Upwork in Germany - Still Worth It in 2025?
Stan
Updated on:
Oct 17, 2025
AI makes freelancers' lives both easier and harder. It enables faster work, more clients, and automates tasks like accounting. It also enables companies to do more in-house, often replacing freelance work with AI tools like ChatGPT.
Upwork is at the center of this change. It has long been a popular platform for freelancers worldwide, connecting professionals with companies looking for help with specific projects. For many, especially expats in Germany, it seems like an ideal way to maintain global work while settling in a new country.
However, while Upwork simplifies finding clients, Germany’s bureaucracy complicates things. Even with foreign clients, income here is taxable, requiring registration with the Finanzamt, regular taxes, and understanding VAT rules — tasks that can be overwhelming for newcomers.
This matters more than many freelancers realize. We regularly see people who’ve worked through Upwork for months — even years — before learning that they should have registered as self-employed (Freiberufler or Gewerbetreibender), filed VAT returns, or declared their foreign income. The good news? It’s fixable — and much easier when you know what to expect from day one.
In this guide, we’ll explain how to register your Upwork business properly, stay fully tax-compliant in Germany, and answer one of the biggest questions freelancers are asking in 2025:
❓ Is Upwork still worth it — or has the platform lost its shine?
How Upwork Works (and Why It’s So Popular Among Expats in Germany)
Upwork is one of the largest freelance platforms in the world, bringing together millions of professionals and clients across every imaginable industry — from software development and graphic design to copywriting, marketing, and business consulting. It’s simple: you create a profile, bid on projects, and get paid once the work is approved.
For expats living in Germany, this global reach is a major advantage. You can work with clients from the US, the UK, Australia, or anywhere else — all from your laptop in Berlin, Munich, or Hamburg. Payments are processed directly through Upwork and can be received in either USD or EUR, providing you with flexibility to earn internationally while living locally.
Upwork’s fee model is straightforward: it takes a small commission (usually around 10%) from your project earnings. In exchange, you get access to an enormous marketplace, secure payment protection, and visibility among thousands of potential clients. Many expats use Upwork as their main income source — or as a bridge while establishing their freelance business in Germany.
However, there’s one crucial point that often gets overlooked: your tax obligations depend on where you live, not where your clients are.
Even if every single client is abroad, as a tax resident in Germany, you must declare your Upwork income to the German tax authorities (Finanzamt).
That’s where things start to get a bit bureaucratic — and where the next section will help you understand exactly what to do.
Tax Obligations for Upwork Freelancers in Germany
Working on Upwork while living in Germany comes with clear tax obligations, and ignoring them can quickly become expensive. Whether you’re a full-time freelancer or just testing the waters, the Finanzamt (German tax office) considers your Upwork income a taxable business activity. Let’s go step-by-step through what you need to do to stay compliant.
Step 1: Tax registration (Fragebogen zur steuerlichen Erfassung)
Before you send your first Upwork invoice, you must register as self-employed with the Finanzamt. Depending on the kind of work you do, you’ll be classified as either:
Freiberufler — for creative, scientific, or intellectual professions (e.g., designers, developers, writers, consultants).
Gewerbetreibender — for commercial or service-based businesses that don’t fall under freelance professions (e.g., virtual assistants, marketing managers, translators).
Registration is completed by submitting the “Fragebogen zur steuerlichen Erfassung”, a multi-page form that requires you to describe your activity and select your VAT status.
🆓 With Norman, this entire process is handled for free. You answer a few simple questions online, and we automatically generate and send the form to your Finanzamt — so you get your Steuernummer (tax number) without stress or confusion.
Step 2: VAT (Umsatzsteuer)
VAT can be tricky for Upwork freelancers in Germany, especially when you work with clients abroad. Here’s how it generally works:
If your annual revenue is under €25,000, you can apply for the Kleinunternehmerregelung (small business rule). That means you don’t charge VAT on invoices and don’t need to submit monthly VAT returns (Umsatzsteuervoranmeldung).
If you exceed that threshold or opt out of it, you must file VAT returns regularly — even if most of your clients are outside Germany.
When working with clients outside the EU, you typically apply the reverse charge mechanism: you issue an invoice without VAT, and the client is responsible for handling local VAT on their end.
When working with EU clients, you must include the client’s VAT ID and apply reverse charge if they are a business.
⚠️ A common pitfall: Upwork fees. Because Upwork is registered in Ireland, its service fees to you include German VAT if your account is registered in Germany. You can reclaim this VAT in your tax filings — but only if you’re registered for VAT.
Step 3: Bookkeeping (Einnahmenüberschussrechnung – EÜR)
Even if you’re a one-person operation, you’re legally required to keep proper bookkeeping records. That includes:
All invoices (both to clients and from Upwork)
Proof of expenses
Bank statements
Currency conversions (USD to EUR if you’re paid in dollars)
In Germany, small businesses and freelancers typically use the EÜR method — a simple profit-and-loss calculation based on income and expenses.
