The fundamentals of freelancing in Berlin
Working on a self-employed basis has some significant perks, so more people are venturing out on their own. Berlin has the highest percentage of self-employed people in Germany – and for good reason. In a city that’s brimming with opportunities to work across many diverse industries and areas, being a freelancer is both rewarding and exciting.
Good starting points for going solo are being well-organized, having an impressive portfolio and a broad professional network. But for self-employed success in Berlin, there are several other key things to consider.
1. Register with the Finanzamt
Once you decide to become a freelancer in Berlin, you need to let your local tax office (Finanzamt) know by registering with them. To do this you must first have a valid visa (if you’re from outside the EU), a registered address in Berlin, and a tax identification number (Steuer-Identifikationsnummer), which you’ll have received when you registered your address in the city.
If you have all of these things, you can then complete the tax registration form known as a Fragebogen zur steuerlichen Erfassung (Formular 001) online. Once completed, print the form and send it by mail or take it to your local Finanzamt. The form is only available in German, which means you might need help filling it out: The Berlin Chamber of Industry and Commerce (IHK) provides consultancy services and seminars for people starting their own business and can help with formalities.
After you submit your registration, you’ll receive a tax number (Steuernummer) a few weeks later in the post. This is the number you need to include on all future invoices to your clients.
2. Choose your self-employed status
As a self-employed person in Germany, when you register your status with the Finanzamt, you need to identify what type of business you are according to three different categories:
- Kleinunternehmer (small business): a Gewerbe or Freiberufler with a low revenue under €17,500 in the first year and a revenue of less than €50,000 in the following years. As a small business owner earning less than €17,500, you do not have to pay VAT.
- Freiberufler (freelancer): a freelance professional with special qualifications who sell their services. For example self-employed doctors, lawyers, accountants, and engineers. As a freelancer, you do not need a trade licence (Gewerbeschein), to pay trade tax (Gewerbesteuer)or to enrol in the German Trade Register (Handelsregister).
- Gewerbe/Gewerbetreibende (trade/tradesperson): a business or a freelancer with a common job. For example: traders, caterers, craftspeople or producers of goods. As a trades person, you must obtain a trade licence (Gewerbeschein), pay trade tax (Gewerbesteuer)and enrol in the German Trade Register (Handelsregister).
3. Find the right health insurance
Having health insurance (Krankenkasse) is mandatory in Germany, and as a freelancer, small business owner or tradesperson you will need to cover the cost of your own insurance. Once you’ve registered as self-employed, you need to also enroll yourself in a health insurance plan.
There are two kinds of health insurance and you can decide if you want to go with a public or private insurance scheme as follows:
- Public health insurance (Gesetzliche Krankenversicherung or GKV ) – is the most typical coverage and also mandatory (pflicht) for people earning less than €56,000 a year. Three of the most common providers are TK (Techniker Krankenkasse), AOK and Barmer GEK.
- Private health insurance (Private Krankenversicherung or PKV) – is for people who do not qualify for the public system for various reasons - or for those who choose PKV as an option when earning more than €56,000 a year.
Monthly fees for public health insurance depends on your income. Costs are around 14% of your earnings, but is bound to a minimum and maximum. The cost of private health insurance depends on what type you choose, and what you want to include. For example, if you want additional coverage for dental and alternative medicines, it will be more expensive. It can also increase when you get older and have particular health needs.
Are you applicable for Künstlersozialkasse (KSK)?
The Künstlersozialkasse provides social health insurance assistance for self-employed people who are deemed ‘artists’, which can include roles like freelance journalists, freelance authors or freelance designers. To be considered, you must submit an application to the KSK proving your self-employment statusagainst their strict criteria. If accepted into the scheme, it significantly cuts your costs.The KSK pays half your monthly insurance fees and covers health insurance, pensions, and social security payment.
4. Manage your taxes
As a self-employed person, you must regularly declare your income to the tax office, so your taxes can be calculated annually. As a freelancer, you should familiarize yourself with the German tax system and learn more about the types of taxes that are especially relevant to entrepreneurs. When you’re starting out, it’s a good idea to seek professional advice from a tax advisor known as a Steuerberater who can deal with the tax office on your behalf, optimize your expenses and maximize your tax return.
Alternatively, if your German is good and you feel confident doing your own taxes, you can submit your return online using Elster Online (in German). Using online bookkeeping programs is also a good way of managing expenses and keeping track of invoices.
5. Build a network and find clients
Building a strong professional network is key to succeeding as a self-employed dynamo in Berlin. Networking in the capital extends beyond typical business gatherings to offer some of the best events and activities in Europe. So finding your next work opportunity is both enjoyable and interesting.
If you prefer working in a space that is not your home, Berlin offers a range of locations across the city for coworking. These flexible hotspots give insight into the Berlin business scene, and allow you to easily network and socialize.
6. Get help
Fortunately, when it comes to going self-employed, Berlin offers different professional services to help you get set up properly. From to business networks to consulting services like the IHK to agencies like Berlin Partner. Our Business Immigration Service provides information regarding and help with visa and residence title related issues.
Text: Trish Elms
Header Image: Brooke Cagle on Unsplash