confectioners.

A distinction is drawn between:

  • Skilled crafts that require a license (for example bakers, confectioners and tilers)
  • Skilled crafts that do not require a license (for example photographers and cleaners)
  • Trades similar to skilled crafts (for example beauticians, alteration tailors, ice cream makers)

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

Deutsche Rentenversicherung Bund
[German Statutory Pension Insurance Scheme]

www.deutsche-rentenversicherung.de

Professional association info line
Phone: 0800 60 50 40 4

www.dguv.de/en

City of Munich, Department of Public Order (KVR)
Phone: 089 233-96030

www.muenchen.de

Fill-in help for registering a business in Munich

www.munich.de/startup

Munich Tax Office –
Information on taxes for start-up entrepreneurs

www.finanzamt.bayern.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

As a freelancer starting out in business, you are required to contact the Tax Office [Finanzamt] yourself.

Register a freelancing activity with the Tax Office [Finanzamt]

Regardless of the legal form of your newly commenced entrepreneurial activity, you are obliged to inform the tax office responsible for you within one month of opening the business or commencing the activity. In general, the tax office responsible for you is determined by where the activity is expected to be carried out predominantly. In Munich turn to the Munich Tax Office [ Finanzamt München]. They require all information on the legal and factual circumstances relevant for taxation. Depending on the legal form of your business, this information is to be provided on the relevant “tax registration questionnaire” [Fragebogen für die steuerliche Erfassung]. The questionnaire is available in German language only via “Mein ELSTER”,  the financial administration portal. A one-time registration for “Mein ELSTER” is required before you can access the questionnaire. Please be careful when completing this form,  mistakes may have important consequences. If you have questions, consult your tax advisor. Please understand that for legal reasons we are not allowed to provide individual tax advice. Once you have submitted the questionnaire to the tax office you will be assigned a tax number which you will need in order to write invoices.

Munich Tax Office: information on tax registration in English language (PDF, 153 KB)

ELSTER Portal: information in easy German language

Munich Tax Office: tax registration questionnaires (German language)

Munich Tax Office: contact persons for new businesses (German language)

Munich Tax Office: information on taxes for new businesses (German language)

ELSTER Portal: guidance for the tax registration questionnaire (German language)

 

Types of new businesses: Self-employed people are either business people [Gewerbetreibende] or members of the liberal professions [Freie Berufe]. Different rules apply to these two categories. Are you not certain whether the tax office will classify your activity as one of the liberal professions [Freie Berufe]? Read on here

Further steps

Please check if you are required to inform other authorities such as the social insurance system, if you need any permits and which laws and regulations apply to your future business.