Self-employment and freelancing

When you start a standing trade, you must notify the local trade authority. This registration is called a Gewerbeanmeldung. Freelance work taxed as independent work falls into a different category, so check how your activity is classified. Any trade registration fee is set locally.

In short

• Ask the Finanzamt about the tax classification before you start, and ask the competent trade authority whether a trade notice is required. A tax classification and a trade-law notification are separate checks.
• If you are starting a standing trade, file the Gewerbeanmeldung with the responsible authority when you start. The fee is set locally; section 14 does not specify an amount.
• You must also notify the authority if you move, change the activity beyond what is usual for that business, change your name or close the business. Closing a website does not count as notice. The authority can deregister the business if you do not.
• Not every self-employed person pays trade tax. Section 2 taxes a trade. Income under section 18 is a different category.
• Third-country nationals need a residence title that allows the activity. A trade registration does not register you for VAT and does not replace a residence permit.

What you need to know

Section 14 of the Trade Regulation Act says that anyone who starts a standing trade, a branch, or a dependent outlet must notify the competent authority at the same time. The same duty applies when the business is moved, when its object is changed or extended to goods or services that are not usual for that kind of business, when the trader’s name changes, or when the business is given up.

If you give the business up because you move it to another district, you notify only the authority for the new registration, and that authority passes the data on. If it is clear the business has ended and no deregistration arrives in a reasonable time, the authority can deregister it itself.

Section 18 of the Income Tax Act covers a different category: income from independent work, including the liberal professions and other independent work listed in that section. The income can be taxable even if the work is temporary. Work classified in this category is not, by that classification, a trade requiring notification under section 14.

Section 2 of the Trade Tax Act taxes a standing trade so far as it is run in Germany. It defines a trade as a commercial enterprise within the meaning of the Income Tax Act. A municipal multiplier applies to trade tax. Municipal multipliers can differ.

From the 2027 assessment period, section 16(4), read with section 36(5b), sets a fallback multiplier of 280 percent if the municipality has not set a higher one. Check the municipality’s multiplier for the year concerned. The Finanzamt assesses the tax classification. Check the separate notification duty with the competent trade authority. A label on a website does not settle either question.

Third-country nationals also need a residence permit that allows the activity; see the self-employment residence guide. EU, EEA and Swiss citizens use free movement. You still need health insurance and a tax number. Ask the insurer about its prices.

What to do

1. Ask the Finanzamt about the tax classification and the competent trade authority about any notification duty before you start. Do not assume the word freelance on an invoice settles either question.
2. If you are starting a standing trade, file the Gewerbeanmeldung with the responsible authority when you start, not weeks later. Ask which form to use and what fee it charges; another city’s fee may be different.
3. If you move, change the activity beyond what is usual, change your name, or stop, file the matching notice under section 14. Notifying the authority is mandatory when you stop the business.
4. Use the tax guide for invoices, advance payments and the small-business VAT rule. Registering a trade does not register you for VAT or replace a residence permit.

Ask the pension insurance which status the work has

Section 7 defines employment as non-independent work, particularly in an employment relationship. Signs can include working under instructions and being integrated into the organisation of the person giving those instructions. Your status depends on the circumstances of your work.

The parties can ask the Deutsche Rentenversicherung Bund, in writing or electronically, whether a contract is employment or self-employment. The clearing office of the Deutsche Rentenversicherung Bund carries out that status procedure. It does not run if the collection office or another insurer has already started a procedure on compulsory insurance because of employment. The collection office must itself apply when the employer’s report shows that the person is the employer’s spouse, registered life partner or descendant, or a managing shareholder of a GmbH. The Deutsche Rentenversicherung states that the procedure is free. You can ask before the work starts. If a decision was made in advance and the written agreement, or the way the work is carried out, changes within one month of the work starting, tell the Deutsche Rentenversicherung at once.

Under the current section 7a (7), the advance-decision rule in subsection 4a expires at the end of 30 June 2027, along with the other special rules it lists. Check the law and the Deutsche Rentenversicherung’s current procedure before relying on an advance decision for a later start date.

If the work is found to be employment, social-security contributions can be due for the past. Under section 7a(5), the day the decision is communicated is treated as the start of employment only if you applied within one month of starting, you consent, and you had cover during the intervening period against the financial risk of illness and for old age of the kind statutory health and pension insurance provide. The total social-security contribution then becomes due only when the decision is final. If those conditions are not met, do not assume the earlier period is free of contributions. Ask Deutsche Rentenversicherung how the rules apply to you.

Permission to do the activity on a residence title is a separate question, on the self-employment residence page.

Common mistakes

• Assuming there is one national fee for the Gewerbeanmeldung. The fee is set locally.
• Assuming every self-employed person pays trade tax. Section 2 taxes a trade. Section 18 income is a different category.
• Giving up the business by closing the website and not notifying the authority. Section 14 requires the notice, and the authority can deregister if you do not.