Registering: the tax registration questionnaire
Within a month of starting, you submit the tax registration questionnaire (Fragebogen zur steuerlichen Erfassung) via ELSTER. Based on it the tax office issues your tax number and sets your first prepayments. Your estimate of first-year profit matters: too high and you pay too much up front, too low and a large back payment follows.
Freiberufler or trade?
Liberal professions — developers in many constellations, designers, consultants, journalists, translators, teachers — are Freiberufler. They do not register a trade and do not pay trade tax. Everyone else registers a trade (Gewerbe) with the municipality and may owe trade tax above an allowance, which is largely credited against income tax.
The distinction is not always obvious and has real consequences, so it is worth settling before registration.
VAT and the small business rule
By default you charge 19% VAT, file advance VAT returns and may deduct input VAT on business purchases. Below the turnover limits of the small business rule (Kleinunternehmerregelung) you can opt out of charging VAT. For clients abroad, the reverse-charge mechanism usually shifts VAT to the client — the invoice must say so.
- Every invoice needs your tax number or VAT ID, a sequential number and the required details.
- EU B2B clients: apply for a VAT ID (USt-IdNr.) and file recapitulative statements.
- Keep the small business rule decision under review as turnover grows.
Prepayments and setting money aside
Income tax prepayments are due quarterly on 10 March, June, September and December. Many freelancers set aside a fixed share of every invoice — for tax and, where relevant, VAT — on a separate account. That habit prevents the classic second-year shock when the back payment and increased prepayments arrive together.
What you can deduct
Business expenses reduce profit: equipment, software, a qualifying home office, travel, training, professional insurance, accounting and advisory fees. Most freelancers determine profit with a simple cash-basis statement (EÜR) filed with the annual return.
Frequently asked
Do freelancers pay taxes in Germany?
Yes — income tax on profit, VAT unless the small business rule applies, and trade tax only for trades, not liberal professions.
How much tax do freelancers pay in Germany?
Income tax is progressive and applies to profit, not turnover. A sensible rule is to set aside a fixed share of each invoice until your first assessment shows your real rate.
How do I pay taxes as a freelancer in Germany?
Register via the tax questionnaire, pay quarterly prepayments, file advance VAT returns if applicable, and submit an annual income tax return with your profit statement.
Do I need a Steuerberater as a freelancer?
It is not mandatory, but registration, VAT on foreign clients and the Freiberufler question are where early mistakes become expensive.
This guide is general information on German tax law, not advice on your individual case. Rules and figures change with each tax year.