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Starting in Germany & Mehrwertsteuer
Thread poster: slug
slug
German to English
+ ...
Oct 11, 2001

I\'m a British citizen living in Germany and I would like to begin proof-reading and teaching English shortly, and to begin translating as soon as I feel confident enough.



The Finanzamt has told me that all of these occupations are \'Freiberuflich\' so I don\'t need a \'Gewerbeschein\'... I just need to report my earnings at the end of the year.



I have two questions:



How much money should I put aside for income tax? I realise this depends on how much I earn... I expect to be on the lower end of the tax bracket (why change the habit of a lifetime(-:



Do I need to charge Mehrwertsteuer to my customers and then pay it to the Finanzamt later? Or do I only need to do that if I (by some miracle) earn more than the Mehrwertsteuer threshold.



Any other information on starting and operating in Germany would be gratefully accepted.



Cheers



slug


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Thomas Bollmann  Identity Verified
Germany
Local time: 00:33
English to German
+ ...
Freiberufler Oct 11, 2001

Go to the website of the Bundesverband der Freien Berufe (www.freie-berufe.de). There you can find a pdf-file with an awful lot of information for Freiberufler. This will help you a lot not only regarding to taxes.

Ask your Finanzamt for Mehrwertsteuer etc. I am sure they will help you.

I hope I could help you a bit.


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Karin Walker  Identity Verified
Germany
Local time: 00:33
German to English
+ ...
Starting in Germany Oct 12, 2001

Hi Slug,



I posted the very same question on proz a while back but got no reply. Good to see another person in the same boat!



\"How much money should I put aside for income tax? I realise this depends on how much I earn... I expect to be on the lower end of the tax bracket (why change the habit of a lifetime(-: \"



As far as I am aware, the lowest tax rate is around 23 percent. So you should definitely expect to be putting away about a quarter of your earnings for tax. If you have never done a tax return in Germany yet, you do not pay tax for the year until you do your tax return for that year. Depending on your incomings and outgoings, you may or may not have to pay back tax. From then on, things change - you have to pay your estimated income tax quarterly in advance, any differences are balanced out when you do your next tax return.



Don\'t forget that you will have to register for a social security number - as a freelancer you\'ll be liable for 100 percent of your contributions. Altogether, if you are in a lower income group, you\'ll be looking at retaining about 55 percent of your total earnings. ;-(



\"Do I need to charge Mehrwertsteuer to my customers and then pay it to the Finanzamt later? Or do I only need to do that if I (by some miracle) earn more than the Mehrwertsteuer threshold. \"



Yes, there is a threshold. Check with a tax expert or on the Internet what it currently is - I think about 32,500 marks. The year after you reach that threshold you have to start charging VAT to your customers. AGain, it\'s similar to income tax: you have to do a \"Umsatzsteuervoranmeldung\" and pay VAT quarterly in advance. So unless you reach the above threshold, whatever it is, no VAT is levied. The advantage, however, of charging VAT is that you can claim back any VAT you pay on items/equipment you buy for business purposes (i.e. on books, computers etc.)



E-mail me direct if you want to talk. This is a hot topic for me as well.



HTH

Karin


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slug
German to English
+ ...
TOPIC STARTER
Ta! Oct 12, 2001

Thanks Thomas F



You\'re fab!



I\'ll go and take a look right now.



All the best



slug





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Alison Schwitzgebel
Germany
Local time: 00:33
Member (2002)
German to English
+ ...
How much you put away depends on how much you're planning to earn! Oct 12, 2001

My initial comment would be \"Find a Steuerberater\". They will be able to give you all the information on taxes you will ever need. OK, you have to pay them for it, but it\'s money well invested.



When you write your invoices, you will have to charge 16% VAT (Mehrwertsteuer), which you will have to return to the tax authorities at the end of the year - so put away at LEAST this much from every invoice. (unless you buy anything (even paper), in which case you can offset the VAT on the item bought against the VAT you charge your customers).



You will need to get a \"Steuernummer\" from your local \"Finanzamt\" to start doing all this. They will fine you if they find that your\'re charging VAT and not disclosing it in your tax return at the end of the year.



HTH



Alison Riddell-Kachur


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