Last updated on September 19th, 2021 at 01:08 pm
Since written word is taken as gospel in Germany, it is essential to have a service agreement contract with your clients. Germans love paperwork after all. Learn all about German freelance contract and download a free editable template.
A written and signed service agreement is an important basis for a smooth freelancer-client relationship and to avoid any potential disputes. In this article, I will cover the most important points that you should include in your German freelance contract.
Disclaimer 1: This information is based on my experience as a freelancer in Germany. This article does not provide any legally binding information, as I am neither a certified lawyer nor a tax consultant.
Disclaimer 2: This page may include affiliate links. I might earn a small compensation if you decide to use one of my recommended partners and service providers. Thank you for your support to help keep this platform growing!
1. Who sends freelancer contracts in Germany – client or contractor?
Either party can send the service contract to the other.
If your potential client doesn’t send your German freelance contract or mentions it in the initial discussion, you can just send them yours and ask them to review and signed it.
As a rule of thumb, you are not obliged to start a project until the client sends you a signed copy.
2. What should be the language of your freelancer contract in Germany?
Preferably German and your native language? This way both parties will be fully informed about the terms and conditions.
On the other hand, it depends on your clients.
I have had my clients send me 60 page long contracts in both English and German. I have also sent some contracts completely in English (downloadable template below!) and that worked out too. However, I have also signed German freelancer contracts drawn in German only.
Pro Tip: In case your client sends you a contract in German and you don’t understand the language yet, then you have the following options:
- Sign the contract without full understanding: But then you may feel uncomfortable signing a legal document you don’t completely understand. Especially if it is a high stakes project.
- Get it verified for potential loopholes by a professional lawyer: It might be sensible if you are about to start a high stakes/ long term project with a client where you might have to deal with a large budget or sensitive data of your client’s business. Online services such as YourXpert offer an online contract check service for a very reasonable price.
- Get it translated into your native language: If you are a seasoned freelancer and just want a translation of your service agreement you can try an online translation service like lingoking.
3. Essential sections of a German freelance contract
The following sections should be taken into account in a freelance contract in Germany:
3.1. Details of client and contractor
In this section, you want to add details of your client and your own business. Important business details such as contact person name, business name, contact details, address and VAT ID should be added here.
3.2 Scope of project
Define your tasks and goals of the project in detail in this part of the contract. This way, you document a clear basis for the deliverables for your client.
List out your exact tasks if you are working on a multifaceted and complex project.
For example, if you are working on an online marketing project, then don’t just use some vague statement like ‘you will handle client’s online marketing activities.‘
Instead, clearly outline your day to day tasks such as
- Weekly Instagram management
- 30-day content calendar for three social media channels
- Facebook ads campaigns
- Two email campaigns per month etc etc
Besides this, you can also add a clause that you can do additional tasks for XX EUR per hour (or whichever pricing model you use).
This will protect you from your client assigning you more tasks than you initially agreed upon. Plus you keep the possibility to get paid for more work.
Pro Tip: As a freelancer, you may also employ so-called subcontractors to carry out an assignment. If, for example, a project is too large to be completed in the time available, you can agree on the option of hiring a subcontractor.
Upwork or Fiverr are some very popular platforms for finding professional services from all over the world.
3.4 Project time frame
The project time frame should be contractually defined from the beginning.
You want to define not just a time frame for the entire contract period, but also the weekly time frame. Will you work 20 hours per week? 40?
Define it clearly in this section.
You can always add that you are open to working additional hours at XX EUR/ hour.
If in the course of the project, you wish to extend the time frame you can of course agree on a new assignment at a later date.
Pro Tip: If you are expecting it to be long term cooperation then you can always add a clause stating that you revise your rates every six months (or 12 months etc). I, for example, raise my rates by a certain % every six months.
This way you will reduce the risk of getting stuck at the same rate for an extended period of time. Plus this also gives your client a very clear heads up and makes future negotiations a little less awkward.
The remuneration for your work is, of course, an essential part of your German freelance contract.
You can decide what pricing model you want to set for the project – hourly rate, fixed-rate, milestones based or subscription-based model.
In Germany, professional services are usually quoted excluding the VAT. For example, you should quote your services as 100 EUR/hr + 19% VAT.
Otherwise, your client may assume that 100 EUR includes VAT.
Of course, you will have to show this on your invoice (if you are liable for VAT as a freelancer).
Besides your hourly or fixed rate, you might want to consider any business expenses.
- Do you plan to travel?
- Or need any special tool or software for your project?
- Pay any other contractors for some specific tasks out of your skillset?
Think hard about any relevant project-specific costs and add them to your final quote (excluding VAT ;)).
Obviously, you also want to add the payment method for your clients. Your business bank account details or any other payment methods.
