Freelancing While Employed in Germany
Having a side hustle while working it’s a great way to improve your financial situation and work your way to self-employment. However, someone considering working as a freelancer while employed full-time in Germany must pay attention to special regulations.
You can work as a freelancer in Germany if your residence permit allows you to do so. Check the Zusatzblatt for the phrase Selbständige Arbeit gestattet. If you don’t see it, there is only one way to become self-employed in Germany while working full-time: apply for a freelance visa.
An employee who works as a freelancer or is self-employed in addition to the full-time job called Nebentätigkeit in Germany, which translates as a side activity.
As with any self-employment in Germany, you need to do it lawfully, how exactly you will learn in this article.
How to Become a Freelancer While Working a Day Job in Germany?
Check your residence permit
EU and EEA citizens don’t have to worry. They can work and be self-employed without any permit, but all others need to know what they can and can not do in Germany.
All non-EU citizens must have at least a residence permit that allows them to work. Depending on which residence permit you have, you might be allowed to work as a freelancer or not.
EU Blue Card
EU Blue Card holders are often allowed to work on the side as long as their primary job remains full-time. You need to check the Zusatzblatt on your visa; if you see Selbständige Arbeit gestattet in means, you can do freelance activities.
If not, you can only work as a freelancer after receiving a freelance visa. You can have it as an addition to the EU Blue Card.
Work residence permit
Holders of classic residence permit work permission should also check the Zusatzblatt for the same words.
If your residence permit doesn’t allow you to work independently, you should apply for a freelance visa. Same as with the EU Blue card, you can hold both freelance and your current working visa.
Students
Students aren’t allowed to work as a freelancer. However, they can undertake regular employment. It shouldn’t be full-time, though; up to 20 hours per week is fine.
To become self-employed, students also need to have a freelance visa in addition to a student permit. After finishing their studies, they can become full-time freelancers quite easily if their work is related to their study subject.
Read more here: “Can you start a business in Germany as a student?“
Apply for a freelance visa if needed
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Before the visa application, you should prove whether you are categorized as Freiberufler/freelancer or simply self-employed (Selbständiger) in Germany. It will significantly affect the chances of receiving a freelance visa. (Read the full article about requirements for a freelancer visa in Germany).
The requirements for these two categories are different:
- Freiberufler
These are truly freelancers in the German language, a particular group of professionals who can work independently. For example, doctors, lawyers, artists, teachers, scientists, engineers, software developers, etc. (see the complete list below).
You can see the full list of documents for a freelance visa on the official website.
These particular professions can receive a freelance visa more easily and don’t need to fulfill many requirements as another category.
You also want to read an article about how to change visa status in Germany.
- Selbständiger or self-employed
If you are not a Freiberufler, you are Selbständiger (self-employed). You can still apply for a freelance visa, but the requirements are different.
Selbständige will need to open a business/trade (Gewerbe) in order to work in Germany. You can see the full list of documents on the official website.
A foreigner may be granted a residence permit for the pursuit of a self-employed occupation if:
- an economic interest or a regional need exists,
- the occupation is expected to have a positive impact on the economy and
- the implementation is financed by equity or a loan commitment
Although different conditions apply to university graduates, researchers, and scientists.
As you can see, these main requirements must be fulfilled if you don’t fall into the category of Freiberufe, which can be pretty difficult.
Freiberufe is also called liberal professions in Germany, which include:
- medical professions: doctors, dentists, midwives, practitioners of alternative medicine, psychologists, physiotherapists, and occupational therapists
- lawyers, notaries, attorneys
- coaches, teachers
- graphic designers
- artists
- engineers (IT included), architects
- commercial chemists
- auditors, inspectors, tax consultants, economics and business consultants
- journalists, writers, photojournalists
- interpreters, translators
- traffic controllers
Anyone who doesn’t fall into one of those categories must apply as a business owner/selbständige. Usually, people register a one-person business (Einzelunternehmer).
However, writers, journalists, and artists of all types can also apply for the Artist Visa, a special subcategory of the Freelance Visa.
Check out an in-depth article on how to apply for a freelance visa.
Being a freelancer or self-employed can break your budget since your health insurance rate will increase significantly. To avoid it, read this article about the cheapest health insurance in Germany – we have revealed the most affordable options for the self-employed and employees.
Our top insurance companies include Ottonova and Feather, which were made with expats in mind, and thus are customised for foreign employees, expats, freelancers, and self-employed.
Don’t forget to open a business/freelancer bank account. We recommend this one for freelancers in Germany.
Best Business Bank Account in Germany
Read a full article about differences between freelance and self-employment in Germany.
Ask your employer
Assume you can work as a freelancer or are ready to apply for another visa. The next important step is to ask your employer if he is okay with your side hustle.
Although employers can not prohibit you from working as a freelancer, it’s not clearly written in your work contract. Nevertheless, asking your boss beforehand is recommended so you can avoid unpleasant consequences.
