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Business Registration

In Germany, freelancers fall into two categories: Freiberufler (liberal professions — IT, design, consulting) do not register a Gewerbe and do not pay Gewerbesteuer, while Gewerbetreibende (trade, services) must register with the Gewerbeamt. The Kleinunternehmer (small business) threshold from 2025 is €25,000 revenue in the previous year [1].

Freiberufler vs Gewerbetreibender​

Freiberufler (Liberal Professions)​

The list is defined by §18 EStG (Income Tax Act) [2]. Includes:

  • IT specialists (programmers, consultants)
  • Designers, artists
  • Writers, journalists
  • Doctors, lawyers, architects
  • Teachers

Advantages:

  • No Gewerbe registration needed
  • No Gewerbesteuer (trade tax)
  • Simple accounting (EÜR — Einnahmen-Überschuss-Rechnung, income-expense calculation)

Gewerbetreibender (Trade/Services)​

Everything else:

  • Trade
  • Repairs
  • Gastronomy
  • Agencies

Specifics:

  • Gewerbe registration mandatory
  • Gewerbesteuer (local trade tax)
  • IHK/HWK membership (Chamber of Commerce/Crafts)

Registration Process​

For Freiberufler​

  1. Fill out Fragebogen zur steuerlichen Erfassung (tax registration questionnaire)
  2. Send to Finanzamt
  3. Receive Steuernummer
  4. Done!

For Gewerbe​

  1. Gewerbeanmeldung (business registration) at local Gewerbeamt (cost depends on city, typically €15–65) [3]
  2. Fill out Fragebogen for Finanzamt
  3. Receive Steuernummer
  4. Automatic IHK registration (Chamber of Commerce)

Fragebogen zur steuerlichen Erfassung​

Key sections:

SectionWhat to Specify
Art der TätigkeitActivity description
Geschätzter UmsatzExpected revenue
Geschätzter GewinnExpected profit
KleinunternehmerYes/no (€25,000 threshold)
Ist-/SollversteuerungIstversteuerung — tax on payment receipt

Kleinunternehmerregelung​

From January 1, 2025, the limits for Kleinunternehmer (small business) changed [1]:

  • Previous year revenue under €25,000 AND
  • Current year projected revenue under €100,000

Benefits:

  • No VAT added to invoices
  • No VAT declaration needed
  • Simpler accounting

Drawback: Can't deduct input VAT.

What You Need After Registration​

  1. Business account — not mandatory, but common practice
  2. Accounting — SevDesk, Lexoffice, FastBill
  3. Insurance — Haftpflicht, Krankenversicherung
  4. Contract — template for clients
Consultation

Many freelancers consult a Steuerberater before starting. Early mistakes can be costly.

Scheinselbstständigkeit — The Biggest Risk​

Existential Threat

Scheinselbstständigkeit (false self-employment) occurs when you're formally a freelancer but actually work like an employee. Deutsche Rentenversicherung audits status and can reclassify relationships retroactively [4]. Consequences: back assessments for 4 years + penalties + loss of status.

Audit Criteria​

Signs of ScheinselbstständigkeitTrue Self-Employment
Instructions on place and timeFree schedule
Integration in company (email, org structure)Own tools
5/6 of revenue from one clientMultiple clients
No entrepreneurial riskOwn pricing
Works on client's equipmentOwn equipment

Consequences​

For the client:

  • Back payment of all social contributions (employer + employee share) up to 4 years
  • Penalties and interest

For you:

  • Retroactive reclassification as employee
  • Loss of tax advantages
  • Business effectively closed

Protection Measures​

  1. Multiple clients — diversifying client base reduces risk [5]
  2. Own equipment — laptop, software, tools
  3. Marketing — website, LinkedIn, industry directories
  4. Service contract — result-based, not working hours
  5. Statusfeststellungsverfahren — you can request official status review from Deutsche Rentenversicherung before starting collaboration [4]

FAQ​

Not legal or financial advice.

