Beyond the 9-5: How To Get Set Up As a Freelancer in Berlin
Berlin is a great city to freelance in as it gives you a freedom that you simply don’t have when you’re an employee. That freedom however, also means that you don’t have the security that comes with being under contract. And you also have to sort out a lot more paperwork. However, if you get organised early on, it can be an incredibly rewarding way to work, and one of the best ways to make the most of Berlin life. So, without further ado, let’s get to it.
Registering as a freelancer
First things first, everybody’s favourite thing: forms! YAY! Seriously though, you need to let the Finanzamt know that you’re planning on earning your income through freelance work. You need to fill in the Fragebogen zur Steuerliche Erfassung (tax registration form) and post it to your local Finanzamt. You can also show up if you fancy waiting around an office but it’s not necessary. Within a few weeks, you’ll receive your Steuernummer (tax number) in the post which you’ll need before you start invoicing clients. Your Steuernummer is not to be confused with your Steuer-Identifikationsnummer (tax ID number) which is the number that you get sent by the Buergeramt as soon as you register your address in Germany.
Your Steuer-Identikationsnummer is the 11-digit number that you automatically receive in the post when you register your address for the first time in Germany. You need this to earn money as an employee.
Your Steuernummer is the freelance tax number that you need to apply for via the Finanzamt.
Filling in that long-ass form for the Finanzamt is probably the hardest step and the rest of the process is relatively easy, presuming you stay organised. That way you can figure out if this freelance lark is working out for you before you have to pay any income tax (Einkommensteuer). You won’t pay any income tax if you earn less than €8,004 within a year.
Another important thing to note when you register is that you won’t need to charge VAT — which is 19% — if you project to earn less than €17,500 in the first year. This is a good idea, as chances are you won’t, and it saves you having to pay VAT (Umsatzsteuer) to the Finanzamt on a monthly basis. Even if you think you might earn more, it’s best to be on the safe side here. You can always adjust this after your first year of freelancing.
In order to get paid, you’ll need to invoice your clients. This will most likely be a mixed experience as some clients pay promptly, and others will do everything in their power to put it off as long as possible. Your invoices should include the following:
- Your address
- Your client’s address
- Your client’s registration number
- The date of issue
- A description of the product or service provided
- Unit price
- Total price
- Total VAT (if you’re charging it)
- Your bank account details
- Your Steuernummer
- Your VAT ID (if you’re charging it)
If you’re not charging VAT, you should add the following sentence to the bottom of your invoice.
Hinweis: Als Kleinunternehmer im Sinne von § 19 Abs. 1 UStG wird Umsatzsteuer nicht berechnet
Health Insurance for freelancers
Insurance is probably one of the major drawbacks of being a freelancer in Berlin. As a sole trader, you need to foot the bill yourself and the cost can be hefty. Health insurance in Germany is mandatory, and you’re really safer to opt for the public system, even though it can seem pricier at first. You’ll never be charged more than you can afford and if you’re unsure about what you owe, you can always drop in to one of their many support centres. Health insurance works out at about 14% of your income after deductions, but it’s locked to a minimum and maximum so you don’t have to worry about it cleaning you out.
If you’re an artsy type, you can apply to the Künstlersozialkasse which provides social insurance for artists at discounted rates. This covers health insurance, pensions, and social security payments. The definition of artist is also reasonably vague, so if you’re a journalist, or author, or designer, you might make the cut. If you do, it’s really worth the application and will cut your costs significantly.
It’s a really good idea, even when you’re starting out, to get a tax advisor who will deal with the Finanzamt on your behalf. You’re still responsible for ponying up the dough when necessary, but they should tell you exactly what you owe and when to pay it.
However, if you’re keen to go it alone, then the process isn’t actually that hard. There’s a service called Elster Online that is a relatively easy way to submit your tax returns, though you may need a German-speaking friend to help you.
Make sure to keep all your receipts throughout the year as you never know what you’ll be able to write off as a business expense.
Workspace for freelancers
One of those expenses that you’ll be able to write off is your workspace. If you work from home, you’ll need a designated office with a door in order to claim against your electricity bill etc. That means, working from your bed doesn’t count as a place of work. But as a freelancer, one of the hardest things to go without is the sense of community that having colleagues provides. It makes a lot of (tax deductible) sense to pay for a co-working space so that you have somewhere to go to every day should you need it, and an array of amazing people around you. Check out our list of co-working spaces to get an idea of where you could set up shop.
Clients & Networking
Networking is an awful word but when you’re a freelancer, it’s important to get your face out there. Networking doesn’t have to mean falsely schmoozing at events and working the room, firing business cards at everyone either — though it can if you want. It just means attending events that interest you, and making friends with the people you meet there. You’ll be surprised at how fruitful this really is. Speaking from personal experience, every single client that came my way was through a friend’s recommendation. I didn’t apply for a single job. Of course, applications are a necessary part of getting work, but getting your face out there will help you skip that phase in the future.
Freelancing in Berlin is an amazing way to experience the city. It can sometimes mean afternoons off and sleepless nights, but how you play it is up to you. Just follow work that interests you, accept that some jobs are purely to pay the bills, and make sure to get your face out there as much as you can. You’ve got this.