How to be a freelancer in Germany

Learn how to handle everything as a freelancer — Anmeldung, health insurance, bank account, residence permit and taxes.

Working as a freelancer is an increasingly popular choice for expats, especially for those who do creative or entrepreneurial work. Cities like Berlin are major destinations for expats from around the world looking for a home base to start a new business, do programming or graphic design projects, or provide any number of professional services without working inside a company. In this article, we’ll cover all the steps you need to take to get settled as a self-employed person or freelancer in Germany. These include registration, health insurance, business bank account, residence permit and taxes.

Knowing the difference between freelance and self-employed

The first thing you have to know is that self-employed (Selbstständiger) and freelancer (Freiberufler) have slightly different conditions when applying for residency. Self-employed people have to declare additional documents when applying for a residence permit, which you can see in more detail below. As a freelancer, you’re not required to submit a business plan or a company profile, because you’ll be creating work for various businesses, and not exclusively your own. Consider the following example: if you’re a freelance designer, you can submit invoices to your client as an individual. If you’re a self-employed designer, you can submit invoices to your client as your officially registered business.

Registering your address

Now that you know how to classify your work, you’ll want to complete your Anmeldung, or official German address registration. This is for your home address, not the address of wherever you’ll be working elsewhere if you work remotely.

To register your German address, you’ll need the following documents:

• Valid passport or national ID
• Rental agreement from your landlord (Wohnungsgeberbestätigung), usually a signed rental contract
• Registration form, either called Meldeschein or Anmeldung. These are only available in German, so fill this out beforehand

Keep in mind that the entire Anmeldung process is typically conducted in German, so be prepared. If your appointment is with an English speaker, he/she will be able to guide you through the application step by step. We recommend bringing a German-speaking friend with you, or sending a German speaker on your behalf, just to be sure. That person just needs a signed letter from you giving your consent, otherwise known as a Power of Attorney, or Vollmacht in German, in addition to the documents listed above.

Getting health insurance

Being insured by a healthcare provider is a legal requirement in Germany, even if it’s not covered by an employer. That means it’s up to you to enroll yourself in a plan, and you have to decide if you want to enroll in a public or private insurance scheme. If your gross income is less than €57.600 per year, or €4.800 per month, it is compulsory to be insured under a public, statutory health insurance scheme, and you must choose an insurance provider. The three most common providers are TK (Techniker Krankenkasse), AOK and Barmer GEK. Your provider will issue an insurance card (Gesundheitskarte) with a chip, much like in a credit card, that you must present at every doctor’s visit.

The second kind is private health insurance, or Private Krankenversicherung, which is only an option as your primary form of insurance if your gross income is greater than €57.600 per year, or €4.800 per month. This applies to both freelancers and the self-employed. Learn more about the the difference between public and private insurance in this article.

Here’s how to enroll once you decide on a public or private plan.

• Choose a provider and find the right application form on their website
• Provide basic personal information like your name, address and nationality
• Provide employment information like your job title and start date
• Provide previous insurance information like whether you have been insured in Germany before, and by whom
• Send the completed form to the appropriate address, which is usually written on the form
• Submit a recent passport photo to be put onto your insurance card
• Set up a direct debit to get billed automatically

If you choose private, you must also choose your particular plan, and plans vary by cost and coverage. People typically recommend choosing a private plan if you’re young, in good health and may not be living in Germany permanently.

Opening a business bank account

Now that you’ve registered your address and enrolled in a health insurance plan, you’ll want to open a business bank account that allows you to make transactions exclusively for business purposes, which you need for accounting and tax reasons. There are various options from different banks, but the easiest account to open for freelancers and the self-employed is the N26 Business account. It only takes eight minutes, you can manage everything directly from your phone and it’s completely free. In fact, N26 will give you a free business Mastercard and send you 0.1% cashback for all card purchases every quarter.

If you want to do personal spending on this account, you can also get a free Maestro card. It’s currently not possible to have two separate N26 accounts at the same time, but the two cards work seamlessly from one account. As an N26 Business customer, you get the realtime features of the regular N26 bank account like instant push notifications to confirm all card activity or instant money transfers to fellow N26 customers.

Getting your residence permit

This is the last major step to be able to start working in Germany. For both freelancer and self-employed permits, you have to be able to show you can sufficiently finance your life and your career without being a burden to the state. This applies to work in a variety of fields, including the arts. If you’re a freelance artist, journalist or musician, you must be able to demonstrate both a body of work and upcoming projects. To get your residence permit in Germany as a freelancer, your application must include the following contents:

• Valid passport
• 1 current biometric photo
• Proof of health insurance
• Proof of residence
• Completed residence permit application form
• Curriculum Vitae (CV) — an updated document detailing your professional career, your diploma, any qualification certificates, any references or sponsors
• Financing plan — this document details how much money you have to finance your employment, including liquid funds, tangible assets, loans and venture capital
• Revenue forecast — otherwise known as a profit/loss statement that details your projected expenses including your rent, insurance fees and taxes for the next three years
• €50 — €110 application fee, depending on the complexity of your case

If you’re going to be completely self-employed, you need everything above, plus a few additional documents:

• Company profile — this document details all the relevant information about your company including official proof of its existence, names of managing directors, total equity, annual turnover, official business address in your city, official function and more
• Capital requirement plan — this document details all the potential costs you may incur or may require funding for to start your company, including office renovations, licensing fees, vehicle rentals and more
• Business concept — this is a precise written set of descriptions about your company including the industry, the target customers, marketing and sales strategy, and market forecasts and risks
• Business plan — this is a summary document of all the other documents above like your financing plan and revenue forecast that explains the high level function of your company

This may sound like a lot, but you can find templates of most, if not all, of these documents on your city’s official web service portal. You’ll have to be able to interpret line items in German, but the format is largely the same as comparable documents in your home language. If you’ve never completed these kinds of documents before, and are unsure about the exact figures for your capital requirements or revenues, just submit your best estimates.

Declaring your taxes

Once you’ve generated income from your freelance or self-employment work, you have to declare your taxes. First, you need to get a personal tax ID, or Identifikationsnummer, sometimes referred to as a Steuer-ID, or Steueridentifikationsnummer. If it’s your first time living and working in Germany, your ID will be sent to you automatically by the state about one week after you register your address. If you’ve lived in Germany before, you can either fill in this form, or go to your local tax office and an official can give you your ID number on the spot. You’ll need to take your passport with you. You only get one tax ID, so if you move back to Germany or change your address, you will not get a new ID number.

Second, you need a tax number or Steuernummer, which is separate from your tax ID. You’ll need both to declare your taxes. In order to get your tax number, you need to fill out this form, a Fragebogen zur steuerlichen Erfassung. If you don’t speak German, here is a handy guide on how to fill it out. Once the hard part is done, simply send it in a letter to your nearest tax office, which you can find by searching “Finanzamt + your town” on Google. That’s all it takes.

If you found this helpful, see more informative how-to guides for expats in Germany here, featuring articles on how to find a flat, how to switch your bank account and how to manage your savings.

Originally published at mag.n26.com on June 16, 2017.