Pros and Cons of Becoming a Freelancer in Germany
Last updated on January 23rd, 2023 at 02:28 pm
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, lack of daily commute, no workplace politics and stress-free routine really suits 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 being a foreigner 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 businesses. 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, the 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 operations are relatively higher in Germany. As a result, they are prepared to pay high prices to the freelancers.
Freelancers in Germany are considered highly 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. Rewarding 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 reduce your taxables.
Even when you work through online freelancer platforms such as Upwork you charge their membership or service fee as business expenses. Same for any online courses or webinars that you may sign up for.
Learn about German freelancer taxes.
1.4 Digital Nomad Friendly
Germany is conveniently located in western Europe, close to many amazing cities like Amsterdam, Paris, Vienna, Lisbon, Barcelona and so many more. It is under a three-hour flight from warm islands like Mallorca or Crete.
Germany is a fantastic base for any digital nomad who wants to discover other European cultures. As long as you have adequate remote work lined up, you would be able to finance your digital nomad lifestyle in one of the best-located countries in Europe.
1.5 Financial Support During National Emergencies
Even though freelancers in Germany are not entitled to the social benefits system in Germany, they are eligible for financial support during a financial crisis.
When Covid-19 lockdowns led to a worldwide economic recession, the German state immediately set up emergency relief packages for businesses and self-employed people (this includes freelancers in Germany).
Read More: Working Remotely as a Freelancer in Germany
2. Cons of Being a Freelancer in Germany
2.1. Expensive Health Insurance
Health insurance for freelancers in Germany is mandatory. And EXPENSIVE. There is no workaround for it. If you are a member of a public health insurance company, then you have to contribute at least 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…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 research.
There are certain processes and rules such as the quarterly tax prepayment systems 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 headaches.
2020 Update: As of 2020 I started filing my own German freelancer taxes. Read all my how-to guides for taxes for freelancers in Germany.
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. But if you don’t speak fluent German you may find it hard to get 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.
Related: How to Learn German Fluently While Living (and Working Full-Time) in Germany
2.4. Remote Work is Hard to Find
When I started to freelance in Germany in 2017, it was very hard and rare to find clients who were open to remote work. I would get plenty of inquiries from clients all across the country, but it was expected that I should just travel 2-3 hours each day or temporarily relocate to the client’s city for the duration of the project. Actually, many many freelancers and consultants in Germany do this.
I had to source clients from freelance platforms such as Upwork, and everything worked out.
2020 Update: In the post-Covid19 world, Germany was forced to adapt the work culture to remote work or work-from-home situations. And hopefully, it will stay so for a long time.
2.5 Little or No Social Security Benefits
Employed people in Germany are obliged to contribute to the German social security system (Sozialversicherungssystem). This includes pension funds, healthcare, long-term care, unemployment insurance, occupational accident insurance etc. Therefore, whenever they are in need of emergency or extra support, they are entitled to several state benefits.
If you are self-employed (i.e. you run your own business or are a freelancer in Germany), you have to make your own arrangement for these benefits. This article covers all the essential insurances that every freelancer in Germany should have for long-term financial stability.
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.
This was an interesting and insightful post to read! Especially so since I’d just had a chat with my German friend over why she decided to give up blogging and not go the freelancing route in Germany.
– Laura // afinnontheloose.com
Thanks for your comment. 🙂 Germany offers great work conditions to full-time employees. I’ve also seen several freelancers switch to full-time employment later in their life. Maybe that’s what happened with your friend. 🙂
Hello, I am curious about workers compensation type programs in Germany for freelancers if you get injured on the job. Is there such a program?
There are insurances for situations like this. It’s called arbeitsunfähigkeitsversicherung (insurance coverage for inability to work because of health problems). I can research and create an in-depth post about this topic later. There are so many insurances in Germany! :O
Very well written and informative post. A close family friend lives in Germany and works in IT. He’s been trying to persuade us to move therefore years because he loves it. I had no clue that health insurance was so costly in Germany. I typically only hear rave reviews about life there, except for the strict garbage sorting rules.
Thank you, Kimberlie! 🙂 Yes, health insurance is expensive here, but I think in the long term it can save us from a lot of unpredictable medical expenses. Paying a doctor out of pocket is wayyyy costlier. As an expat living here for several years I can vouch that Germany makes up for this by offering several other benefits 🙂