Someone who wants to become self-employed in Germany has to answer quite a few questions for the tax office (Finanzamt). One of the most important ones is whether you will pursue a freelance or trade activity (Freiberufler or Gewerbe) and the answer to that is not always straightforward.
In this guide, we provide an overview of what distinguishes freelancers from trade persons in Germany and list some of the jobs that are most difficult to classify, because the classification often depends on small details.
Here’s what it’s about:
- The difference between Freiberufler and Gewerbe
- Freiberufler or Gewerbe: The 10 professions most difficult to classify
- IT consultant / software developer
- Photographer
- Influencers and bloggers
- Designer Translator
- Engineer
- Educator or pedagogue
- Caregiver
- Coach Online courses
- Freelance or trade: Our quick self-test
The difference between Freiberufler and Gewerbe
Before starting your self-employment, you should already know whether you are considered a Freiberufler (freelancer) or a Gewerbetreibender (trade person), as this determines how you officially need to register your new professional path.
However, not only does the registration of your activity depend on the classification into one of these categories, but the taxes you ultimately have to pay also directly correlate with whether you are classified as a Freiberufler or a Gewerbe.
Whether you are a Freiberufler or a Gewerbe is not something you can simply choose.
In order to register as self-employed in Germany, you have to submit the official form called Fragebogen zur steuerlichen Erfassung. In this form, you name the job you want to become self-employed with and describe the activity. You also have to fill in wether you are Freiberufler or Gewerbe. However, if the Finanzamt disagrees with your choice, they will simply register you under the other status. You will be informed of the final decision via the letter you get from your Finanzamt.
This is what defines a Freiberufler:
In the Income Tax Act, you will find the following definition for a Freiberufler:
“Freelance activity includes independently exercised scientific, artistic, literary, teaching, or educational activities […]” §1 8 para. 1 No.1 Income Tax Act.
In general, all jobs that…
…offer a service (and not goods)
…require personal expertise (e.g., through a degree or training)
…are performed independently and in a managerial capacity
This sounds quite logical and easy to apply at first. If your job falls into one of the mentioned categories, you just have to fill out the ‘Fragebogen zur steuerlichen Erfassung” (questionnaire for tax registration) and can start your new freelance job as soon as you receive your new tax number.
This is what defines a Gewerbe:
For Gewerbetreibende, the official definition is a bit more complicated. It states:
“An independent, sustainable activity undertaken with the intention of making a profit and representing participation in general economic market is a business operation, if the activity is neither to be considered as the practice of agriculture and forestry nor as the practice of a free profession nor as another independent work.” § 15 para. 2 Income Tax Act.
Generally, if you find yourself in this explanation, then you must register a Gewerbe. To do this, you fill out the aforementioned questionnaire for tax registration. Additionally, you need to register with the local trade office.
💡Good to know: Registration with the trade office is associated with a fee, which currently ranges from €20 to €65, depending on your region.
➡️ Don’t know how to fill out the trade registration? Here’s a step-by-step guide!
Another difference between Freiberufler and Gewerbe is that you have to pay Gewerbesteuer (trade tax) for operating a Gewerbe. The amount of trade tax is calculated based on the so-called multiplier, which varies from municipality to municipality. So, once again, the location of your business plays a crucial role.
➡️ Learn more about trade as a form of self-employment in this article.
Being a Freiberufler and Gewerbe at the same time
It is, in principle, possible to work as a Freiberufler and a Gewerbetreibender at the same time. However, you need to register with the Finanzamt (tax office) twice: once for the freelance and once for the trade activity.
In many cases, you will receive an individual tax number for each activity. Only if both of your jobs are very similar, the Finanzamt might let you use one tax number for both of them. In any case, you will always only submit one income tax return that states all the income from all your different professions.
Freiberufler or Gewerbe: The 10 most unclear professions
The field of ‘classic Freiberufler professions’ is relatively clearly defined. You work as a Freiberufler if you engage in…
…scientific
…artistic
…literary
…teaching
…educational
activities.
However, there are also some gray areas in these areas that are worth taking a closer look at. Not every photographer, for example, is artistically active, there is also a small but significant difference among translators and so on.
IT Consultant / Software Developer
A classic case where the classification as Freiberufler or Gewerbe is very difficult is the job of an IT consultant or software developer. The classification often depends on marginal details.
If your tasks are very similar to those of an engineer, you will probably be classified as a Freiberufler. This is the case, for example, with system software developers. Programmers and consultants who support users in the further development and maintenance of their applications are, on the other hand, engaged in commercial activities and therefore more likely to be classified as Gewerbetreibende.
