How to Register as a Freelancer/Contractor?
You need to register with your local Finanzamt as “selbständig”. You can find the required registration form at:
Your Finanzamt will then issue a tax number for you.
The registration is not as complicated as the 8 page form would suggest. You need to provide information on your personal details, the nature of your work, your expected income and VAT as the main points. Most questions are not relevant for a freelancer as they are aimed at companies setting up in Germany.
You need to provide an estimate regarding your expected income. In most cases it is not possible to provide a precise figure, but it needs to be as realistic as possible. This figure is the basis for the advance taxes you need to pay throughout the year. Should your situation change during the year (your income goes up significantly or your income goes down or stops altogether as your contract gets terminated) you need to inform the tax office. They will swiftly adjust your advance tax payments accordingly. Clients are often concerned about these advance payments, thinking it will be difficult to fund the payments if their cash flow dries up. There is usually always a solution for this.
What Is a “Kleinunternehmer”?
You can register as a “Kleinunternehmer”, which is a micro business for VAT purposes. This means, that you can completely stay outside of the VAT system. To qualify for this option your total annual turnover must be less than 22,000 € for the current year (in year one of your freelance work). The limit of 22,000 € is an annual amount. If you register as a “Kleinunternehmer” at some point during the year this limit is reduced pro rata for this year. So, if you start in July your turnover for the rest of the year need to remain below 11,000 € to qualify as “Kleinunternehmer”.