freelancer or gewerbe
Finance,  Legal,  Work in Germany

Are You A Freiberufler, Freelancer or Gewerbe in Germany

Found this helpful? Share it with your friends <3
(Last Updated On: May 23, 2021)

Anyone wishing to set up their own business in Germany must deal with the formal framework right at the beginning. This includes, above all, the question of the tax status: Are you a Freiberufler (Freelancer) or Gewerbe in Germany? Let’s see how the distinction is made in German tax law. 

 

When you become self-employed in Germany, you either run a business as a trader or work in a liberal profession as a freelancer. It is important to distinguish between Gewerbe and freelancer in Germany, as there are some special features that apply to the liberal professions.

This is not always easy and the final decision is made by the tax office (Finanzamt), which classifies the self-employment on the basis of certain criteria. The classification also decides, for example, whether an entrepreneur must pay trade tax (Gewerbesteuer) or not.

What are the differences between a Freiberufler or Gewerbe in Germany? This post attempts to answer the most important questions.

 

PS: If you prefer to listen or watch, then here is this blog post in a video format. Otherwise, continue reading!

 

 

But first, here is a glossary of the most important and frequently used German terminologies in this post.

German English
Finanzamt Tax office
Freiberufler Freelancer
Freier Mitarbeiter Freelancer / Contractors
Gewerbe Trade (Commercial activity)
Freie Berufe Liberal professions
Gewerbetreibende Trader
Gewerbeanmeldung Trade registration
Gewerbesteuer Trade tax
gemischte Tätigkeiten Mixed activities

 

 

difference between freelancer and gewerbe in germany

 

 

1) What is Self-Employment in Germany?

 

The definition of self-employment in Germany is simple.

Anyone who does not work for an employer is self-employed. So both (Freiberufler) Freelancer or Gewerbe in Germany are considered self-employed. 

However…

The terms “Freiberufler“, “freelancer” and “self-employed” are often used as synonyms – but they are actually different -at least in Germany. The most important thing to remember is –

All freelancers are self-employed people, but not all self-employed people are freelancers in Germany. 

 

Let’s dig deeper into the concept of self-employment, Freiberufler or Gewerbe in Germany – because this is where the infamous German pedantry shines through.

 

freelancer oder gewerbliche Tätigkeit
Um…ok let’s try

 

 

2) Self-Employment as a Freiberufler or a Freelancer in Germany

 

2.1) What is a Freiberufler in Germany? 

The term Freiberufler comes from German tax law, where §18 of the Income Tax Act (EStG) describes the income from various freelance activities. Only individuals who practice so-called ‘liberal professions’ (Freie Berufe) are considered ‘Freiberufler‘ in Germany.

Freie Berufe are divided further into THREE subcategories.

 

freelancer or gewerbe
Yes, I know!!

 

2.2) Liberal professions subcategories in German tax law

The income tax law  in Germany distinguishes in §18 paragraph 1 No. 1 in three freelance activity groups:

  • Catalogue professions (Katalogberufe) – the independent activity of the so-called catalogue professions (Income Tax Act, Partnership Company Act). More details on catalogue professions in the next section.
  • Similar occupations (ähnliche Berufe)– the independent activity of occupations similar to catalogue occupations (also called: analogous professions).
  • Professions (Tätigkeitsberufe) – scientific, artistic, or other professions carried out independently, writing, teaching or educational activities.

 




 

2.3) What is included in catalogue professions?

  • Medical professions: Doctors, dentists, veterinary, physiotherapists, midwives, masseurs, psychologists
  • Legal, tax and business advisory professions: Lawyers, patent attorneys, notaries, auditors, tax consultants, consulting economists and business consultants
  • Scientific/technical professions: Surveyors, engineers, chemists, architects, pilots, full-time experts
  • Education/cultural professions: Journalists, photojournalists, Interpreters, translators, artists, Writer, teacher and educator

 

Freiberufler oder Gewerbe

 

 

3) Freiberufler vs  Freelancers in Germany – What is the Difference? 

 

In Germany ‘Freiberufler’ and Freelancer are two different things. Time and again Freiberufler and freelancer are confused and used synonymously by expat freelancers in Germany. Although the two are quite similar, it is important to be extremely careful here.

Not every Freiberufler is automatically a freelancer in Germany. 

 

freelancer oder gewerbe
Trust me, I’m trying…

 

The technical German term for freelancers is Freier Mitarbeiter.

A Freier Mitarbeiter is hired by businesses (clients) for short-term projects and specific time periods. Whereas a Freiberufler generally has their own practice, firm or a studio where customers visit them to receive their services. 

