'Freelancers in Germany: Who Qualifies as a Freelancer and What Taxes Do

In Germany, a “freiberufler” is a person who derives income from independent professional activities: scientific, artistic, literary, teaching, or educational work; or from one of the professions recognized by law, such as a doctor, lawyer, engineer, architect, journalist, or translator. The main difference from a standard business (Gewerbe) is that income from such activities is not subject to trade tax (Gewerbesteuer) if the tax office (Finanzamt) actually classifies the work as a freelance activity (freiberufliche Tätigkeit).

However, “freiberufler” is not a separate “preferential regime” nor is it the German equivalent of Russian “self-employment.” Taxes are calculated according to the general rules for self-employment: income tax on profits, value-added tax (VAT) if applicable, advance payments, and an annual tax return.

What Does “Freiberufler” Mean?

In German tax law, it is not the label “freelancer” that matters, but the type of income. Section 18 of the Income Tax Act (EStG) refers to “Einkünfte aus selbständiger Arbeit,” that is, income from self-employment. Within this category, there is income from “freiberufliche Tätigkeit”—liberal professional activities.

In practice, this means three things:

• The person works independently, rather than as an employee;
• the activity falls under a liberal profession or is similar to one in terms of nature and level of qualification;
• The results of the work are based on personal professional knowledge and creative or intellectual contributions.

Formal registration alone does not make a person a “freiberufler.” Conversely, if the activity essentially qualifies as a liberal profession, the income may be considered “freiberuflich” even if the tax authorities review this only after the “Fragebogen zur steuerlichen Erfassung” has been submitted.

Which professions are classified as freelance?

Section 18 of the Income Tax Act (EStG) lists several groups. The list is not exhaustive: it includes specifically named professions and the phrase “ähnliche Berufe,” meaning similar professions. It is precisely this phrasing that gives rise to disputes with the tax office.

Activities Not Subject to a Strict List of Degrees

Freelance work may include:

• academic work: research, scholarly publications, expert articles;
• artistic activities: music, painting, and design as independent creative work;
• Writing activities: books, articles, technical documentation, and editorial work;
• Teaching: the systematic transfer of knowledge and skills, such as languages, programming, and professional courses;
• Educational work: pedagogical or educational activities.

Not all public or creative work automatically qualifies as “freiberufler” activity. For example, blogging, running a video channel, managing social media, marketing, or content creation may be classified as a “Gewerbe” if the primary income is derived not from writing, artistic, or teaching work, but from advertising, sales, promotion, or commercial platform activities.

Professions Specifically Listed in § 18 EStG

Classic liberal professions include, among others:

• doctors, dentists, veterinarians, alternative practitioners (Heilpraktiker), and physical therapists;
• attorneys, notaries, and patent attorneys;
• tax consultants, auditors, and consulting economists;
• engineers, architects, surveyors, and commercial chemists;
• journalists and photojournalists;
• translators and interpreters;
• Pilots.

Qualifications are important for many of these professions. The tax authorities look not only at the name of the service listed on the invoice, but also at education, professional experience, the nature of the work, and the degree of personal responsibility.

IT Specialists: When Can You Qualify as a “Freiberufler”?

IT professions are not explicitly listed in § 18 of the Income Tax Act (EStG), so qualifications and the nature of the project are particularly important here. German case law recognizes that complex software development, systems architecture, IT consulting, or the management of technical IT projects may be comparable to engineering activities.

However, there is no automatic rule that “programmer = freelancer.” The tax office (Finanzamt) typically assesses:

• Does the specialist have a relevant college degree or comparable knowledge?
• how technically complex and independent the work is;
• Does the specialist develop an engineering solution rather than perform simple adjustments?
• Is it possible to separate IT services from commercial resale, marketing, hosting, or agency activities?

For example, a developer who designs and writes non-trivial software for a client is more likely to have grounds for claiming “freiberufliche Tätigkeit.” Creating simple websites using a website builder, providing support for an online store, offering intermediary services, or selling ready-made digital products are more likely to be classified as a “Gewerbe.”

How to Start Working as a Freelancer

A business registration (Gewerbeanmeldung) is usually not required to start filing taxes. Freelancers notify the tax office (Finanzamt) of the start of their activities using the “Fragebogen zur steuerlichen Erfassung” (Tax Registration Questionnaire). The form is submitted electronically via ELSTER or another acceptable tax filing channel.

Typically, the following information is provided on the application form:

• the date the business began;
• description of services;
• expected income and profit;
• bank account information;
• a plan for Umsatzsteuer, including the application of the Kleinunternehmerregelung if applicable;
• Information about a tax advisor, if applicable.

After processing the application, the Finanzamt issues a Steuernummer for self-employment. You must then keep records of income and expenses, retain supporting documents, and file an annual tax return () at.

What taxes do freelancers pay?

