Are You A Freiberufler, Freelancer or Gewerbe in Germany
Last updated on December 23rd, 2022 at 01:06 pm
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 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 (Freelancer) or Gewerbe in Germany? This post attempts to answer the most important questions.
But first, here is a glossary of the most important and frequently used German terminologies in this post.
|Freier Mitarbeiter||Freelancer / Contractors|
|Gewerbe||Trade (Commercial activity)|
|Freie Berufe||Liberal professions|
|gemischte Tätigkeiten||Mixed activities|
For busy people: Here is this blog post in a video format. Otherwise, continue reading!
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.
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.
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 is divided further into THREE subcategories.
2.2) Liberal professions subcategories in German tax law
The income tax law in Germany distinguishes in §18 paragraph 1 No. 1 into 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 are 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 the 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, writers, teachers and educators.
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 English-speaking international freelancers and unfortunately expat bloggers in Germany.
This is INCORRECT!
Although the two words are quite similar, it is important to be extremely careful here.
Not every Freiberufler is automatically a freelancer in Germany.
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 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 developers, photographers etc.|
|They often have their own practice, law firm or design studios – a specific place dedicated to their work. Their clients/customers visit their offices 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 that 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 Register Your Freelance Business With Tax Authorities (Finanzamt) in Germany
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 Gewerbe 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
- Specialised 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.
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.
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
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.
I would like to know which category i would fall and if i will need to register for freelancing
I am a full time employed person and now would like to start my own blog for travelling.
I see gaining profits via rhis blog over time via adsense and affiliate marketing links
So my questions are
1) should i register with finamzamt being a full time employee for this blog? If yes what should i register as?
2) i already have my steur id from my current full time employment, so will i need another one for this blog?
Hey Sarah, ad income comes under Gewerbe category. so you should register as one and not as a freelancer. Also, you will get a different tax id for self-employment. There are detailed articles about this topic on this website.
Thank you for the informative blog!
I have a question on the category I fall under. I am a recruiter who work with different clients on different projects at the same time. The clients pay me commission when work is completed (around 20% of the salary of the person they hire).
The visa appointment asks if I would like to make an appointment as a freelancer or self-employed which makes me so confused.
Which category would I fall under and which appointment should I book?
Hey Louis commissioned work is almost always ‘gewerbe’, but maybe you should confirm this with an official source e.g. your local IHK.
Thanks for the explanation.
I’m still a bit confused about where I fall. I have had a visa listed as freelancer, and started working as a freelance (I thought?) video editor in 2017 here in Berlin and never registered a business or self-employed type situation. I work sometimes doing motion graphics, editing, color correction, voice over, etc. All for various clients in Germany. I mostly work from home but occasionally travel to offices.
I have a bill now for Gewerbesteuer, though I didn’t expect I should have to pay this as I’ve never registered and consider myself to be doing artistic/freelance work. It sounds like maybe the Finanzamt disagress with me? I’m trying to figure out if I should fight this bill as it’s hundreds of euro, or if I should just give in–but will that now mean that I have to keep paying this?
Hey Cody, I assume, you must have registered your self-employment activity when you filled up the ‘fragebogen zur steuerlichen erfassung’ form? After which Finanzamt must have sent you a tax number and assigned you an activity type – either Freiberuflichkeit or Gewerbe. How is it described in this letter? Maybe you can refer to that letter and confirm your self-employment status?
Very useful information you put together, nicely presented!
I have a question: I have recently accepted a job offer as an independent contractor based in Germany and I will be performing professional services in the telecom industry. May I know if I will qualify as a freelancer or self-employed?
Thank you in advance.
Hey Abel, Consultants are generally considered freelancers. The German term would be ‘-berater’
Although it’s not clear to me if you’re really a freelancer since you mention that you accepted a ‘job offer’. A job offer makes it sound like you might be an employee, not a contractor.
Thank you for the article! Really helpful information! I do have a question though: I’m working on a German company and I decided to become a freelance designer/illustrator for either German clients or from abroad and eventually set my own studio. I’m on a blue card now but not sure if I can keep it as a freelance and if freelance it’s the actual category I fall into?
Hello Edwin, you can take up self-employment on the side. However, you will need approval from your current employer and obviously, you will have to notify your responsible ABH so they can issue you a self-employment permit.
I would like to clarify my case. I am currently employed in a firm with Blue Card visa.
At the same-time, I would like to start my own firm for language teaching. Initially I will be the owner of the firma dn the only employee and over years, I would like to employee in teachers and make it into a Language school. How should I classify it, Gewerber as I am planning to grow it and employee people, with no office premise as such, or Freelancer or freiberufler?
Hi, You might want to consult your local IHK for information on setting up a language school as a blue cardholder in Germany.
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,
Hello Arash, thank you for the kind words. Regarding your questions:
1) I’ve answered it in the same article in section 4.1: https://mademoisellein.de/are-you-a-freiberufler-freelancer-or-gewerbe#4_Self-employment_as_a_Trader_Gewerbetreibende_in_Germany
2) Here is a step by step process to register your trade: https://mystartupgermany.com/gewerbeanmeldung-register-a-business-in-germany/
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!
Hey Krushna, Thank you for reaching out. I’m afraid this is out of my scope of knowledge. I found this article about dealing with taxes for aufwandsentschaedigungen – https://www.haufe.de/personal/haufe-personal-office-platin/aufwandsentschaedigungen-voraussetzungen-fuer-die-steuer-und-beitragsfreiheit_idesk_PI42323_HI1562148.html
I hope it helps you further with your questions. Cheers, 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!
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.
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 🙂
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!
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,
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.
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
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
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,
Hey Nat, I’m afraid I’m not aware of how it’d work in this case 🙂 The best option will be to ring your local Finanzamt and ask them how to do this.
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:
Any insight would be greatly appreciated 🙂
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. 🙂
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.
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.
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.
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.
Thanks for such a quick response. Truly appreciate it!
Will go though your recommended post..
Thank You so much… Have a nice day!
You’re welcome, and thank you! 🙂
I forgot to mention…I am from India!
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.
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