Taxes for freelancers in Germany
(Freiberufler & self-employed professionals)

If you work as a freelancer in Germany – for example in translation, design, programming, coaching, writing, consulting or similar fields – you are often classified as a Freiberufler (liberal professional) under German law.
Freelancers are taxed differently from regular employees and from classic business owners (Gewerbetreibende).

1. Income tax (Einkommensteuer)

• Income tax is charged on your net profit, calculated as:

  Profit = business income – deductible business expenses

• The tax rate is progressive, meaning it increases with higher income, roughly between 14% and 45%.

• The first €11,604 of annual income (as of 2025) is tax-free (basic allowance – Grundfreibetrag).

• After your first tax assessment, the tax office (Finanzamt) usually sets quarterly advance payments (Vorauszahlungen), which you must pay throughout the year.

2. Value added tax / sales tax (Umsatzsteuer / Mehrwertsteuer)

• The standard VAT rate is 19%.

• Certain services or products (e.g. some books, cultural or educational services) are taxed at the reduced rate of 7%.

• As a freelancer, you normally add VAT to your invoices and pay this VAT on to the tax office.

• In return, you can deduct input VAT (Vorsteuer) paid on your own business-related purchases and expenses.

Exception – Kleinunternehmerregelung (small business scheme):

If your annual turnover

• was below €22,000 in the previous year, and

• is expected to be below €50,000 in the current year,

you may opt for the Kleinunternehmerregelung. This means:

• You do not charge VAT on your invoices.

• You do not pay VAT to the tax office, but you also cannot deduct input VAT on your purchases.

3. Health insurance (Krankenversicherung)

• Health insurance is mandatory for all self-employed persons in Germany.

• You can choose between:

  • Statutory health insurance (GKV), or

  • Private health insurance (PKV).

• Costs depend on your income or on your chosen tariff:

  • In GKV: contribution rate is about 14.6% of your assessable income, plus an additional supplementary contribution (Zusatzbeitrag) of around 1.6% on average.

  • In PKV: premiums depend on age, health status and scope of coverage.

4. Pension insurance (Rentenversicherung)

• Not all freelancers are obliged to contribute to the statutory pension scheme.

• Some professions are compulsorily insured, for example:

  • teachers and trainers,

  • artists,

  • certain types of translators (especially written translators).

• The contribution rate is roughly 18.6% of the pension-insurable income.

5. Trade tax (Gewerbesteuer)

• Genuine Freiberufler (e.g. doctors, lawyers, engineers, designers, translators etc.) do not pay trade tax.

• Gewerbesteuer (trade tax) applies only if you are classified as a Gewerbetreibender (commercial trader), e.g. for typical trading or craft businesses.

Example calculation (as of 2025)

Figures are simplified and for illustration only. They are not a precise or binding tax calculation.

Annual obligations for freelancers

Key terms

The editorial team strives to provide accurate information based on thorough research and multiple sources. However, errors or incomplete details cannot be entirely ruled out. This text is therefore intended only as a general, non-binding orientation. For binding and personalised advice, please consult a tax adviser or the competent tax authorities in Germany.