Freelancer in Germany
Thread poster: Sónia Tavares

Sónia Tavares
Germany
Local time: 12:26
English to Portuguese
+ ...
Oct 19, 2016

Hi all!

I have just moved to Germany and I have to issue invoices to my clients, however I have no idea how to proceed in Germany. Can you help me, please?

- do I need to register somewhere?

- can I use a word template to create the invoice?

- how can I register in VIES?

- how can I pay my taxes, and taxes for health insurance and retirement? Do I need to have an accountent?

Thanks a lot in advance!
Sonia


 

Sheila Wilson  Identity Verified
Spain
Local time: 11:26
Member (2007)
English
+ ...
You can spend time or money on it Oct 19, 2016

You say you've already moved and you have an established client base and are therefore working? The first question is: Are you registered in another EU country? If so, you can continue to invoice from there for up to three months (in principle - I'm sure there are exceptions).

If you can't get any money in then you need to act fast. As you don't seem to have done any prior research whatsoever I'd suggest you do the last thing on your list: get an accountant.

To others in the same boat, I'd advise thorough research before moving. There are many ways to make the move easier and less expensive, but acquiring the knowledge takes time. Every piece of information you find online has to be double and triple checked, particularly from forums. Here in Spain the steps are multiple and all have to be done in the right order. In France too it's difficult (to the point where I spent a lot of time helping French nationals to set up as self-employed). I suspect it's easier in Germany but there will still be a best way of doing it, and decisions to be made that can affect your future.


 

RobinB  Identity Verified
United States
Local time: 05:26
German to English
Straightforward Oct 19, 2016

Hi Sónia,

Welcome to Germany!

Registering as a freelance translator is really straightforward here. All you have to do is tell your local tax office (Finanzamt) that you've started work as a self-employed translator, and they'll send you a form to fill out (it used to be only a couple of pages long, but unfortunately it's now grown to six or more pages). One of the boxes to tick there is whether you want an EU VAT ID (USt-ID-Nr.). They're actually handled by a separate government agency, and it will normally take 6 to 8 weeks to get your VAT ID issued.

You should receive your regular tax number (for income tax and domestic VAT) within three to four weeks, depending on where you live.

The information required on German invoices is stipulated in the German VAT Act (Umsatzsteuergesetz). Googling that should give you plenty of examples. A summary of all the VAT-related requirements for translators is published and occasionally updated by our colleague Per Döhler. The latest (I think 2015) version is available here:

http://www.triacom.com/content.archive/content.de.html

However, I would also urge you to use the services of a tax adviser/accountant (Steuerberater), at least for the first couple of years. They can then handle all communication with the Finanzamt for you, including things like applying for the facility to file your monthly VAT returns the second month after the reporting month (rather than by the 10th of the following month), that sort of thing, as well as filing your income tax returns. Because of the relatively large number of deductions and allowances you can claim, it makes sense to get professional help with this.

Depending on your income, the tax office may require you to make quarterly advance payments of income tax as well. Income tax rates in Germany are quite modest.

There is no compulsory state health or pension insurance for self-employed people in Germany. However, everybody has to have health insurance of some sort (private or state schemes). If you're only to be in Germany for a few years, and then return to another EU country where you've been paying state health insurance, it would probably make most sense to join one of the statutory health insurance schemes (gesetzliche Krankenkassen), which all now charge the same basic tariff. Private health insurance can be cheaper, but most of the private insurers are going to be hiking their rates by a double-digit percentage amount next year, so beware.

Of course it also makes sense to have some sort of pension insurance, but the German state scheme is expensive and won't pay out very much at the end. The present coalition government plans to introduce compulsory pension insurance at some point (with private insurance as one of the allowed options), and the BDÜ (the national T&I association) is currently in talks with the government in particular to ensure fair grandfathering arrangements.

Your Steuerberater will also be able to advise you on all of these issues.

