Paying taxes in Germany as a freelance translator
Thread poster: Michael Lourenço Leite

Michael Lourenço Leite
Brazil
Local time: 23:03
Member (2010)
English to Portuguese
+ ...
Oct 27

Dear fellow translators,

I'm a freelance translator planning to move to Germany this year. I would like to know the following:

1. Do you know how much income tax I would pay as a freelance translator (average income EUR 1700)? Would I have to pay monthly or yearly?

2. Any tips on how to save on health insurance?

3. How do you contribute to pension funds as a freelancer?

Thank you so much for sharing your information/experience.
... See more
Dear fellow translators,

I'm a freelance translator planning to move to Germany this year. I would like to know the following:

1. Do you know how much income tax I would pay as a freelance translator (average income EUR 1700)? Would I have to pay monthly or yearly?

2. Any tips on how to save on health insurance?

3. How do you contribute to pension funds as a freelancer?

Thank you so much for sharing your information/experience.
Michael
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Sebastian Witte  Identity Verified
Germany
Local time: 02:03
Member (2004)
German to English
+ ...
The situation is potentially quite complex Oct 28

.

[Edited at 2019-10-28 09:30 GMT]

This is now Sebastian's wife writing. The topic under discussion is extremely complex, and no ballpark figures can be given.
The issue preceding the one raised is how to get residence and work permits, in particular lasting for longer than 3 months.
Should that issue have been satisfactorily resolved, the asker would need to differentiate between business income and household income. Household income may only be half that of busi
... See more
.

[Edited at 2019-10-28 09:30 GMT]

This is now Sebastian's wife writing. The topic under discussion is extremely complex, and no ballpark figures can be given.
The issue preceding the one raised is how to get residence and work permits, in particular lasting for longer than 3 months.
Should that issue have been satisfactorily resolved, the asker would need to differentiate between business income and household income. Household income may only be half that of business income. Advice should be sought on short courses about running a business in Germany.
In regard to health insurance, there are two varieties. Health insurance is compulsory, but it may be difficult to get health insurance of any kind at all upon simply arriving in Germany. Statutory health insurance goes hand in hand with getting a job, working for an employer. It is expensive for freelancers who earn well, or start to earn better, because the premiums are based on a percentage of one's earnings. Private insurance is based on a fixed monthly fee quoted by the health insurance company. As a general rule of thumb, statutory insurance may eventually become more affordable in senior years, whereas private health insurance has a reputation of getting very expensive with increasing age. It is not possible to change back from private to statutory after the age of 45.
Income tax cannot be estimated, because it is based on so many different things, but basically all sources of income added up (including the net income from a freelance business), with the addition of church tax, if applicable, and also solidarity surcharge, among other things. Allowances (deductions) may exist for craftsmen and other assistants legally deployed in and around the household, pension plans, donations to charities, and various other things.

A move from one country to another is a giant undertaking, and all aspects would need to be looked into with great care first. Accommodation is scarce, expensive and limited in size for a large number of households in Germany. Food used to be cheap, but is no longer. The budget mentioned - even if it is the household budget - falls somewhat below that of the national average, which means that all aspects of such a move would have to be looked into in great detail prior to undertaking it.

[Edited at 2019-10-28 10:07 GMT]
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Thomas T. Frost  Identity Verified
Member (2014)
Danish to English
+ ...
Figures Oct 28

Sebastian Witte has already covered the essentials.

As for income tax, it depends on which religion you declare, if any, as Germany collects church tax unless you declare that you don't belong to any religion. Obviously it also depends on the business expenses you deduct and any other deductions such as certain parts of private insurances and all sorts of medical expenses, including transport costs, not covered by the insurance. If you dedicate a room for working at home, you can al
... See more
Sebastian Witte has already covered the essentials.

As for income tax, it depends on which religion you declare, if any, as Germany collects church tax unless you declare that you don't belong to any religion. Obviously it also depends on the business expenses you deduct and any other deductions such as certain parts of private insurances and all sorts of medical expenses, including transport costs, not covered by the insurance. If you dedicate a room for working at home, you can also deduct the costs of that, subject to certain conditions. Charities and, for homeowners, home improvements (not the materials) are deductible too.

You have the option of using a medical insurance regulated by the public scheme or take out private insurance in Germany or abroad. Depending on your age, expat insurers such as asfe-expat.com may or may not beat the cost of public insurance, but using a foreign insurance requires you to be aware of which part of it (corresponding to a German basic cover) is tax deductible, not least as German accountants don't seem to understand this (at least not the ones I have come across, but in a city such as Berlin, perhaps they do). Also, it doesn't include the mandatory German Pflegepflichtversicherung (care insurance). Again depending on your age, German private insurance may be an option. But beware that once you have chosen to take out private insurance, you can't change your mind and change to public – unless you were to become employed.

I can't advise about retirement funds. With the sort of income level you indicated, it will be limited how much you have left to save.

If you have children anywhere in the EU, you or their mother may be entitled to German child benefit, which is quite generous, or the difference between the German amount and what their local child benefit office pays.

