Ask any freelancer, and they’ll tell you it’s not for the sissies. After being a freelancer for several years, I can vouch for this. But because I like to live dangerously, I decided to take it to the next level by freelancing in Germany. Here are my experiences after one year for working as a freelancer in Germany!
I have been freelancing in Germany for nearly a couple of years and recently scaled up from freelancing to small business. However, I deem the first year of freelancing as the most important in my career. I’ve learned so much in 12 months – not just about freelancing in Germany or about creating a business from scratch, but also about other life skills.
You see, freelancing in Germany is like that one really tough level in a game which takes a 100 tries to get through. But once you do, it opens up gates to newer better levels, bigger rewards, and more exciting adventures. And bonus – you come out with some superpowers. ??
I still am learning something new every day and still have a lot to learn on this journey. Here are some of the key lessons I learned during my first year of freelancing in Germany.
It’s VERY Complicated In The Beginning
As with anything in Germany, the process for starting up as a freelancer is quite intricate. When you start as a freelancer in a non-expat situation, some of your biggest concerns are client acquisition, project management, billing, and your actual work.
As an expat in Germany, you have to swap your time between sorting out the registration at the Finanzamt, finding a health insurance plan valid for self-employment, dealing with the German tax system, or getting a work permit for self-employment – all of these simultaneously! That’s a lot of German bureaucracy to deal within less than a year. This is enough to add layers upon layers of stress that already come with the beginning stages of freelancing.
You Will Need To Understand The German Tax System
Another complicated side of freelancing in Germany is the mandatory advance payment of the taxes. That’s right, you pay taxes on your income before earning it. As a freelancer in Germany, you are supposed to pay the tax for the last year and the same amount as pre-payment for the next year. The advance payments are due every quarter and the “difference” between the last year’s tax and the last year’s advance payments is due around the following month after the submitted tax declaration.
For the first year of freelancing, the freelancer has no advance payments. This is because you don’t have any past tax records to use as estimates. In the second year, however, the tax for the first year is due, as well as the same amount of advance payment for the current year. As a new freelancer, you should watch out for this. Be prepared and keep enough funds in your bank account so these payments don’t disrupt your budget.
You Will Have to Get Used to A Very Expensive Healthcare System
The German healthcare system is complicated as it is. It is even more complex for the self-employed. Simply speaking, if you are a freelancer in Germany, you need a health insurance plan specially designed for the self-employed. I chose to become a member of a public health care healthcare system. If you are self-employed in Germany, your other options are a private provider or a Künstlersozialkasse (KSK) which is an insurance service for artists.
In Germany, full-time employees pay about 7.3 to 8.3% of your income towards your health care contribution and the rest is paid by the employer. However, as a self-employed person, you are your own employer, which means you have to pay both shares. This can be from 14.6 to 15.6% of your monthly gross earnings. Like with the taxes, your monthly premium varies according to your income.
If you are with public health insurance, after a certain monthly income threshold you will reach a ‘flat’ monthly fee. This is still a huge chunk of your income and can take some getting used to. Honestly speaking, I’m still shocked a bit every time I see my monthly contributions into the health care system each month. But hey, a necessary evil as they say.
But even if the German healthcare and taxes are excruciatingly high, at least…
Your Earning Potential Is Higher If You Work With Local Clients
In Germany (and western EU in general), the average hourly rate is amongst the highest in the world. Clients are aware of this and are prepared to pay these rates. Depending on the references, experience and performance, a freelancer can easily charge more than €100/hr. You can calculate the latest average rates for your expertise on GULP.
What I like most about freelancing in Germany is that clients do not haggle you to bring down your budget. You give them a number, and you get paid that number. All you have to do is meet their expectations. Read my tips for negotiating with clients for better and higher paid projects.
Which brings me to…
You Are Expected To Be Self-Sufficient Service Provider
To justify higher than average hourly rates, clients expect you to be completely autonomous and an utmost expert in your job role. Even though you are working as an individual, you are expected to bring the structure, discipline and expertise of a business.
German work culture is still more conservative and rigid in comparison to other countries. Your personal branding is expected to have a corporate, professional mannerism. From your communication with the clients down to your contract and invoicing method – everything is expected to be formal and by the books.
Now, bear in mind that this does not apply to ALL potential German clients. There are startups and young businesses that are much more relaxed and informal. However, clients here see you as their equals and problem-solving experts in your field. Unlike some other cultures where freelancers are seen as cheap outsourcing resources.
Remote Working Is Frowned Upon (At Least By Traditional Businesses)
Ok, maybe not frowned upon, but certainly not preferred. Remote working is still a rare phenomenon in German work culture. Most clients expect you to work ‘onsite’ even if a few days in a week. This basically limits the number of projects if your goal is to work remotely or from home office. Some projects can be done from the home office, but they are usually cold calling type work.
It is still possible to find remote clients in Germany. Good news is that this is slowly changing. I see more and more German projects on remote working marketplaces like Upwork. In my first year of freelancing, I was able to successfully acquire some German clients through Upwork alone.
Ready to Freelance in Germany: START HERE!
Have you ever freelanced in Germany? How was your experience? What were the biggest highlights or challenges for you?