Self employment and freelancing

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Freelancer

All you need to know to start your freelance work in Hamburg.

What counts as freelance work?

A Freelancer is someone who:

  • is independent and works at their own responsibility
  • and pursues a scientific, artistic, literary, teaching or educational activity

There is a catalogue of freelance professions (Katalog freier Berufe - §18, paragraph 1, no. 1 EStG)  that provides good orientation, but the catalogue doesn´t include all freelance professions. In individual cases and in cases of uncertainty, the tax office will decide whether an activity counts as freelance work or not. The definition and  separation from a normal business or trade (Gewerbe) is not always entirely clear.
For example, if someone works as a coach and also sells online courses on their homepage, a distinction must be made between the two activities. The sale of online courses is a commercial activity and requires registration with the trade office (Gewerbeanmeldung) as well as a separate account. As a coach, on the other hand, you work as a freelancer. It is not necessary to register a business and you don´t need a separate account and bookkeeping.
Because: As a freelancer it is not necessary to register a trade. But you have to inform the tax office about the start of your freelance activity.


How do I register my freelance work?

Freelancers are exempt from the obligation to register with the trade office (Gewerbeamt) and the commercial register (Handelsregister). However, founders who start a freelance activity may register voluntarily.

Freelancers must register with the relevant tax office (Finanzamt) no later than four weeks after starting their freelance work. There you need to request and complete a questionnaire for tax registration. You can find helpful instructions on how to fill it out here (in German).

Through this process, the tax office issues a tax number to the freelancer.

It is also important to note that only tradespeople are obliged to pay trade tax. So, those who register a freelance activity do not have to pay the trade tax.

Professional chambers

Often there are professional chambers, also called chambers of ethics, with which the freelancer must register if they want to register a freelance activity. Freelance professions that are subject to registration are:

  • doctors, dentists, veterinarians, pharmacists
  • Notaries, attorneys, patent attorneys
  • Tax consultant, auditor
  • architects, consulting engineers

Further information is available from the start-up office of the responsible tax office.


Where can I get support?

  • Start-up subsidy (Gründungszuschuss): One possibility of financial support is the start-up subsidy from the Agentur für Arbeit. You can apply for it if you are entitled to unemployment benefits. It is paid in two phases. In the first phase, which lasts six months, there is a subsidy in the amount of the unemployment benefit - this is usually 60 percent of the last salary. There is also a €300 subsidy for social security contributions. After that another €300 per month may be approved for the remaining six months. More information can be found on the website of the employment agency.
  • Credit: In addition, one can take out a start-up loan from the KfW-Förderbank. The state-owned KfW-Bank has the public mandate to financially support business start-ups with loans. You apply for the start-up loan through your house bank. 
  • Starting a business on the side: Many freelancers work on the side and start a business while studying, for example. Those who no longer study can also build up their freelance work parallel to their job. However, the employer must be notified of any secondary employment.


Insurances for freelancers

Health insurance

Ever since the health reforms of 2009, there has been general requirement in Germany to have health insurance. This also applies to all freelancers. For health insurance options, German residents have a choice between public health insurance coverage and private health insurance. Freelancers should also check their daily sickness benefit or sickness allowance in order to be protected against loss of earnings due to a long illness or accident.

It is worth comparing the different offers of the various health insurance companies to find the best options to suit your needs.


Pension insurance

For liberal professions assigned to a professional association, membership in the given association's pension plan is also mandatory. Membership means that contributions to the pension insurance are due.

In addition to the liberal professions that are subject to membership in a chamber, there are other liberal professions that must make compulsory payments to the pension insurance scheme. The reason for this is that they are considered to be particularly in need of protection. This refers to freelancers such as teachers, midwives, sea pilots or coastal skippers. Of course, all other freelancers can also pay voluntarily into the pension insurance or provide privately for the pension.


Künstlersozialkasse for artists and publicists

Freelancers such as artists and publicists are integrated into the public social security system via the artists' social insurance (Künstlersozialkasse). Here, freelancers receive their benefits from pension, health and nursing care insurance. The artists' social insurance fund is thus the health insurance fund for freelancers. This includes:

  • Artists - persons who create, practice or teach music, performing or visual arts
  • Journalists - Persons who are active in the field of journalism as writers, journalists or in other ways

Artists and publicists are compulsorily insured in the Künstlersozialkasse under the following conditions:

  • The minimum income of freelancers must be €3,900 per year - exceptions are made for business founders within the first three years.
  • The insurance for freelancers with the Künstlersozialkasse is only possible if a maximum of one employee is employed.

The freelancer pays half of the contribution. The other half is made up of a subsidy from the federal government and a levy from companies such as publishing houses, radio stations and galleries that are the beneficiaries of artistic and journalistic achievements.


Professional association for liberal professions

Freelancers must also register with a professional association. The professional associations in Germany are accident insurance institutions for companies and their employees. Their task is to prevent accidents at work, occupational diseases and work-related health hazards. In addition, the Berufsgenossenschaft supports companies in occupational health and safety and offers training for the insured. In the event of an accident at work or an occupational disease, it supports the insured person with various measures. Freelancers must register with it within one week of starting their freelance work.


Accident insurance for freelancers

The professional associations are members and thus sponsors of 'German Social Accident Insurance'. As is the case for founders of new businesses and self-employed persons, the majority of freelancers are subject to compulsory insurance. The following groups are specifically exempt from the obligation to take out accident insurance for freelancers:

  • Dentists, veterinarians and self-employed doctors
  • Psychotherapists, pharmacists and alternative practitioners

The occupational groups excluded from compulsory insurance have the option of taking out private accident insurance for freelancers or voluntarily taking out insurance with the statutory accident insurance.


Liability insurance for freelancers

Freelancers should inform themselves about business liability insurance and/or professional liability insurance. Depending on the industry, certain forms of liability insurance (such as financial loss liability for some professions) are more or less part of the basic equipment.