Freelancer, self-employment, and GmbH in Germany

If you want to start your own business as a newcomer, this guide covers all options. Most important decision: choosing the right legal form.

Three main forms

1. Freiberufler (liberal profession)

Under § 18 EStG catalog:

• Doctor, dentist, psychotherapist
• Lawyer, Steuerberater, notary
• Engineer, architect, urban planner
• Writer, journalist, translator
• Artist, musician, designer
• Software developer, data scientist, AI engineer
• Consultant (management, IT, science)
• Teacher, trainer

Advantages:

• No Gewerbeanmeldung
• No Gewerbesteuer
• Simple accounting, EAR only
• Free to start

Disadvantages:

• Border with Gewerbe sometimes unclear, Finanzamt decides
• At borderline get Steuerberater before starting

2. Gewerbe (trade/industry)

Anything that is not Freiberufler:

• Online shop (Shopify, Amazon FBA)
• Restaurant, café, store
• Construction, industry
• Cleaning, logistics
• Marketing
• SaaS product (sometimes)

Advantages:

• Clear legal status, easy invoicing

Disadvantages:

• Gewerbeanmeldung (~20 euros)
• Gewerbesteuer (allowance 24500 euros)
• IHK membership (~50 to 200 euros/year)
• Detailed accounting at high turnover

3. UG (Unternehmergesellschaft / Mini-GmbH)

• Minimum capital: 1 euro
• Save 25 percent profit until 25000 euros
• Then convert to GmbH
• Limited liability
• Corporate tax ~15 percent + Solidarität

4. GmbH

• Minimum capital: 25000 euros (at least half cash)
• Highest prestige in Germany
• Corporate tax ~15 percent + trade tax
• Managing director salary → income tax

Decision guide

What is my work?
├── Liberal profession (§ 18 EStG)
│   └── Freiberufler, simplest
├── Trade/industry
│   ├── Turnover < 50,000 euros?
│   │   └── Gewerbe (Einzelunternehmer)
│   ├── Want limited liability?
│   │   ├── No capital
│   │   │   └── UG
│   │   └── 25,000 euros+ capital
│   │       └── GmbH
│   └── Multiple partners?
│       └── GmbH or OHG

Step by step: Freiberufler

Step 1: Check Aufenthaltstitel

• § 21: fully allowed
• § 18g (Blue Card): main job first, side work with approval
• § 18b/c: side work with approval
• § 16b: max 20 hrs/week + approval
• § 9: fully allowed
• § 28: fully allowed

If approval needed: email Ausländerbehörde with business documents.

Step 2: Steuernummer from Finanzamt

1. www.elster.de or paper

2. Fragebogen zur steuerlichen Erfassung

3. Details: activity, revenue forecast, address, IBAN, Kleinunternehmer yes/no

4. Submit online

5. Steuernummer in 2 to 8 weeks by post

Step 3: Kleinunternehmer decision

2025 limit: turnover < 25000 euros and forecast < 100000 euros

Choose Kleinunternehmer if:

• B2C clients (no VAT refund need)
• Want simple accounting
• Low first-year revenue

Choose VAT (Regelbesteuerung) if:

• B2B clients (VAT neutral for them)
• Want input VAT refund on expenses
• Revenue clearly above 25000 euros

Note: Kleinunternehmer choice binds 5 years. When unsure, choose VAT.

Step 4: Business bank account

Bank	For	Cost
Kontist	Digital freelancers	from ~9 euros/month
Holvi	Small business	from ~9 euros/month
N26 Business	Solo, simple	from ~9 euros/month
DKB Business	High volume	medium
Penta/Qonto	UG/GmbH	from ~15 euros/month

Step 5: Accounting software

• Lexware Office: ~12 euros/month
• sevDesk: ~8 euros/month
• Excel: only for simple Kleinunternehmer

Step 6: First invoice

Mandatory fields:

1. Your and client name/address
2. Steuernummer or VAT ID
3. Invoice number (sequential)
4. Issue date
5. Service date
6. Service description
7. Net amount
8. VAT (19 or 7 percent) or Kleinunternehmer note
9. Gross amount
10. Bank details

Kleinunternehmer: "Gemäß § 19 UStG wird keine Umsatzsteuer berechnet."

Insurance for freelancers

1. Krankenversicherung (mandatory)

• GKV voluntary: ~210 to 900 euros
• PKV: age-based, sometimes cheaper for young healthy people

2. Künstlersozialkasse (KSK)

For artists, writers, journalists, designers, musicians:

• Half insurance paid by KSK
• Income > 3900 euros/year
• Saves 2000 to 3000 euros/year

3. Rentenversicherung (pension)

Voluntary, but:

• Without contributions no Niederlassungserlaubnis (60 months rule)
• Minimum ~100 euros/month recommended

4. Berufshaftpflicht (professional liability)

For consulting, development, design: ~10 to 50 euros/month

5. Krankentagegeld (sick pay)

GKV from day 43, first 6 weeks no income. Supplement ~20 to 80 euros/month

Taxes overview

Freiberufler:

1. Income tax (14 to 45 percent)
2. Solidaritätszuschlag (5.5 percent of income tax, high earners)
3. Church tax (8 to 9 percent if registered)
4. VAT (19 or 7 percent) if not Kleinunternehmer

Gewerbe:

All above plus trade tax (allowance 24500 euros, rate varies by city)

GmbH/UG:

Corporate tax ~15 percent, trade tax, payroll tax for director, 25 percent on dividends

Critical points for newcomers

1. § 21 visa, founder path

Before entry from Iran:

• § 21 visa for self-employed
• Viable business plan
• Financial proof ~10000 to 50000 euros
• Regional economic benefit
• After 3 years success → Niederlassungserlaubnis

2. Clients in Iran, sanctions

• Report income (Welteinkommensprinzip)
• German banks reject Iran payments → Wise, PayPal (limited)
• Iran transactions can close account
• Better: payment via third country

3. Steuerberater almost mandatory

Cost: 800 to 2500 euros/year Savings: often 5000 to 20000 euros tax

• Persian-speaking Steuerberater in big cities
• Fully deductible

4. PayPal, Stripe, international

• PayPal Business: easy, expensive (~2.9 percent + 0.35 euros)
• Stripe: best for SaaS
• Wise Business: best FX rates

5. GmbH name rules

• Must include "GmbH" or "UG (haftungsbeschränkt)"
• Unique, IHK check before registration

6. Notary for GmbH/UG

• Notary: ~400 to 800 euros
• Handelsregister: ~150 euros
• Total GmbH setup: ~2000 to 3000 euros

7. Bookkeeping from day 1

• Every invoice (sequential numbers!)
• Every receipt
• Bank statements
• Client contracts

Start Lexoffice/sevDesk early, mistakes are costly.

8. Closing GmbH

Liquidation takes 12 to 18 months, costs 2000 to 5000 euros. Reason to start with UG.

Checklist

Before starting:

• Aufenthaltstitel: business allowed? If not, Ausländerbehörde
• Choose form: Freiberufler / Gewerbe / UG / GmbH
• Find Steuerberater
• Write business plan
• Business account (Kontist, Holvi, N26 Business)

Week 1:

• Freiberufler: ELSTER questionnaire
• Gewerbe: Gewerbeamt
• GmbH/UG: notary + Handelsregister
• Update Krankenkasse
• Start Lexoffice

Before first invoice:

• Steuernummer received?
• Invoice template (German)
• Kleinunternehmer or VAT
• Standard client contract

First year:

• VAT advance returns (if VAT)
• EAR or balance sheet
• Steuererklärung by July 31
• Check KSK eligibility
• Pension insurance if high income

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