Pro Tip: If you work on an hourly basis, you can also document all working hours in writing or record them with a tracking tool! Read about some EU based accounting tools that support multiple languages.
3.6 Payment terms
You can also regulate the payment period you want to grant your client in your freelance contract in Germany.
Typical payment deadlines are 7 or 14 or 28 working days after the issue date.
However, if your contract does not contain any payment deadlines, the statutory payment period of 30 days automatically applies.
Pro Tip: You can learn how to create a German VAT invoice and download free VAT invoices here.
Alternatively, you can also use a free tool like Sorted to generate VAT invoices free of cost.
If you have a large number of clients, you can automate your accounting and invoicing by using one of the many EU based accounting tools (that support multiple languages)
3.7 Late payment terms
If you have been a freelancer for a few years you will know that not all clients adhere to payment deadlines. After having some personal experiences with super late payments, this clause is now a must-have for my German freelance contracts.
In this section, you add a clause that if the client misses the payment by XX days, you will charge XX amount of late fee in addition to the original invoice amount.
Pro Tip: Learn how the dunning process works in Germany and how to send friendly and effective payment reminders to your German clients.
3.8 Non-compete clause (NCC)
This clause normally comes from the clients’ side and typically used for salaried employees instead of independent contractors.
It is understandable that businesses don’t want people working for them also helping their competition.
In some cases, these clauses have some merit – particularly when there are intellectual properties and conflict of interest involved.
However, they can get too restrictive. If the clause is written in a way that will prevent you from working on similar projects and eventually restricting your income potential you probably want to renegotiate its terms.
Pro Tip: If your client’s NCC is too demanding and restrictive, you can always suggest signing a non-disclosure agreement instead.
3.9 Non-disclosure agreement (NDA)
As a freelancer, you inevitably gain insight into the various business areas of your client.
It is therefore common and understandable to include an obligation to keep internal company information confidential in the freelance contract. This clause prevents you from revealing confidential information about their business processes but also allows you to work with competitors.
As a small business owner or freelancer in Germany, you are liable to pay damages without any limits e.g with all of your personal and business assets.
However, it is possible to contractually limit your own liability to a reasonable extent.
You can propose an agreement that limits your liability to a certain maximum amount. It is also possible to limit liability to cases of so-called simple or gross negligence as part of the contract.
In any case, you should carefully inform yourself about the risks in advance and consider taking out appropriate professional liability insurance for freelancers.
Pro Tip: If your contract does not cover enough liability, then you can always take out basic professional liability insurance.
Hiscox offers custom professional liability insurance for over 200 professions including freelance IT consultants, Bloggers, Marketers etc.
All good things eventually come to an end. If your client is turning out to be a client from hell you can also add a clause for premature termination of your freelancer contract in Germany.
Cancellation terms of service agreements are clearly defined in the German Civil Code (cf. § 621 BGB).
In the case of a service relationship that is not an employment relationship within the meaning of section 622, termination is allowed
1. if the remuneration is assessed by days, on any day to the end of the following day;
2. if the remuneration is assessed by weeks, at the latest on the first working day of a week to the end of the following Saturday;
3. if the remuneration is assessed by months, at the latest by the fifteenth of one month to the end of the calendar month;
4. if the remuneration is assessed by quarters or longer periods of time, observing a notice period of six weeks, to the end of a calendar quarter;
5. if the remuneration is not assessed by time periods, at any time; in the case of a service relationship that completely or mainly takes up the economic activity of the person obliged; however, a notice period of two weeks must be observed.
Tl;Dr: You can set aside a reasonable notice period for terminating your German freelance contract. It is also advised to give a notice in writing for both parties. Both parties should be able to initiate the cancellation process.
You can also use this section to define the handover process of project material – such as any passwords, codes or scripts, WIPs, prototypes etc.
Pro Tip: You should also mention that the client will be responsible for revoking your user access from sensitive accounts such as CRMs or social media ads accounts. I had some clients who didn’t remove me from their systems for years even after sending multiple reminders.
4. Download a German freelance contract template
5. Dos and Don’t of a freelancer contract in Germany
Clearly define tasks and activities, but leave enough room for custom solutions.
|Use a general, broad description that sounds like a job advertisement.|
Define the project period and scope.
|Specify fixed conditions regarding the place of work and working hours.|
|Include agreements on fees, expenses and payment terms.||Specify remuneration including VAT (not legally wrong, but rather unusual).|
Formulate regulations on confidentiality and personal liability with the resulting consequences and, if necessary, have them checked by a lawyer.
|Limiting your liability too much, for example only to cases of gross negligence, may make a negative impression – after all, you want to signal to your client that you are basically already capable of carrying out your tasks in a considered and conscientious manner.|
Agree on the payment of work already done in case of cancellation.
|Cancellation periods should be in proportion to the total duration of the contract. Keep room for a reasonable notice period.|