Overall, the bureaucracy for self-employed translators in Germany is very light - and far less onerous than most other countries.

Good luck, and enjoy life here in Germany - there's a lot to enjoy (i.e. not just the high standard of living and relatively low costs).

Robin


 

Kelly Neudorfer  Identity Verified
Germany
Local time: 12:26
German to English
yes Oct 19, 2016

Sónia Tavares wrote:

Hi all!

I have just moved to Germany and I have to issue invoices to my clients, however I have no idea how to proceed in Germany. Can you help me, please?

- do I need to register somewhere?


Yes, you need to contact your local Finanzamt and register as a freelancer. You'll need to tell them whether you anticipate making less than 17,500€ in your first year (careful, if you start now in October then I believe they'll take your earnings from Oct-Dec and multiply them by 4 to see what you theoretically would have made for the year as the basis for the calculations) *and* less than 50,000 in your second year. If not, then you fall under the "Kleinunternehmerregelung" and don't have to charge VAT. If you will make more, then you'll need a VAT ID number for your invoices. If you're a Kleinunternehmerin then you'll still get a separate tax number to put on your invoices. You can also choose to voluntarily get a VAT number even if you make less than 17500€, which you will need to do if you send invoices to EU entities and use the reverse charge mechanism. For a VAT you have to contact the Bundeszentralamt für Steuern. Read more here:
http://www.bzst.de/DE/Steuern_International/USt_Identifikationsnummer/USt_Identifikationsnummer_node.html

Sónia Tavares wrote:
- can I use a word template to create the invoice?


Yes, the only regulations there are about invoices deal with the content, not the formatting. As long as the information listed in the link below is included, it's fine.

http://www.frankfurt-main.ihk.de/recht/steuerrecht/umsatzsteuer_national/rechnungsstellung_pflichtangaben/

Sónia Tavares wrote:
- how can I register in VIES?


I don't know, but since it's European-wide I imagine you can google some instructions in English.

Sónia Tavares wrote:
- how can I pay my taxes, and taxes for health insurance and retirement? Do I need to have an accountent?

Thanks a lot in advance!
Sonia


You do not *need* an accountant. However, since you're brand new in Germany, I would highly recommend one. They will help you understand how everything works, what you can write off, etc. Once you get the hang of it after a few years you can either continue to let them do it or do it yourself.

You will need to either get private health insurance or register with one of the gesetzliche Krankenkassen for voluntary statutory insurance (freiwillige gesetzliche Krankenversicherung). Private health insurance premiums have a wide range depending on your age, health history, and what sort of services you want included. If you choose to voluntarily be part of the gesetzliche Krankenversicherung (GKV), then you'll pay 16% of your income (although there is a minimum and a maximum fee). In the first year you'll have to guess how much that will be, and after that it's based on your previous year's tax returns - although you will have to adjust and pay more or get a refund at the end of each year when you know how much you actually made. With the GKV you can also choose whether to pay for long-term care insurance (Pflegeversicherung).

As for retirement insurance, you'll need to get something private. Freelancers are not included in the state pension scheme, although there is currently legislation being worked on that might change that. For now, though, you're on your own.

Hope that helps!


 

Kelly Neudorfer  Identity Verified
Germany
Local time: 12:26
German to English
ps Oct 19, 2016

I wasn't trying to correct or add to the previous posts- when I started my response there were no replies yet. Then I got distracted, came back and finished, and posted. So don't interpret my response as a correction of any of the previous ones. From what I read we all seem to agree with each other on how it works, though.icon_smile.gif

 

RobinB  Identity Verified
United States
Local time: 05:26
German to English
No worries Oct 19, 2016

Kelly Neudorfer wrote:

I wasn't trying to correct or add to the previous posts- when I started my response there were no replies yet. Then I got distracted, came back and finished, and posted. So don't interpret my response as a correction of any of the previous ones. From what I read we all seem to agree with each other on how it works, though.icon_smile.gif


No worries, Kelly. The only thing I would "correct" in your post is that you don't have to contact the BZSt yourself: checking the relevant box on the regular tax registration form will take care of that.