💡 Norman automates this entire process for you: invoices, VAT, and EÜR bookkeeping are synced in one place. That means no Excel chaos, no missed receipts, and no panic at tax time.
Step 4: Income tax (Einkommensteuer)
All your Upwork earnings are considered business income and must be reported on your annual income tax return (Einkommensteuererklärung).
You’ll pay income tax on your profit, not on total revenue — so make sure to deduct all legitimate business expenses, such as:
Upwork service fees
Software and subscriptions (e.g., Adobe, Zoom, Notion)
Equipment (laptop, camera, microphone)
Internet and workspace costs
Separating private and business expenses is essential — if you use one bank account for both, things get messy fast.
With your registration, VAT, income tax, and bookkeeping in order, you’re not just compliant — you’re building a legitimate business foundation in Germany. In the next section, we’ll cover the common mistakes many Upwork freelancers make and how to avoid them.
📘 Download our free eBook:
Mastering Freelance in Germany: A Practical Handbook for Beginners.
Learn how to register, invoice, and handle taxes like a pro — from your very first project to your first €100k in freelance income.
Is Upwork Still Worth It in 2025?
If you’ve spent any time in freelance forums lately, you’ve probably seen the question:
“Is Upwork even worth it anymore?”
It’s a fair question — the platform has changed a lot over the last few years. Between rising fees, AI competition, and shifting client expectations, many freelancers are rethinking their strategy. Let’s break down what’s really happening on Upwork in 2025.
The 2025 Reality Check
1. AI-generated proposals are everywhere.
With ChatGPT and other AI tools, clients are bombarded with generic copy-paste proposals. That means human touch and professionalism matter more than ever. Personalized, well-researched offers win — lazy, automated ones don’t.
2. Platform fees keep rising.
Upwork’s fee structure has become more complex, with higher service fees and new “connects” costs for bidding on jobs. For freelancers earning modest amounts, these costs can eat into profits quickly — especially if you’re also paying VAT on top of Upwork’s own service fees.
3. Competition has exploded.
More people than ever are freelancing, and platforms like Upwork are flooded with new talent from around the world. This drives prices down, especially in categories such as design, writing, and basic web development. The result: you need stronger positioning, a great portfolio, and clear communication to stand out.
4. Client budgets are tightening.
Global inflation and changing market conditions have led many companies to cut freelance budgets. Some clients now expect “agency-level work for freelancer rates,” making negotiation skills and specialization key to maintaining income.
5. Experienced freelancers are still thriving.
Despite the noise, top-rated freelancers continue to earn solid incomes on Upwork — often more than before. Why? They build long-term client relationships, charge premium rates, and use Upwork mainly as a lead source rather than their entire pipeline.
Pros
Access to global clients and recurring work
Secure payments and escrow protection
Ability to build a public reputation through reviews and a professional profile
Ideal for testing new niches or expanding your client base
Cons
Rising fees and reduced take-home income
A growing race to the bottom on pricing
Less personal connection with clients compared to direct outreach
Administrative complexity, when combined with German tax obligations (VAT, invoicing, etc.)
How to Make It Work in 2025
Upwork shouldn’t be your only source of clients — treat it as part of a larger business strategy. Combine it with:
Direct clients you find through referrals or LinkedIn
Your own website or portfolio that builds long-term credibility
A tax-compliant system (like Norman) that keeps your finances clean and stress-free
This combination gives you the flexibility of platform work plus the stability of independent business growth.
Bottom Line
Upwork is still worth it in 2025, but only if you approach it like a real business, not a casual side hustle. Build a brand, price yourself strategically, and stay on top of your taxes — especially if you’re living in Germany.
With the right setup, Upwork can remain a powerful income stream — not a trap of underpaid gigs and administrative chaos.
Common Mistakes to Avoid on Upwork as a Germany-based Freelancer
Even experienced freelancers can trip up when it comes to German tax rules. The system is strict, and the Finanzamt doesn’t usually accept “I didn’t know” as an excuse. Here are the most common mistakes Upwork freelancers make — and how to stay clear of them.
1. Using your personal PayPal or bank account for business income
Mixing personal and business transactions is one of the fastest ways to lose track of your finances. It makes bookkeeping confusing, complicates tax filings, and can raise red flags with your tax office.
↔️ Always open a separate business account for your Upwork payments. This makes it easy to track income, link to your bookkeeping tool, and prove your transactions if ever asked by the Finanzamt.
2. Ignoring VAT registration
Many freelancers assume VAT (Umsatzsteuer) doesn’t apply if their clients are abroad — but that’s not true. Whether you need to file VAT returns depends on your annual revenue and the location of your clients, not the platform you use.
If you earn more than €25,000 per year or voluntarily opt out of the Kleinunternehmerregelung, you must file Umsatzsteuervoranmeldung (monthly or quarterly VAT returns). Even below that threshold, you must clearly decide and document your VAT status.
