Do you want to become a freelancer in Germany? Will you be better off with a proper salaried job or Is being your own boss is worth it? I have been freelancing in Germany for nearly three years now. Here are some of my thoughts about the pros and cons of being a freelancer in Germany.
I have been freelancing in Germany for quite a while now. This has been an exciting journey and I’m glad that I chose to freelance instead of going for a full-time job after my master’s degree.
The flexibility, the lack of daily commute, workplace politics and stress-free work routine really suit my introverted personality.
While I love the freedom and lucrative business opportunities because of my remote work lifestyle, I also have to face certain challenges in my day to day work situation. Most of them stem from me being an expat in Germany.
Here is a summary of the key advantages and disadvantages for expats who are looking to become a freelancer in Germany.
START HERE to become a Freelancer in Germany
1. Pros of Being a Freelancer in Germany
1.1. Constant Supply of Potential Clients
Germany has a stable economy and it is projected to stay like this for the next few years. Cities like Berlin and Hamburg have a vibrant startup scene. Frankfurt, Munich, and Stuttgart are known for traditional automobile industries.
Larger cities in NRW like Düsseldorf and Cologne have a strong presence of media and publishing business. Between these above-mentioned cities and the rest of the country, Germany has heaps of big to mid-sized businesses. Entrepreneurship is encouraged in Germany, so it is no wonder that there is a growing freelance economy.
As long as you are highly skilled and have great client reviews, you will be able to find a consistent stream of lucrative projects in Germany.
1.2. High Earning Potential
Thanks to a healthy GDP, average income in Germany is amongst the highest in the world. Salaried employees enjoy a good monthly income and other perks.
Freelancers have the freedom to charge a higher than average hourly rate or fixed price. Another advantage is that German clients know that the taxes and other costs of business operation are relatively higher in Germany. As a result, they are prepared to pay high prices to the freelancers.
Freelancers in Germany are considered high skilled professionals in their fields. Clients know this and see them as experts who solve their business problems, and not just as contractors for outsourcing repetitive, tedious tasks.
Well established freelancers can easily charge high rates and progressively increase their income.
You May Be Interested in: Where to Find Lucrative Remote Jobs in Germany
1.3. Good Tax Policies
Even though Germany is notorious for high taxes, as a freelancer you are entitled to several tax benefits. There are a number of expenses that you can easily write off as business expenses and expect a return on them.
Even if you work from home, you can deduct it from your taxable income.
Read More: A Guide to VAT for Freelancers in Germany
2. Cons of Being a Freelancer in Germany
2.1. Expensive Health Insurance
Health insurance for freelancers in Germany is EXPENSIVE. And mandatory. There is no workaround it. If you are a member of a public health insurance company, then you have to contribute about 14% of gross income towards health insurance.
This monthly premium increases with the increase in your income. I have to admit it hurts to see so much of your money go towards insurance, especially if you are a healthy individual and visit the doctor like…once a year.
This is honestly one part of this freelance saga that pains me every time I look at my bank statement each month. However, you can still deduct health insurance as a business expense, so there’s that.
You May Be Interested in: Health Insurance for Freelancers in Germany (2020 update)
2.2. Complicated Tax System
Ask any native and they’ll tell you that the German tax system is very complicated. It is even more so for us expats, who have the added challenge of grasping tax-related terminologies in German. When I registered as a freelancer in Germany, I assumed that I would be able to deal with the tax myself. But I found that it is way too complicated upon researching.
There are certain processes and rules such as quarterly tax prepayment system and monthly VAT registrations that not everyone can wrap their heads around. Now I’m better off hiring a tax advisor. I pay a hefty fee, but they save me from potential Finanzamt related problems and a ton of headache.
Recommended Reading: How To Do Your Tax Declaration As A Freelancer In Germany – Easy And Fast
2.3. Highly Competitive For Foreigners
An expat freelancer has to compete with fellow expats and native freelancers.
As mentioned earlier, Germany has a large freelance economy. High skilled freelancers are in demand. If you don’t speak fluent German you may find it hard to find consistent work.
You may be a freelancer in a field that does not require German language skills (IT, software dev etc), however, German businesses operate in German on day to day basis.
Limited German skills will make communication with your client and their team challenging. You may also have to limit your business networking to English speaking professional groups, which are still a minority in Germany.
Are you also a freelancer in Germany? What is the greatest benefit for you? Is there something you hate about freelancing in Germany? Let us know in the comments below.