Want to know how to submit freelancer taxes in Germany? Learn how you can easily file taxes as a freelancer in Germany – all by yourself in simple English and without spending thousands of euros!
If you are a salaried employee then it’s relatively easy to file taxes using one of the many expat-friendly and affordable English online tax filing tools.
However, freelancers taxes in Germany are a whole different ballgame.
There are too many moving parts, too many deadlines in one financial year to keep track of, and all those expenses, invoices to remember.
Hiring a German tax consultant who can offer advice in English AND is familiar with freelancer taxes in Germany AND expat taxes is both rare and super expensive.
So what are the budget-friendly alternatives to file freelancer taxes in Germany?
In two words – get Sorted!
In this post, I will describe how I use Sorted to file my taxes as a freelancer in Germany – for free and in English!
1) What exactly is Sorted?
Sorted is an online tax tool created to serve the tax needs of freelancers living in Germany. It is developed by Zeitgold GmbH, a leading fintech firm that provides digital bookkeeping platform for small businesses. So they know their stuff. 😉
Sorted is available in simple German and English.
This tool single-handedly takes care of ALL stages of being a freelancer:
- it guides you through your registration process as a freelancer with your local Finanzamt
- it helps you keep a track of your expenses and invoices
- it helps your file your Income-tax return (Steuererklärung), Annual VAT return (Umsatzsteuererklärung), Annual profit report (EÜR), Advance VAT declaration (Umsatzsteuer–Voranmeldung)
Or watch this quick video walkthrough of how it works
Let’s take a look at who can use Sorted, how you can prepare your freelancer taxes in Germany on your own with confidence and without paying an immoderate fee to a tax advisor.
2) Who can use Sorted?
Sorted is a tool for freelancers, especially expat or non-german speaking freelancers in Germany.
You can use Sorted if:
- You want to become a freelancer in Germany
- You are a non-German speaking freelancer who would prefer to use an English tax tool
- You are registered as Kleinunternehmer in Germany
- You charge VAT as a freelancer in Germany
- You have clients on Upwork or similar online freelance portals
- You have clients in or outside of Germany
- You are a sole trader selling goods
- You need occasional professional advice from tax consultants in Germany
If you are an expat freelancer with a special tax situation, you may still be able to use Sorted to file your freelancer taxes in Germany. Read further if the following situations apply to you.
2.1) You are a salaried person besides being self-employed
It is common for salaried people to work as a freelancer on the side. This generally leads to a little complicated tax situation. In this situation as well Sorted can help you deal with your taxes as a freelancer in Germany with ease.
If you would like to consult a tax advisor, Sorted can match you with a tax advisor in their network who can help you declare your salary when preparing your annual tax reports at an additional charge.
If you prefer to go the DIY route, you can easily add the details about any income from a salary within Sorted’s UI without the help of the tax advisor.
2.2) You are a freelancer who is also married or has a family
Similarly, you can also use Sorted if you are filing freelancer taxes in Germany as a married person.
You can get help from a tax firm in Sorted’s network to prepare the income tax return for you and your partner, which will make sure you get all tax benefits that you are entitled to as a family.
2.3) You are an expat with international income
Expats often have a complicated tax situation because of international income that can lead to double taxation. If you have income outside of Germany or investments in your home country, Sorted can still come in handy.
Sorted takes care of all your income generated in Germany. For managing taxes on any income earned outside of Germany, they pair you with a dedicated tax firm that can help you declare it at an additional charge.
PS: You may still need to separately declare your taxes in the country where you earned the income so please make sure to inform yourself about the tax laws in that country.
3) Who cannot use Sorted?
Unfortunately, Sorted does not support UG or GmbH companies. If you need an accounting or bookkeeping tool for your UG or GmbH firm, then read my detailed comparison of English accounting software for freelancers/ small businesses in Germany.
4) How can Sorted help you with freelancer taxes in Germany?
Sorted is a simple yet powerful tool for filing taxes as a freelancer in Germany.