As you can see, the differences here are minimal, and there are indeed some legal disputes where the categorization of IT consultants was ultimately decided in court. This is because the corresponding paragraph in the Income Tax Act does not provide clear definitions for this area.
Therefore, you can consult your Finanzamt before registering for self-employment in the IT sector if you have any doubts.
2. Photographer
As a photographer, it depends on the type of photography you offer and the clients you work with.
Wedding photographers or photographers with a studio for portraits, e.g., for IDs and other documents, are generally considered Gewerbetreibende. If, on the other hand, you are artistically active and work, for example, as a photojournalist for a magazine, you will be considered a Freiberufler.
3. Influencers and Bloggers
In recent years, the attractiveness of the job as an influencer has increased tremendously for many young people. However, as a social media influencer, are you an artistically active freelancer or a consistently profit-making trade person?
Again, it depends on the content. Those who are engaged in journalistic work, conduct research, and perhaps even have relevant training can indeed be classified as Freiberufler.
However, the majority of influencers are considered Gewerbe since, in most cases, there is a permanent intention to make a profit.
💡Good to know: When registering your activity in the questionnaire for tax registration, it’s best to indicate “Internet-Dienstleistungen” (internet services) as a blogger or influencer.
➡️ Find more tax tips for influencers here!
4. Designer
In the field of design, wether you are Freiberufler or Gewerbe depends on the type of work and your clients again.
If, as a graphic designer, you design a company’s advertising brochure and arrange products for it, you are engaged in commercial activities and therefore a Gewerbe. If, however, you pursue a clear artistic aspect in your work, you are a Freiberufler.
5. Translator
Translators are often classified as Freiberufler. Nevertheless, in this area, you should be able to demonstrate relevant professional competence to avoid having to register a Gewerbe.
A degree as a state-certified interpreter or translator or a university degree in a relevant field can make the crucial difference here.
6. Engineer
Engineers are also usually Freiberufler. However, to be considered an engineer, you have to be able to show professional qualifications. This can be a completed degree, but also relevant work experience in an engineering profession is relevant.
💡Tip from Accountable: If you want to work as a consulting engineer, your advice must also be directly related to your skills as an engineer. So, if you advise a company, but your sole aim is to generate more revenue, you could rather fall into the category of a so called ‘beratender Betriebswirt’ (consulting business economists), which comes with separate requirements.
7. Educator / Pedagogue
As an educator, you are engaged in a teaching job and thus automatically fall into the liberal professions which means you are a Freiberufler – or do you? In fact, it also depends on whether you work independently.
So, if you now work at a daycare center where there are other employed educators besides you, you must be able to prove that you not only work at the direction of your client but also work independently.
8. Caregiver
All healing professions fall into the Freiberufler category. These include:
Doctors
Dentists
Veterinarians
Nurses
Geriatric nurses
Alternative practitioners
Physical therapists
However, there is also a special case in this group, namely that of home care worker. If the service primarily relates to support in everyday life, it is classified as Gewerbe. This also applies if the assistance includes health care and maintaining vital functions.
9. Coach
The job title Coach also requires a more detailed explanation for the Finanzamt. If you really work purely as a coach, you are engaged in commercial activities and must register accordingly with the Gewerbeamt (trade office).
However, if you work in the business management field, things look different again. Here, you could be considered a Freiberufler if you have completed a business-related degree and apply the knowledge gained in your coaching.
So, if you want to become self-employed as a coach, the small nuances of your activity and your previous education and expertise matter.
10. Online Courses
Online courses are a very popular way to earn money on the internet. However, if you only offer and sell them on your website without actively participating in their design, you are engaged in commercial activities and are a Gewerbe.
On the other hand, you are freelancing if you either personally accompany the course as a teaching force or if you write the content as part of a literary activity.
Freiberufler or Gewerbe: The Self-Test
As our examples show, it often depends on small details and precise job descriptions. Nevertheless, there is a clear legal situation in many common professions that has been tested multiple times in practice.
To simplify your entry into self-employment, we have prepared a quiz that allows you to easily find out whether you belong to the liberal professions and are a Freiberufler or if you might have to register a Gewerbe.
Does your activity fall into a grey area or do you have other questions about Freiberufler or Gewerbe in Germany? Then ask one of our tax coaches for free!
💡Accountable is a tax and bookkeeping software for self-employed professionals in Germany. It is tailored to people who do not have much experience with taxes and have only recently become self-employed. At Accountable we prioritise ease of use and personal support. So you can save on an expensive tax advisor and can still do all your tax returns and bookkeeping with confidence. Test it now for free!
