Tax rate for Freiberufler?
Thread poster: Lutz Molderings

Lutz Molderings  Identity Verified
Germany
Local time: 12:25
Member (2007)
German to English
+ ...
Jul 16, 2009

I currently live in the UK where I work as a freelance translator. I operate as a limited company which means I pay 21% corporation tax on my profits. I don't pay any income tax because I make sure the salary I pay myself does not exceed my personal allowance.

Now, I recently decided to relocate to Germany and am wondering how much tax the Finanzamt will want from me. I have done a bit of research and it seems the best solution would be to work as a so-called "Freiberufler". But how much do Freiberufler pay in tax? I know this will depend on my Steuerklasse, but perhaps somebody can give me a rough idea what kind of rate I can expect (28, married, no children).


Thanks for your help.


 

Textklick  Identity Verified
Local time: 11:25
German to English
+ ...
In German Jul 16, 2009

Hi Lutz,

I would have thought you'd get much more feedback if you post this in German.

Viel Glück!

Chris


 

Astrid Elke Witte  Identity Verified
Germany
Local time: 12:25
Member (2002)
German to English
+ ...
Tables Jul 16, 2009

For example, find your annual taxable earnings in the left-hand column, and read off the amount of tax you would owe in the middle column:

http://www.steuerlinks.de/uploads/tx_fbfilebase/est-2008-grundtabelle-splittingtabelle_01.pdf

There is a certain tax-free allowance, as in the UK.

After that, you pay a certain, fairly low percentage of tax on the first few thousands above the allowance limit.

The next few thousands are taxed at a higher percentage.

The few thousands after that are taxed at a higher percentage still.... and so on.

And yes, there is an upper limit, so that, even adding on the extra taxes, such as paying for reunification, church tax if you decide to be a member of the church and so on, you will never be paying more than 50% of your earnings.

The final figure of your taxable earnings, that is taken as a basis for calculating the tax payable, does, of course, include consideration of your Steuerklasse, pension plans that you have, and a whole host of other things.

[Edited at 2009-07-16 22:30 GMT]


 

Lutz Molderings  Identity Verified
Germany
Local time: 12:25
Member (2007)
German to English
+ ...
TOPIC STARTER
Thank you Jul 17, 2009

Thank you Astrid, this is very helpful.
I have the feeling I'll end up paying more in Germany. I'll just have to wait and see.
Thanks again for your help.



[Edited at 2009-07-17 07:15 GMT]


 

Gogyoo
Local time: 12:25
English to French
But Astrid, Jul 17, 2009

Is it not true that you have to double that percentage? Since you are your own boss, it makes sense to have to pay the employer's part as well (I'm talking about income tax here, not corporate tax)...

It must be actually the same thing with your contributions to the Social Security. Or am I in the wrong here?


 

Michelle Hertrich  Identity Verified
Germany
Local time: 12:25
German to English
+ ...
Brutto-Netto-Rechner Jul 17, 2009

Hi Lutz,
There are also a number of websites with inbuilt calculators to give you an accurate idea of how much tax you will have to pay (e.g., http://www.spiegel.de/wirtschaft/0,1518,223811,00.html ).


 

RobinB  Identity Verified
United States
Local time: 05:25
German to English
Confused? Jul 18, 2009

Gogyoo wrote: Is it not true that you have to double that percentage? Since you are your own boss, it makes sense to have to pay the employer's part as well (I'm talking about income tax here, not corporate tax)...

It must be actually the same thing with your contributions to the Social Security. Or am I in the wrong here?


1) There is no such thing as "employer's part of income tax". Only an employee pays income tax on their salary.

2) Freiberufler don't pay any social security contributions in Germany.


 

RobinB  Identity Verified
United States
Local time: 05:25
German to English
Tax in Germany Jul 18, 2009

Lutz Molderings (MSc, BSc) wrote:
I currently live in the UK where I work as a freelance translator. I operate as a limited company which means I pay 21% corporation tax on my profits. I don't pay any income tax because I make sure the salary I pay myself does not exceed my personal allowance.


So you're paying yourself a pretty low salary, right? After all, the personal allowance is only around 6,500 GBP a year. Which ain't very much a month.

Now, I recently decided to relocate to Germany and am wondering how much tax the Finanzamt will want from me. I have done a bit of research and it seems the best solution would be to work as a so-called "Freiberufler". But how much do Freiberufler pay in tax? I know this will depend on my Steuerklasse, but perhaps somebody can give me a rough idea what kind of rate I can expect (28, married, no children).


How much do you expect to earn? According to information that's publicly available on the web, and for which no liability whatsoever is assumed, somebody who generates profit before tax of, say, 50,000 EUR from a freelance (Freiberufler) business, and then deducts the maximum standard (recurring) personal allowances (primarily health and pension insurance), can probably expect to pay somewhere in the region of 11,000 EUR in income tax (making quarterly advance payments).

Not a lot, is it? And almost zero paperwork, certainly compared with a limited company.

Disclaimer: Note that the information above is something you can obtain yourself from publicly available sources, and the figures given above may therefore be inaccurate and cannot be relied upon. Please consult an experienced tax adviser (Steuerberater) to discuss your personal circumstances in detail before making any tax-related decisions.


 


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