3. Assuming “foreign clients = no taxes”
Just because your clients are in the US or Asia doesn’t mean your income is tax-free. If you live in Germany, you’re a German tax resident — and that means all your worldwide income (including from Upwork) is taxable here.
It doesn’t matter whether you’re paid in USD, GBP, or crypto — the moment the money hits your account, it counts as taxable income in Germany.
4. Not reporting Upwork earnings to the Finanzamt
Upwork doesn’t automatically report your income to the German authorities — but that doesn’t mean you can skip declaring it. You must include all Upwork earnings in your EÜR and income tax return each year.
Failing to do so can result in penalties, backdated taxes, and, in the most severe cases, an audit. Keep your transactions transparent from the start.
5. Not keeping Upwork invoices or fee receipts for bookkeeping
Upwork issues invoices for its service fees and payment processing. These are business expenses and can reduce your taxable profit — but only if you keep them as documentation.
Download all your Upwork invoices (you’ll find them under Reports → Transactions) and store them safely. Tools like Norman automatically categorize these receipts and link them to your income, saving you hours during tax season.
📝 Keep your finances clean from day one — separate accounts, organized invoices, and automated bookkeeping. It’s not just about avoiding fines; it’s about running your freelance career like a real business.
How Norman Helps Upwork Freelancers in Germany
If you’re earning through Upwork while living in Germany, staying compliant with tax rules can feel like a full-time job in itself. That’s exactly where Norman comes in — we simplify the entire process so you can focus on what actually matters: your clients, your projects, and your growth.
Here’s how Norman helps Upwork freelancers keep everything under control:
✅ Free tax registration with the Finanzamt
No need to figure out the Fragebogen zur steuerlichen Erfassung yourself. Norman automatically prepares and submits your registration, so you receive your Steuernummer (tax number) quickly and without stress.
✅ Automated VAT and income tax filing
Norman calculates, prepares, and files your Umsatzsteuervoranmeldung (VAT returns) and income tax declarations based on your real transaction data — no spreadsheets, no confusion, no missed deadlines.
✅ Smart invoicing in EUR or USD
Whether your Upwork clients pay you in dollars or euros, Norman lets you create compliant invoices in both currencies — with the correct VAT, reverse charge notes, and exchange rate conversions applied automatically.
✅ Bookkeeping that fits your Upwork workflow
Upload your Upwork payout reports, invoices, and expense receipts directly into Norman. The system automatically matches and categorizes them, giving you a clean EÜR (profit and loss) overview ready for tax season or bank requests.
With Norman, you get a complete back-office solution that’s built for freelancers — not accountants. Everything runs in the background so that you can focus on clients, not forms.
Conclusion
Upwork remains one of the best platforms for finding clients and building an international freelance career — but in Germany, success takes more than great work. It also takes structure.
Germany’s tax system may be complex, but with the right setup, it doesn’t have to be stressful. Once you’re properly registered, compliant with VAT rules, and equipped with smart tools to manage your bookkeeping, freelancing through Upwork becomes smooth, legal, and profitable.
Whether you’re just getting started or already earning steadily, the key is to treat your freelance career like a real business — because that’s exactly what it is.
🏁 Start your freelance journey right — register for free with Norman today and let us handle the paperwork while you focus on your next client.
FAQ: Upwork and Taxes in Germany
Do I need to register a business if I work only on Upwork?
Yes. Even if all your work comes through Upwork, the German tax office considers it a self-employed activity. You must register with the Finanzamt by submitting the Fragebogen zur steuerlichen Erfassung. Depending on your type of work, you’ll be classified as either a Freiberufler (freelancer) or a Gewerbetreibender (business owner).
💡 Norman can handle this registration automatically and get you your tax number — free of charge.
Does Upwork report earnings to the German tax office?
No. Upwork does not directly report your income to the German Finanzamt. However, your income is still taxable in Germany if you live here. You’re responsible for declaring all your Upwork earnings in your income tax return (Einkommensteuererklärung) and maintaining proper bookkeeping records.
How do I declare Upwork income on my tax return?
You declare your total Upwork income as business revenue in your EÜR (Einnahmenüberschussrechnung) and income tax return. Subtract your business expenses — such as Upwork fees, software subscriptions, and hardware — to calculate your taxable profit. Norman automates this process and generates your tax reports for submission.
Is VAT charged on Upwork fees?
Yes. Since Upwork is based in Ireland, it charges German VAT (19%) on its service fees if your account is registered in Germany. You can reclaim this VAT — but only if you’re registered for VAT and not under the Kleinunternehmerregelung. Norman automatically includes these invoices in your VAT return, so you don’t pay more than necessary.
Can I stay a Kleinunternehmer on Upwork?
Yes — as long as your annual revenue stays below €25,000, you can choose the Kleinunternehmerregelung. That means you don’t charge VAT on invoices and don’t need to file monthly VAT returns. However, you must still register your business and declare your income annually.