 

Freiberufler in Germany Freelancer in Germany
They (mostly) practice catalogue professions like doctor or lawyer or an architect, tax advisor etc. They generally fall under the category of similar professions like marketing consultants, graphic designers, web developer, photographer etc.
They often have their own practice, law firm or design studios – a specific place dedicated to their work. Their clients/customers visit their office to get their services. They can work onsite at their client’s office or work remotely from their home office or a coworking space.
Their clients are generally end-customers. i.e patients that need medical treatment from a doctor, clients looking for legal help from a lawyer, or professionals who need tax consultation etc.   Their clients are mostly other businesses who hire them as external contractors. Web development agency hiring a web developer or graphic designer.  A business hiring a marketing consultant, etc.

 


Related: How to Create VAT Invoices in Germany + Download FREE Invoice Templates


 

4) Self-employment as a Trader (Gewerbetreibende) in Germany

 

A trader is a self-employed person who carries out a trade. It must be distinguished from a freelancer who pursues a liberal profession (lawyer, doctor, etc.).

The legal basis for this is the Gewerbeordnung or GewO for short. According to this, trade is an economic activity that you carry out on your own account, under your own responsibility and with the intention of making a profit in the long term.

In contrast to freelancers, tradespeople must register their self-employment as a business. Registration with the tax office (Finanzamt) is done by means of the questionnaire for tax registration, which every self-employed person (i.e. also freelancers) must fill out at the beginning of their activity.

 


Related: How to Register Your Freelance Business With Tax Authorities (Finanzamt) in Germany


 




 

4.1) What is Commercial Activity (Gewerbe) in Germany

By contrast, industry, crafts, trade and “simple services” are neatly piled under commercial activities. These include the following economic sectors:

  • Industrial manufacturing,
  • Craft and craft-related professions, excluding artistic activities,
  • Wholesale and retail trade (in the broadest sense the sale of products),
  • Gastronomy and hotel industry
  • “Simple” services (for example, household-related services such as plumbing, cleaning or repairs)
  • Representatives, intermediaries and agencies and
  • Money and investment advisor
  • Sale of digital products

Furthermore, regardless of the type of business and activity, all corporations (limited liability companies and stock corporations) are automatically considered to be commercial due to their legal form.

Anyone who practices in any of the above-mentioned fields is considered a ‘trader’ by Finanzamt in Germany.

 

difference between freelancer or gewerbe

 

5) Tax Benefits for a Freiberufler or Freelancer in Germany

 

Anyone who meets the criteria and can work as a self-employed freelancer can enjoy various benefits that tradespeople can only dream of.

The following overview illustrates the difference between freelancing and trade in Germany.

  • Freelancers do not have to register their business as a ‘trade or ‘Gewerbeanmeldung
  • Freelancers do not pay a trade tax 
  • Freelancers are not subject to trade supervision
  • Freelancers are not subject to trade law
  • Freelancers are not subject to commercial law
  • Freelancers are not subject to the obligation to be members of a chamber
  • Freelancers are not required to keep accounts (regardless of the amount of income)
  • Freelancers only have to submit a surplus income statement for the annual accounts
  • Freelancers have the possibility of a partnership company, etc.

 


Related: Guide to Value Added Tax For Freelancers in Germany


 

6) Freelancer or Gewerbe in Germany- You Can Be Both!

 

Just so you know, you can be both a Freelancer or Gewerbe in Germany.

 

freelance and gewerbe difference in germany
Well..I’m about to give up now

 

If you carry out several activities that are both freelance and trade, this is called a mixed activity (gemischte Tätigkeiten). These are again divided into separable and inseparable mixed activities.

Freelancing sole proprietors can declare their income from freelancing and trade in Germany separately for tax purposes in order to prove the share of their freelance activities to the tax office.

Otherwise, they run the risk that their freelance income will be classified as commercial and thus subject to trade tax. By the way: the activity of corporations such as the UG (limited liability) is basically commercial.

 




 

Some examples of mixed activities:

  • A freelance author sells her works through her own online publisher.
  • An architect earns commissions from the brokerage of real estate in addition to his core tasks.
  • A computer scientist tests programs from other developers.
  • A graphic designer, in addition to his freelance work, also places printing orders from his own customers in his name and on his account.

 


Related: How to make a German client- freelancer contract


 

 

 

Freiberuflich oder gewerblich?

 

So this is how you differentiate between Freiberufler, Freelancer or Gewerbe in Germany. Do you have experience with setting up a freelancing or trade in Germany? Let us know in the comments below.  

Hi there, I am the human behind this blog. If you could not tell by my photo, I am fueled by tea. My expat journey started at the age of 19. Germany has been my home for several years. I hope you will find some helpful insights if you are considering moving to Germany or already live here.