Beware that German electricity prices may be two to three times as high as what you may be used to, as roughly half the price is climate tax. It pays to switch to another provider once a year, a simple online process, but the trick is to avoid providers likely to go bankrupt, as it has happened a few times, which has left hundreds of thousands of electricity customers out of pocket. The German electricity market is the Wild West. Because of the extreme electricity taxes, electricity providers are operating with wafer-thin margins, trying to outbid each other.

If you need car insurance, take as many original no-claims bonus statements as you can to hope to make a German insurance company accept them.

Housing costs can be very low in the former GDR provinces, but you may not be able to find your preferred lifestyle and social scene out there.
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Ebrahim mohammed
 

Michael Lourenço Leite
Brazil
Local time: 23:03
Member (2010)
English to Portuguese
+ ...
TOPIC STARTER
Thank you for your help Oct 30

Dear Sebastian and his wife

Thank you so much for your information. I'll take that into consideration.


Sebastian Witte wrote:

.

[Edited at 2019-10-28 09:30 GMT]

This is now Sebastian's wife writing. The topic under discussion is extremely complex, and no ballpark figures can be given.
The issue preceding the one raised is how to get residence and work permits, in particular lasting for longer than 3 months.
Should that issue have been satisfactorily resolved, the asker would need to differentiate between business income and household income. Household income may only be half that of business income. Advice should be sought on short courses about running a business in Germany.
In regard to health insurance, there are two varieties. Health insurance is compulsory, but it may be difficult to get health insurance of any kind at all upon simply arriving in Germany. Statutory health insurance goes hand in hand with getting a job, working for an employer. It is expensive for freelancers who earn well, or start to earn better, because the premiums are based on a percentage of one's earnings. Private insurance is based on a fixed monthly fee quoted by the health insurance company. As a general rule of thumb, statutory insurance may eventually become more affordable in senior years, whereas private health insurance has a reputation of getting very expensive with increasing age. It is not possible to change back from private to statutory after the age of 45.
Income tax cannot be estimated, because it is based on so many different things, but basically all sources of income added up (including the net income from a freelance business), with the addition of church tax, if applicable, and also solidarity surcharge, among other things. Allowances (deductions) may exist for craftsmen and other assistants legally deployed in and around the household, pension plans, donations to charities, and various other things.

A move from one country to another is a giant undertaking, and all aspects would need to be looked into with great care first. Accommodation is scarce, expensive and limited in size for a large number of households in Germany. Food used to be cheap, but is no longer. The budget mentioned - even if it is the household budget - falls somewhat below that of the national average, which means that all aspects of such a move would have to be looked into in great detail prior to undertaking it.

[Edited at 2019-10-28 10:07 GMT]


 

Michael Lourenço Leite
Brazil
Local time: 23:03
Member (2010)
English to Portuguese
+ ...
TOPIC STARTER
Thank you for your help! Oct 30

Dear Thomas,

Thank you so much for your help. I really appreciate it.



Thomas T. Frost wrote:

Sebastian Witte has already covered the essentials.

As for income tax, it depends on which religion you declare, if any, as Germany collects church tax unless you declare that you don't belong to any religion. Obviously it also depends on the business expenses you deduct and any other deductions such as certain parts of private insurances and all sorts of medical expenses, including transport costs, not covered by the insurance. If you dedicate a room for working at home, you can also deduct the costs of that, subject to certain conditions. Charities and, for homeowners, home improvements (not the materials) are deductible too.

You have the option of using a medical insurance regulated by the public scheme or take out private insurance in Germany or abroad. Depending on your age, expat insurers such as asfe-expat.com may or may not beat the cost of public insurance, but using a foreign insurance requires you to be aware of which part of it (corresponding to a German basic cover) is tax deductible, not least as German accountants don't seem to understand this (at least not the ones I have come across, but in a city such as Berlin, perhaps they do). Also, it doesn't include the mandatory German Pflegepflichtversicherung (care insurance). Again depending on your age, German private insurance may be an option. But beware that once you have chosen to take out private insurance, you can't change your mind and change to public – unless you were to become employed.

I can't advise about retirement funds. With the sort of income level you indicated, it will be limited how much you have left to save.

If you have children anywhere in the EU, you or their mother may be entitled to German child benefit, which is quite generous, or the difference between the German amount and what their local child benefit office pays.

Beware that German electricity prices may be two to three times as high as what you may be used to, as roughly half the price is climate tax. It pays to switch to another provider once a year, a simple online process, but the trick is to avoid providers likely to go bankrupt, as it has happened a few times, which has left hundreds of thousands of electricity customers out of pocket. The German electricity market is the Wild West. Because of the extreme electricity taxes, electricity providers are operating with wafer-thin margins, trying to outbid each other.

If you need car insurance, take as many original no-claims bonus statements as you can to hope to make a German insurance company accept them.

Housing costs can be very low in the former GDR provinces, but you may not be able to find your preferred lifestyle and social scene out there.


 


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