For instance, your contract might contain a clause that you must obtain your employer’s agreement before taking any other paid work, whether as an employee or self-employed.
Therefore, working as a freelancer without informing your boss will contradict a contract, thus can lead to termination, and this is the last thing we want to happen.
Also, keep in mind that those self-employment activities on the side should not exceed 18 hours a week, and the salary shouldn’t be higher than the income from work.
So if you plan to work or earn more than that, asking your boss doesn’t really make sense, and you should work part-time or quit otherwise.
Make Your Business Legal in Germany
To start working by yourself, you need to get to know the German government about your idea in the first place. All self-employed activities must be registered! You can do it with the help of this tool.
Therefore, people categorized as Freibefufler need to show up in Fiananzamt, and all who don’t fall into this category – in the trade office (Gewerbeamt) to register their business and after in the Finanzamt as well.
Sometimes it can be hard to determine if it’s Freiberuf or if you need to register a Gewerbe (business). Especially in the IT sector, such as programmers or web designers, the classification is often controversial.
If you aren’t sure about which category your profession applies to, ask Finanzamt or hire a tax consultant for help.
Bank account for freelancers and business owners
All business owners and freelancers need a bank account in Germany to receive payments, make invoices and pay taxes. Check out our in-depth overview on banking for the self-employed in Germany.
If you are registered in Germany as such, you are eligible to apply for a business bank account. Commerzbank is one of the best proverbs out there. For more digital folks, we recommend innovative banking such as the app Kontist.
Moreover, freelancers and self-employed can use the services of to manage and pay taxes in Germany.
Finance your business in Germany
If you need the money to finance your business in Germany, you can also apply for a loan at Auxmoney. They offer financing options for self-employed, freelancers, and founders.
There you can apply for a personal loan within five minutes. The application process is entirely online. The amount you can borrow ranges from 1,000 and 50,000 EUR, and the duration of the credit can be between 12 and 84 months. If you plan to finance a company in Germany, you can even borrow up to 750,000 EUR.
Moreover, you don’t need to provide a reason why you need a loan. Auxmoney is rated as 4,8 out of 5 among its clients. So go ahead and borrow some money if you don’t have enough personal savings to make a leap in your business!
Read our full review of Auxmoney.
Before signing for the loan, we recommend you check all financing options on the comparison websites such as Tarifcheck.de, Verivox, and Smava.
Read more about what expenses to expect when becoming self-employed in Germany or setting up a business.
Cost of Starting a Business in Germany: How Much Will You Need?
Taxes
Income tax
If you fall into the category of Freiberuf, you only need to register your side hustle with Finanzamt and pay income tax if earnings are higher than 9,408 EUR in a year.
Income taxes are progressive; the higher the earnings higher the rate; the starting point is 14% and up to 45%.
For someone who wants to work for another company as a part-time employee (mini-job) in addition to their main job doesn’t have to pay income tax if earnings are under 450 EUR per month.
Submit your tax declaration in Germany online and manage all your taxes as a freelancer with Sorted.
Trade tax
With a profit from the Gewerbe (business), additional trade tax must be paid, but only with annual earnings from 24,500 EUR.
If your profession falls into Freiberuf, you don’t need to register a trade, and so you pay no trade tax. Furthermore, there is no accounting obligation.
Consequently, if you register a business, bookkeeping must be done correctly; you might even want to hire a specialist to help with this.
VAT
VAT tax is the next obligation for both small businesses and freelancers. If your annual revenue/income is under 17,500 EUR in the first year and less than 50,000 EUR in the following year, you will be exempt from VAT tax.
It’s a great advantage for your side hustle to keep it low expenses. This also will save you time on bureaucratic work, as you don’t have to submit a VAT declaration every month or quarter.
After registering with the Finanzamt (tax office), you will receive your tax number and VAT identification number (UID). As a self-employed, you will need it for VAT declarations (if required) and for billing the customers.
Yearly reports
As a freelancer or self-employed, you will have to do yearly tax returns (Einkommensteuererklärung) for your profits, and if you have a business, also a business tax declaration (Gewerbesteuererklärung).
Yearly final returns on VAT (Umsatzsteuererklärung) also need to be submitted to the Finanzamt if you pay VAT taxes (see above).
Take an online consultation with a German tax advisor before starting any self-employed work.
Get your taxes sorted in Germany!
Source: pexel
How to be a freelancer or work on a side in Germany and avoid the bureaucratic nightmare?
Get Sorted!
It’s an online tool for managing all your tax obligations, reports, payments, and communications with the Finanzamt (tax office) in Germany. The tool will do all the bookkeeping, tax, and VAT declarations.
Not only freelancers can use Sorted, but also small business owners and people with side income. So if you have a job in Germany and considering working or freelancing on a side, this tool will be super helpful.
What can you do with Sorted?