26 Comments

  • Arash Davar

    Hello Yamini,

    First of all thank you for writing this post, it was very helpful and informative.
    I make Jewelry and home decore and sell them on my website and etsy. I have work permition and I am resident. I want to register my business here in Germany but I am confused and I really appreciate if you help:

    1. Wich category do I fall into? I am not sure if I can go under freelance!
    2. Where do I go for registering

    Thank you again,

    Cheers,
    Arash

  • Krushna

    Hello Yamini, (somehow my previous comment was not submitted)

    I am a Freier Mitarbeiter (as a PhD student) at a company. As per contract, I am not at all considered as an internal employee. I receive so called ‘Aufwandsentschädigung’ more than 450 € for writing my doctoral thesis with them. I receive the complete brutto amount mentioned in contract to my account.

    From here I have few questions. I have to pay my social contributions on my own. I am paying my health insurance for now. But the other things like Rentenversicherung, Lohnsteuer, Arbeitlosversicherung etc., are mandatory? I might not settle here in Germany. In this situation, I am exempted to pay these social contributions?

    Could you please guide me here how o proceed further? It would be really helpful to come out of this confusion.

    Thanks a lot in advacne!

      • Krushna

        Hello Yamini,

        thank you for the quick response. The link you provided was a bit helpful. But, I think the term ‘Aufwandsentschädigung’ is a bit tricky here. Let’s consider that I am receiving some payment monthly from the company. As a freelancer, I have got to know that it is not compulsory to pay Rentenversicherung, Arbeitlosenversicherng. Is it true? And could you please help me with some info on how to pay the Lohnsteuer as a freelancer? Any hints would be highly appreciated 😊

        Sorry if I’m asking too many questions. Thanks!

        Br
        Krushna

        • Yamini

          Hey Krushna, No worries! I’m not adequately informed about ‘Aufwandsentschädigung’ and how it works. My ‘advice’ will be ill-informed at best – that’s the last thing I want to do. 🙂 Do you have any colleagues who are employed on a similar contract? They may be the best source of info, else I’d recommend calling a steuerberater.

          • Krushna

            Hello Yamini,

            thanks a lot! I think that would be the only option to get everything clear. Unfortuantely, there is no one within my company to my knowledge who have same type of contract. I will contact Steuerberater and I will comment my answer here if possible. May be it will be useful for some other people 🙂

  • Krushna

    Hello Yamini,

    I am Freelancer (as a PhD student) at a company and they pay me ‘Aufwandsentschädigung’ for my doctoral thesis. As per contract I am not an internal employee of the company. So I receive the complete brutto xxxx euros into my account.

    I have some questions from here. Could you please clarify me what social contributions I MUST pay? Currently I am paying my own health insurance. Should I also pay Lohnsteuer, Rentenversicherung, Arbeitlosenverischerung ? If yes, on what conditions? (I am not palnning to settle here in Germany).

    Could you please clarify my doubts? It will be really hepful for me.
    Thanks a lot in advance!

  • Bernard

    Hi Yamini,
    very fluent, informative, and eloquent, the storyline was also sweet and easy to follow. Thanks for sharing your information. I received a consulting contract to sign from an organization in Latin America for 1 year, with no working time, leaves, vacation, or job location. salary is also an all-inclusive package which I should myself pay all the deductions. The theme is more training and research delivering analytical reports (earthquake risk assessment and preparedness). From what I read I would be then more Freier Mitarbeiter, right? but could be also a little bit catalogue professions? In general is there any advantage to being Freier Mitarbeiter or Frei Berufler tax-wise?
    All the best for you,
    Bernard

    • Yamini

      Hey Bernard, Are you relocating to LA, because then maybe the local tax laws may apply. 🙂
      Also, the salary part is a bit confusing here because it’s usually for employees. Does it say specifically in your contract that they are hiring you as an independent consultant? From what you describe it sounds like a classic Freiberufler (because of scientific activity) or a ‘similar profession to me.

      • Bernard

        Hey Yamini,
        🙂
        Thanks for your reply, orally they asked me to relocate there but no job location is set in the contract, and due to our beloved corona I will certainly start from the home office in Germany and of course, I remain registered in Germany as well. I am to decide whether I should call a tax advisor, job lawyer or just finanzamt to ask: what am I!
        Yes, it is mentioned that I am a consultant and they have no liability about taxes or any deductions, you are right, it is very confusing, thematically it is Freiberufler but since they are hiring me and are my only client I should be very careful to not fall into the fake-freelancer dilemma (Scheinselbständigkeit) therefore, I was thinking about Freier Mitarbeiter. I also could not find much info about the difference between Freier Mitarbeiter or FreiberuflerI regarding their tax deduction amount and tax-related works. I will try to find answers and afterward, I will share them here, maybe it could be useful for some other expats with a similar situation. I thank you again for your inputs and efforts for sharing helpful information
        Kinds,
        Bernard

        • Yamini

          Hi Bernard, I think you have the best idea – talking to either Finanzamt or a tax consultant.