Freelancers typically face three main categories of taxes.

Tax	When it applies	What’s important
Income Tax	on annual profit	profit is included in the individual’s total taxable income
Value-Added Tax (VAT)	if the small business exemption does not apply and the service is subject to VAT	you must issue invoices with VAT and file returns/preliminary reports
Trade tax (Gewerbesteuer)	generally does not apply to freelance work (freiberufliche Tätigkeit)	may apply if the activity is in fact a trade (Gewerbe) or if mixed income cannot be separated

Freelancers are not exempt from income tax. The tax savings primarily relate to trade tax, but in reality, the difference is not always significant.

Why the savings on Gewerbesteuer are often less than they seem

For individuals and partnerships (Personengesellschaften), trade tax (Gewerbesteuer) is levied only on business income (Gewerbeertrag) exceeding the tax-free allowance (Freibetrag) of 24,500 euros. The tax base is calculated using a tax assessment rate (Steuermesszahl) of 3.5% and then multiplied by the municipal assessment rate (Hebesatz).

Example: An entrepreneur earned 40,500 euros in business income (Gewerbeertrag).

1. 40,500 euros minus the 24,500-euro tax-free allowance = 16,000 euros.
2. 16,000 euros × 3.5% = 560 euros tax base.
3. If the municipality’s assessment rate (Hebesatz) is 410%, the trade tax (Gewerbesteuer) will amount to 2,296 euros.

For sole proprietors and partners in partnerships, a credit for trade tax against income tax applies under § 35 EStG: income tax may be reduced by up to four times the trade tax assessment base, but not exceeding the amount of trade tax actually assessed and subject to the established limitations.

In the example, 4 × 560 euros = 2,240 euros. If the actual trade tax (Gewerbesteuer) at a tax base multiplier (Hebesatz) of 410% amounts to 2,296 euros, the actual additional tax burden after offsetting may be around 56 euros. At a tax base multiplier of up to 400%, trade tax is often almost entirely offset. At higher tax base multipliers, the difference increases.

When “Freiberufler” status really matters

This status is particularly relevant if:

• Profits are consistently above 24,500 euros;
• The municipal tax rate is significantly higher than 400%;
• The activity can be easily distinguished from commercial services;
• You can clearly explain the professional nature of your work to clients and the tax authorities;
• There are no sales of goods, brokerage, advertising, or agency arrangements that would classify the activity as a trade (Gewerbe).

If profits are below 24,500 euros and the business is a sole proprietorship (Einzelunternehmen), trade tax (Gewerbesteuer) is usually not due because of the tax-free allowance (Freibetrag). In such cases, the classification as a freelancer is often more important for the simplicity of accounting and business positioning than for immediate tax savings.

The tax base (Hebesatz) varies by city and municipality. It must be verified based on the location of the business establishment (Betriebsstätte) or where the activity is actually carried out. For remote work from home, this is often tied to the place of residence, but it is best to clarify the specific application on a case-by-case basis.

Can a freelancer hire employees?

Yes, the act of hiring employees is not prohibited. Section 18 of the Income Tax Act (EStG) permits the use of professionally trained workers provided that the specialist himself remains in a managerial and independent capacity—that is, he directs the work based on his own professional knowledge and bears personal responsibility for the results.

A risk arises when the owner is effectively only selling the team’s services and no longer personally determines the professional outcome. In that case, the tax office may classify the activity as a business operation (Gewerbebetrieb).

Can You Combine “Freiberufler” Status with a Business (Gewerbe)?

It is possible to earn different types of income simultaneously: for example, teaching as a freelancer, renting out real estate, and running a commercial project at the same time. A problem arises if the freelance and commercial activities are so intertwined that they cannot be reliably separated.

To minimize risk, it is generally important to:

• Keep separate records of income and expenses;
• Describe services separately in contracts and invoices;
• Do not confuse consulting work with the sale of goods or brokerage;
• Discuss any controversial scenarios with a tax advisor in advance.

Common Mistakes

• Do not call yourself a “freiberufler” simply because you work remotely or on a project basis.
• Do not submit the “Fragebogen zur steuerlichen Erfassung” (Tax Registration Questionnaire) while waiting for a separate “freelancer registration.”
• Assuming that freelancers do not pay VAT or income tax.
• Providing an overly general description of the service on invoices, which obscures the professional nature of the work.
• Mixing development, marketing, resale, and agency services without keeping separate records.

Brief Conclusion

In Germany, “freiberufler” is not a way to “avoid taxes,” but rather a tax classification for a specific professional activity. It may exempt one from trade tax (Gewerbesteuer), but not from income tax (Einkommensteuer), record-keeping, or reporting requirements. The closer the work aligns with the professions listed in § 18 EStG and the better your qualifications, personal contribution, and independence are documented, the stronger your position will be with the Finanzamt.