My work combines IT consulting (Freiberufler) and selling software licenses (Gewerbe). How do I register?​

If you combine a liberal profession with trade activity, strict separation is critical. Under the "staining theory" (Abfärbetheorie), commercial income can reclassify all income as Gewerbe — triggering Gewerbesteuer and mandatory IHK membership on everything [2]. Options: (1) strictly separate activities in accounting — different invoices, separate documentation; (2) register Gewerbe only for the trade portion; (3) for significant volumes — create a separate legal entity (UG/GmbH) for trade. The Finanzamt evaluates each case individually; discussing the situation with a Steuerberater (tax advisor) at the start is worthwhile.

I have a Blue Card. Can I freelance on the side?​

The Blue Card (§18g AufenthG) permits only employment with the specified employer during the first 12 months. After 12 months, you can change employers without approval, but side self-employment is a separate matter. For Nebentätigkeit (side activity) as a freelancer: (1) obtain permission from Ausländerbehörde (ABH) for additional activity; (2) notify your employer (most employment contracts require consent); (3) register with Finanzamt. Without ABH permission, side freelancing violates residence conditions and may affect Blue Card renewal.

I chose Kleinunternehmer but my income exceeded €25,000. What happens?​

From 2025, if you exceed the €25,000 limit for the previous year, you automatically lose Kleinunternehmer status from January 1 of the following year [1]. If current-year income exceeds €100,000, status is lost immediately from the moment of exceeding. Consequences: you must charge VAT (Umsatzsteuer) on all subsequent invoices, file monthly or quarterly VAT returns (Umsatzsteuervoranmeldung), and recalculate invoices issued after losing status. Returning to Kleinunternehmer is possible if the following year's income is again below €25,000.

The Finanzamt classified me as Gewerbetreibender, but I believe I'm a Freiberufler. Can I appeal?​

Yes. The Finanzamt evaluates your actual activity, not your self-description. If you believe the classification is wrong: (1) file an Einspruch (objection) within 1 month of receiving the decision — free of charge [2]; (2) attach a detailed activity description demonstrating alignment with the §18 EStG catalog; (3) include qualifications — degree, certifications, portfolio. For IT professionals, the boundary is blurry: pure "programming" may qualify as Freiberufler, while "general IT services" may be Gewerbe. Court rulings are inconsistent. If the Einspruch is rejected, you can appeal to Finanzgericht (tax court), though this requires time and expense.

I've been working for one client for a year. How do I know if Scheinselbstständigkeit is a risk?​

The "5/6 of revenue from one client" criterion is one of the key indicators for Deutsche Rentenversicherung [4]. But it's not the only one — the overall picture of factors is assessed. High risk: working at the client's office, using their equipment, following their schedule, being integrated into their org structure. Risk can be reduced without changing clients: (1) work from your own office/home; (2) use your own equipment; (3) maintain your own website and marketing; (4) use a Werkvertrag (contract for results, not working hours); (5) complete a Statusfeststellungsverfahren — official status review by Deutsche Rentenversicherung before problems arise [4].

Sources​

  1. Bundesministerium der Finanzen — Kleinunternehmerregelung (§19 UStG, changes from 2025) — https://www.bundesfinanzministerium.de/Content/DE/Gesetzestexte/Gesetze_Gesetzesvorhaben/Abteilungen/Abteilung_IV/20_Legislaturperiode/2024-03-22-Wachstumschancengesetz/0-Gesetz.html — Accessed: 2025
  2. Einkommensteuergesetz (EStG) §18 — Catalog of liberal professions — https://www.gesetze-im-internet.de/estg/__18.html — Accessed: 2025
  3. Bundesverband der Gründerinnen und Gründer — Costs of business registration — https://www.gruenderverband.de/gewerbe-anmelden-kosten/ — Accessed: 2025
  4. Deutsche Rentenversicherung — Status determination procedure for self-employed — https://www.deutsche-rentenversicherung.de/DRV/DE/Rente/Arbeitnehmer-und-Selbststaendige/03_Selbststaendige/statusfeststellungsverfahren.html — Accessed: 2025
  5. IHK München und Oberbayern — Avoiding false self-employment — https://www.ihk-muenchen.de/ratgeber/recht/arbeitsrecht/einstellung-von-arbeitnehmern/scheinselbstaendigkeit/ — Accessed: 2025