But I would argue that trying to claim the KleinunternehmerIn exemption for VAT is probably only worthwhile if you're working part-time, and your clients are mainly private persons, rather than businesses (after all, you're no cheaper to a business if you don't charge VAT). The registration threshold in Germany is so low, it's easy to breach it, and then you face the risk of having to pay VAT in arrears.

Robin


 

Sónia Tavares
Germany
Local time: 12:26
English to Portuguese
+ ...
TOPIC STARTER
Thank you Oct 19, 2016

Thank you all for the quick replies!

Just to make sure...
- only income tax payments are mandatory not the pension, right?

How much would an accountant charge per month, any idea?
I think I will hire one. It's safer for now.

Thank you all!


 

RobinB  Identity Verified
United States
Local time: 05:26
German to English
Tax accountant charges Oct 19, 2016

are regulated by law, so it will all depend on what exactly you want them to do, and what the value of e.g. your tax return is.

The simplest thing would be to find a tax accountant and ask them!

And yes, only income tax payments and healthcare insurance are mandatory.

Robin


 

Kelly Neudorfer  Identity Verified
Germany
Local time: 12:26
German to English
BZSt Oct 19, 2016

RobinB wrote:

Kelly Neudorfer wrote:

I wasn't trying to correct or add to the previous posts- when I started my response there were no replies yet. Then I got distracted, came back and finished, and posted. So don't interpret my response as a correction of any of the previous ones. From what I read we all seem to agree with each other on how it works, though.icon_smile.gif


No worries, Kelly. The only thing I would "correct" in your post is that you don't have to contact the BZSt yourself: checking the relevant box on the regular tax registration form will take care of that.

But I would argue that trying to claim the KleinunternehmerIn exemption for VAT is probably only worthwhile if you're working part-time, and your clients are mainly private persons, rather than businesses (after all, you're no cheaper to a business if you don't charge VAT). The registration threshold in Germany is so low, it's easy to breach it, and then you face the risk of having to pay VAT in arrears.

Robin


Ah, okay. I worked for years (part-time in addition to my studies) as a Kleinunternehmer and didn't have to get a VAT number until I needed it for an invoice using the reverse-charge mechanism. Since I had already been registered for years, I was told by the Finanzamt that I needed to get my VAT no. from the BZSt directly. It also took around 6-8 weeks, I think, so it wasn't any faster than applying through the Finanzamt.


 

Woodstock  Identity Verified
Germany
Local time: 12:26
Member (2005)
German to English
+ ...
So far no one has mentioned the obligatory residency permit Oct 20, 2016

Do the German authorities even know you are here? That has to be done before anything else:
https://www.justlanded.de/english/Germany/Germany-Guide/Visas-Permits/Residence-registration-in-Germany

"Within a week of finding permanent accommodation (i.e. not a hotel), you have to register your address at the local Residence Registration Office (Einwohnermeldeamt), usually located in the town or city hall."

This is the required first step, anything work-related comes after this first step, otherwise you are not considered a legal resident and could run into problems.


 

RobinB  Identity Verified
United States
Local time: 05:26
German to English
No, we didn't Oct 20, 2016

Woodstock wrote:

Do the German authorities even know you are here? That has to be done before anything else:
https://www.justlanded.de/english/Germany/Germany-Guide/Visas-Permits/Residence-registration-in-Germany

"Within a week of finding permanent accommodation (i.e. not a hotel), you have to register your address at the local Residence Registration Office (Einwohnermeldeamt), usually located in the town or city hall."

This is the required first step, anything work-related comes after this first step, otherwise you are not considered a legal resident and could run into problems.


I think there was a general assumption that the asker had proceeded past that stage. But I guess it's the no-brainers that often get overlooked. Incidentally, I do think that the period for registering a new address is now two weeks.


 


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