- Legally register as a freelancer if you are just starting out
- Create legally correct invoices
- Prepare and submit tax reports
- Get help from professional tax advisers
- Connect to your bank account for the full transparency
- Track your income and expenses
- Full overview over taxes
Most importantly, it allows you to submit your tax reports to the German tax office. Based on your income and expenses, Sorted will automatically fill in all of your tax reports, and after that, you can submit it online with one click.
Moreover, all necessary features are available at zero monthly costs. Thousands of freelancers already happily use Sorted; read reviews here.
Kontist app
is another tax management option for freelancers and self-employed in Germany. It’s comparable with Sorted but with an even wider range of services.
Kontist is virtually your private accountant in Germany but at a fraction of the cost (free or 9 EUR/month). It’s ranked 4,7 stars on Trusted.de and 4,5 on Trustpilot.
With the Kontist app, you can effectively:
- handle your taxes and communication with the German tax office
- consult experts
Kontist also offers a special for freelancers and self-employed in Germany. Hence, it’s a perfect solution for banking and bookkeeping.
Some additional features:
- service & customer support is 100% in English
- SEPA transfers
- overdraft – between 500 EUR and 5,000 EUR
You can start with the free plan.
Best Business Bank Account in Germany
Insurance in Germany
Taxes are one challenging part of self-employment in Germany, and another is – insurances.
Health insurance
One of the most significant advantages of working on the side in Germany is that you can keep your statutory health insurance from your primary job.
As a part-time self-employed person, you don’t need additional health insurance unless the freelancing hustle economically outweighs the main job and you work for yourself more than 18 hours per week.
If this happens, additional private or public insurance is required. With private health insurance, rates depend on the provider and the coverage, but the public will always charge at least 14,9% of your gross income. (check out all insurance options in Germany here.)
To avoid paying too much for your coverage, read this article about the cheapest health insurance in Germany.
Those who make over 65,350 EUR a year might purchase a private insurance plan. However, as self-employed, you can opt for a private company earlier, with a lower income.
Read here about how much private health insurance costs in Germany.
Public health insurance is good for anything below this amount; with higher earnings, they also will recommend private insurance.
Moreover, private insurance will also be a wiser decision since it doesn’t charge a percentage of your profits but the pre-agreed fixed rate.
Most freelancers, self-employed, and expats can opt for Ottonova and Feather in Germany. The price ranges between 261 EUR and 480 EUR per month. And if you’re a younger, healthier freelancer, private insurance will be even cheaper for you.
Besides that, you can sign for public insurance, which costs a minimum of around 300 EUR a month.
As your earnings grow, public health insurance contributions will grow as well. That’s why we recommend private coverage – it doesn’t depend on your income.
Hence, taking out the private plan from the beginning is a better idea.
Moreover, if you suddenly become unemployed in Germany, you will need to take care of your own insurance. Read in this article how to solve this problem.
Health Insurance If You Are Unemployed in Germany
Liability insurance
Suppose your side income exceeds 400 EUR per month. In that case, you should also check whether your liability insurance is still sufficient for your activities or whether you need to extend the insurance cover. If not, find your coverage here.
Legal insurance
Every business owner or freelancer needs legal insurance, which will protect you from hefty rates for lawyers and going to court. With prices starting from 17 EUR per month, you don’t have any excuses not to take it.
Furthermore, you can use legal insurance for issues in private life, e.g., with your landlord or at work with your employer.
Thanks to this insurance, you’ll be covered for legal disputes at work, at home, in the business, and in your personal life.
Pension and Unemployment insurances
As with health insurance, as long as you don’t exceed the limit, you won’t pay for any insurance, but if so, pension and unemployment insurance contributions must be paid each month.
What will be a significant cut from your income: unemployment 3% and pension 18,7%!
So keep in mind that your earnings with a side hustle must be less than the primary job, and you shouldn’t spend more than 18 hours on it. So insurances can be minimized to zero.
Otherwise, expect to pay at least 36,6% of your profit in insurances and approx. 24% in income tax – over half of the income will go to the government; not sure if your hard work is worth it in the end.
Where to Look for Freelance Work in Germany?
Freelancing is becoming more popular in Germany. But still, the country isn’t as advanced as the USA, for example, but there are still some good resources for local freelancers.
German resources with mostly German customers:
International offers:
Upwork and Fiverr are by far the two biggest and most well-known platforms for freelancers and hiring companies/self-employed. They are marketplaces where you can find a job in the most common freelance areas, such as design, writing, or programming.
Have a Second Job in Germany
As you can see, working as a freelancer might not be that easy in Germany. Yet, you can work part-time for another employer while working full-time on your primary job.
Usually, you don’t need permission from your employer or government to work in your free time as an employee.
There are also special regulations, such as your income should be under 450 EUR per month to avoid income tax and additional insurance obligations.
Besides, you can’t work for a business competitor of your employer since it’s against the rules. Moreover, some working contracts might restrict you from working on weekends or vacation days.
In any case, you should speak to your employer before undertaking any additional employment.
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