Being self-employed in Germany

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How does a freelancer/contractor register for tax as an expat?

In order to register tax the freelancer/contractor has to contact the local Finanzamt.  Download registration form on: https://www.formulare-bfinv.de/ffw/content.do

After registering a tax number will be issued.

The expat has to report the VAT liability to the Finanzamt monthly and make VAT payment accordingly.  On www.elsterformular.de one can register electronically and file a profit and loss calculation as part of the annual income tax returns and as annual VAT return.  The freelancer/contractor has to submit the report with a personal signature by registering on ElsterOnline-Portal which provides an Elster-certificate with high security.

How to pay the taxes?

The expat has to give an estimate of the income for the current year and for the following year.  This will be the basis on which the Finanzamt assesses the preliminary income tax.  The preliminary income tax has to be paid on a quarterly basis (10th March, 10th June, 10th September and 10th December)  to avoid any late payment find one can have the option of setting up a direct debit mandate.

What is a Kleinunternehmer?

A “Kleinunternehmer” is a micro business for VAT purposes meaning that the expat does not have to pay any VAT.  Expats have the option to register as one, however, in order to be eligible the total annual turnover must be less than €17,500 in the first year working as a freelancer.   For expats that want to register as a “Kleinunternehmer” as some point of the year the €17,500 limit is reduced pro rata for that year.

Does VAT has to be shown on invoices?

If the expat is not registered as a “Kleinunternehmer”  the VAT has to be shown if the customer is located in Germany.

If the service is provided to a non-Government VAT registered organisation within the EU the VAT does not have to be shown.   To be eligible for this exemption the client has to provide their VAT ID.  Check VAT ID on:  www.ec.europa.eu/taxation_customs/vies/vieshome.do?selectedLanguage=EN

In cases where the service is being provided to a customer outside the EU, VAT does not have to be shown,

To calculate the annual income tax liability visit: www.abgabenrechner.de/ekst

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