          Regarding the fake freelancing trap, as long as you have a completely separate business identity and freedom to set office, working hours, you would not be considered as a ‘fake freelancer’.

          Good luck with figuring out everything. I’m looking forward to hearing how it goes. Yamini

  • nat

    Dear Yamini,

    Just a question regarding your last post. I want to apply for both freelance and trade (mixed activity).

    Is it possible to apply for both in the one application? Or I need to do them both seperately? And/or is it better to do one before the other?

    Thanks so much,

    Nat

  • Natalie

    Hi Yamini – great blog article, thanks so much for posting!

    I recently applied for a Steuernummer, and received a letter from the Finanzamt with the number. However, I’m still unclear if I’m classified by them as a Freiberufler or Gewerbetreibende? The letter is not clear (to me), and defines the type of activity as:

    Bezeichnung des Betriebes bzw. Art der Tätigkeit:
    Erbrg.v.Beratldg.f.Info.tech.

    Any insight would be greatly appreciated 🙂

    Natalie

    • Yamini

      Hey Natalie, Thank you! It’s not clear to me as well from this text. However, I remember that I called my FA to clarify when I received my tax number and they confirmed that I’m a freiberufler. I’d suggest giving them a quick call next working day. 🙂

    • Priya Arunachalam

      Hello

      I am about to take up a teaching contract (Honorarvertrag) at a language school and I was asked to register at the Gewerbeamt. Do you have any idea why I should do this and if this is gonna cost me a lot even if I don’t earn regularly or earn good income in my teaching job?

      Thanks much for your response.

      • Yamini

        Hi Priya, Language school teaching is generally considered freelancing. Is it just teaching or would you be doing other activities that could qualify as a trade? My suggestion would be to call up your local Finanzamt and explain them your situation. They will be able to give you the most accurate advice. Also, IHK gives advice to self-employed people about starting up.

  • Preslav

    Hi Yamini,

    Thanks for the thorough explanation. I was wondering, how you would categorize my case. I am a software developer who has been employed in Germany for the past close to ten years. Now, I would like to slowly expand, and set up my own business. Nothing fancy, but I have a few small projects, on which I would gladly keep working, and charge customers for their usage. Being relatively flexible, I could as well help bring some money in the business, by performing some project work.

    In any other country, I could just call myself a freelancer, set up my own shop, and just pay off taxes, based on my income. Yet, I am guessing that it is different in Germany. Can I still consider myself freelancer, and bring up some of my software projects to customers, or does that put me into the position of having to have a company first?

    P.S. I know that registering a company is not required, if profits per year are up to a certain amount. One only needs to make sure they pay the appropriate taxes.

    • Yamini

      Hey Preslav,

      I recommend it’s best to consult a tax advisor since there are so many moving parts in this case. 🙂

      I’m also very very sceptical about working as a freelancer without registering with Finazamt (even as a side job). There is, at the very least, an obligation to informally inform your responsible FA. There is plenty of information (in German) citing that registration is obligatory for freiberufliche nebentätigkeit as well. Then there’s a question of VAT – whether you charge it or not?
      I’d really set up an appointment with a tax consultant to cover all bases.

  • Anita

    Dear Yamini,

    Thanks for such a quick response. Truly appreciate it!
    Will go though your recommended post..

    Thank You so much… Have a nice day!

  • Anita

    Hi Yamini,

    Any idea about Interior Designers!

    I have expertise in designing Hospitality Spaces & High-end Residences.

    I provide the complete (design concept, theme, layouts, elevations, detailed/joinery drawings, material & vendor reference, Bill of Quantity, & design changes till the time project is 100% complete at site.). I get paid for all of these activities.

    But I don’t undertake work execution myself. My clients commission & pay directly to contractor and Material Vendors.

    Do I qualify for Freelancer or Self Employed or Artist Visa for Germany?

    Also, my younger sister is settled in Germany (with PR). Her both kids are born in Germany.

    and yes, I am 1978 born…Does it changes anything?

    What are my prospects, if you may guide please.

    Thank You!

    • Yamini

      Hi Anita,

      Do I qualify for Freelancer or Self Employed or Artist Visa for Germany?

      – There’s only a self-employment visa for Germany (freelance or artist visa) are just colloquial terms for it.

      The distinction between Freelancer or Trader is only relevant for the tax authorities at the time of registering your business (nothing to do with visa especially when you’re located outside Germany)

      To see the requirements for German self-employment visa please read this post: https://mademoisellein.de/german-self-employment-visa-requirements

Leave a Reply

Your email address will not be published. Required fields are marked *