It can single-handedly support your freelance journey right from the beginning. If you are considering becoming a freelancer in Germany, you can sign up with Sorted to register yourself as a freelancer with German tax authorities. This service is for free!
They offer a step by step guide in English and directly send the finished tax form to your responsible Finanzamt. It is a free service provided by Sorted.
If you already are a freelancer in Germany, then Sorted takes care of your basic bookkeeping and tax declarations.
4.1) It helps you track your freelance expenses and income
When you log into Sorted, it will ask you to add expenses and income. The tool will guide you through adding your income and expenses. It will automatically prepare your tax reports based on your income and expenses, so you must ensure the accuracy of your data.
For adding expenses, Sorted UI lets you upload documents in various formats. There is also a dropdown list that easily categorises your business expenses.
If there are some recurring expenses you can simply select the frequency of the expenses. This feature is particularly handy because it automatically adds fixed expenses such as monthly internet or phone bills, legal insurance payment etc. You don’t need to upload an invoice and add a new expense manually each month.
4.2) It automatically prepares your freelancer tax reports
Your tax reports are automatically prepared by Sorted based on the income and expenses you enter. You can submit your tax reports electronically to the Finanzamt through Sorted.
With Sorted you can prepare and file your:
- Advance VAT declaration (Umsatzsteuer-Voranmeldung)
- Income-tax return (Steuererklärung)
- Annual VAT return (Umsatzsteuererklärung)
- Annual profit report (EÜR)
4.3) It directly sends your tax reports to Finanzamt
Sorted submits your tax reports directly to the Finanzamt through the official online ELSTER interface. This software is connected with the Finanzamt through their official software provider, ELSTER. There is no need for you to create an ELSTER account or certificate for the submission.
Once you submit your tax reports via Sorted, you will immediately receive a document confirming that the reports have been sent to the Finanzamt.
PS: It may take a few weeks or even months before the Finanzamt reviews your tax reports and sends you a tax assessment via post.
4.4) It gets you on-demand help from certified tax consultants in Germany
Even though Sorted is intended as a DIY tool for freelancers in Germany (albeit with several step by step guides and knowledge base), there are going to be moments when you may want to get professional tax advice.
For this, Sorted has a database of tax consultants in their network. When you sign up on Sorted, they automatically pair you with a dedicated tax firm. This tax firm supports you on-demand and whenever you need additional guidance or reports for your specific case. Your tax consultant on Sorted can answer your complex tax questions in an easy to understand language, in English or German.
The consultation can be a simple ‘Ask a Question’, ‘Schedule a call’ or ‘Review Your Tax Report’ etc. Each consultation is charged at a fixed rate upfront so you always know how much you will pay to your tax advisor.
5) How much does Sorted cost
Currently Sorted offers THREE types of subscription plans for freelancers in Germany.
1) STARTER: With a Starter plan, you can register as a freelancer for free with Sorted. You can also take advantage of Sorted’s several bookkeeping features with this plan – connect your bank account, create invoices, and track income and expenses for free.
2) KLEINUNTERNEHMER: This a new subscription plan for small businesses that earn under 22,000 EUR per year. With this plan, Kleinunternehmer can file their annual tax reports in Germany. The plan is priced at €80 per year including VAT.
3) PRO: Pro plan is suitable for those who have to file multiple tax reports in a year – such as monthly or quarterly advance VAT reports. Pro plan subscription costs €60 per a quarter (€240 per year).
Check out the full Sorted features and pricing here.
If you are looking to manage freelancer taxes in Germany, it is totally worth trying out Sorted.
Until 2020, I had been paying over 2000 € per year to my tax consultant in Germany. This does not even include occasional phone calls or one to one consultations which used to cost me €100+ with 19% VAT per hour!
As you can see in my videos, I use Sorted for all my bookkeeping and filing freelancer taxes in Germany (for a very fair price!).
Going from over 2k to under 300€ per year for accounting and tax services are pretty significant annual savings.
Or watch this video walkthrough to see how Sorted can help you file taxes as a freelancer in Germany
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