Self-Employment in Germany

Article of association for limited liability and partnership in Germany
April 4, 2020
Tax System in Germany
April 22, 2020

Different types of self employment in Germany

In practice everyone, even people with citizenship outside the European union could apply to be self employed in Germany. Although, the fact that this application will be approved or not is another story to be evaluated by authorities.

However to give you a general look before proceeding as a business person to Germany, we hereby categorize two main types of self employment that you can choose as follows:

  1. Commercial business (Gewerbliche Tätigkeit): the person who is doing it in Germany is called tradesman/woman or Gewerbebetrieb 
  2. Freelance (Freiberufliche Tätigkeit): the freelancer or Freiberufler is also a person who does this type of self employment

There are some differences in nature between the two above-mentioned types of self employment. The first step is to understand which category your profession is assigned. Also it should be investigated whether or not you can fulfill the requirements and prerequisites of the selected business whether from the qualification perspective or other criteria. 

This is called “Anforderungen an den Berufsstand” in Germany which eans “profession requirements”

As already mentioned, the first step is to see, by considering your career in your home country, for which one of the two types of self employment programs you should apply. 

1- Commercial business (Gewerbliche Tätigkeit)

In Germany the term “Gewerbe” can consist of any profession that can generate income. These types of jobs are also called “Stehendes Gewerbe” or stationary trade as opposed to  “Reisegewebe” which is a mobile trade. The only exception in this definition is the freelance and forestry/agriculture “Land- oder Forstwirtschaft tätig” which could not be considered as commercial trade in Germany.

2- Freelance (Freiberufliche Tätigkeit)

Freelance professions consist of independent businesses in the fields of science, art, writing, tutoring/teaching, education, and consultancy. 
 science, art, writing, tutoring/teaching, education, and consultancy 

There are two important points about freelance jobs in Germany:

  • Freelancers only render services.This is exactly where they are separated from other traders which produce or sell products. The opposite does not apply though, meaning any service renderer is not necessarily considered to be a freelancer in Germany. 
  • Basically a freelancer needs to have a valid certificate approved by the trade office (Gewebeamt)and tax office (Finanzamt) in Germany to be able to be considered as a freelancer. These certificates could be an academic degree, or a particular qualification obtained as a licence by passing specific tests or exams. 

Another important difference between a commercial trade and freelance business in Germany is related to taxes: Freelancers are exempted from paying trade taxes (Gewerbesteuer). Also preparing and submitting documents for the annual closure, and declaration is less complicated than commercial trades. 

Because of this advantage, the local tax office should always approve whether the person is literally a freelancer or trader in Germany. For the former the businessman should only register himself in Finanzamt and for the latter registering in both Finanzamt and Gewerbeamt is needed. 

It should be noted that a commercial trade can represent itself in Germany either as a sole trader or a company as legal entities which in next articles we will explain more.

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