Navigating taxes as a freelancer in Germany can feel complex, especially if you're new to self-employment. Understanding exactly which taxes you must pay, when they're due, and what expenses you can deduct from your taxable income is crucial for keeping your finances healthy and avoiding penalties.
Unlike traditional businesses, freelancers (Freiberufler) enjoy certain tax advantages. You don’t have to worry about trade tax (Gewerbesteuer), but you're still responsible for income tax (Einkommensteuer) and usually sales tax (Umsatzsteuer). Whether you're wondering when freelancers pay taxes or deciding which tax software is best for freelancers, this comprehensive guide provides simple answers and actionable tips to help you confidently handle your taxes in 2025.
What Taxes Do Freelancers in Germany Have to Pay?
As a freelancer in Germany, you primarily need to consider these taxes:
Income Tax (Einkommensteuer)
Progressive rates range from 14% to 42%, depending on your income.
Includes all your income from all sources (employment, stock investment, crypto, real estate leasing, etc.).
A tax-free allowance (Grundfreibetrag) of €12,084 applies for 2025.
Freelancers calculate taxable income using the simplified income surplus statement - EÜR (Einnahmenüberschussrechnung). EÜR is an attachment to the income tax declaration that lists revenue, expenses by category, profit from self-employment, and amortized assets.
Value Added Tax (Umsatzsteuer)
The standard rate is 19%, while some products and services qualify for a reduced rate of 7%.
VAT is reported through monthly or quarterly prepayments, depending on your revenue.
There is also an annual VAT declaration summarizing the monthly/quarterly pre-filings.
You may qualify for the Kleinunternehmerregelung (small business rule), exempting you from VAT if your annual revenue is below €25,000.
Solidarity Surcharge (Solidaritätszuschlag)
Generally applies only to high-income individuals.
Taxes Freelancers Do NOT Have to Pay
Trade Tax (Gewerbesteuer): Only applies to commercial businesses, not freelancers.
Corporate Tax (Körperschaftsteuer): Applies only to corporations, not individual freelancers.
Starting Out as a Freelancer in Germany? Get Our Free Guide!
Thinking about becoming a freelancer or just starting your freelance journey? Download our comprehensive e-book to understand everything you need to set up and thrive as a freelancer in Germany. This guide will help you navigate the early stages smoothly, from registration to maximizing tax savings.
When Do Freelancers Need to Pay Taxes?
Knowing tax payment deadlines is essential to avoid late fees and interest charges:
Income Tax Advance Payments: Freelancers with average and high incomes usually pay advance income tax every quarter. Quarterly payments are due on March 10, June 10, September 10, and December 10. The Finanzamt decides the size of the advance based on the previous year’s results and projections for the next year.
Value Added Tax (VAT): Monthly or quarterly VAT prepayments are due by the 10th of the following month.
Annual Tax Returns: Must be submitted electronically by July 31 of the following year. If working with a tax advisor, this deadline typically extends to the end of February of the second following year.
Keeping these dates in mind ensures compliance and helps manage your cash flow effectively.
Which Expenses Can Freelancers Deduct from Taxes?
Deducting business expenses reduces your taxable income, lowering your overall tax burden. Common deductible expenses for freelancers include:
Office Rent and Home-office Expenses: Rent, utilities, and maintenance costs.
Office Supplies and Equipment: Computers, software, furniture, and stationery.
Travel and Transport: Costs related to business trips, vehicle expenses, and public transport tickets.
Business Meals and Hospitality: Expenses incurred while meeting clients or business partners.
Professional Services: Fees paid to tax advisors, lawyers, or consultants.
Internet and Telephone Expenses: Bills related directly to your business activities.
Professional Education and Literature: Costs of workshops, seminars, courses, and relevant books.
Marketing and Advertising: Expenses related to promoting your freelance services, such as websites, ads, and print materials.
Health and Pension Insurance Contributions: Premiums paid for your mandatory or private health and pension insurance.
Staff Salaries: Wages and related expenses if you employ any staff.
🧾 Always retain appropriate documentation to substantiate these claims with the tax office.
Choosing the Best Tax Software for Freelancers in Germany
Selecting the right tax software can significantly simplify the process of filing your taxes and managing your finances. When choosing tax software, look for these key features:
Complete tax coverage: Software that seamlessly integrates Einnahmenüberschussrechnung, Umsatzsteuervoranmeldung, and annual declarations, simplifying income calculation.
ELSTER integration: Direct connection with Germany’s electronic tax filing system, allowing direct declaration submission.
Expense tracking: Efficient management and categorization of deductible expenses.
Ease of use: Intuitive interface and personalized tips.
Look for software built specifically for freelancers, offering clear explanations and tips to maximize your deductions. Norman makes tax filing for freelancers effortless, providing intuitive tools and personalized tax tips to simplify your tax obligations.
Frequently Asked Questions (FAQs)
What is the difference between "Freiberufler" and "Freelancer"?
In Germany, "Freiberufler" refers to professionals in specific fields like medicine, law, arts, teaching, and science, who don't require a trade license. "Freelancer" is a broader term referring to any self-employed individual providing services independently.
Do part-time freelancers pay the same taxes as full-time freelancers?
Yes, the type of taxes remains the same. However, the total amount payable depends on the income generated from freelance activities.
What happens if I miss a tax payment deadline?
Missing deadlines can result in late fees and interest charges from the tax office. Regular and punctual submissions help avoid these penalties.
Can freelancers apply for VAT exemption (Kleinunternehmerregelung)?
Yes, if your annual turnover is below €25,000, you can apply for VAT exemption under the Kleinunternehmerregelung.
Conclusion
Understanding and effectively managing your taxes as a freelancer in Germany ensures you can focus more on your work and less on administrative stress. By familiarizing yourself with your tax obligations, deadlines, and potential deductions, tax filing can become effortless and straightforward.
Choosing the right tax software tailored for freelancers will further streamline this process, making tax time simpler and more efficient. Norman was specifically designed by ex-freelancers to simplify tax filing for freelancers.