If you want to become a freelancer, you first have to find out whether you meet the requirements for freelance work, i.e. self-employed work as a freelancer. This article is about the possibility of freelance work. To do this, you first need to know the difference between a commercial and a freelance activity. This distinction is very important for the tax office - as a rule not for the health insurance companies, the employers' liability insurance association, the employment agency and other authorities. Very often not only start-ups, but also seasoned entrepreneurs confuse the terms freelancer, freelancer or freelancer. First, take a look at my infographic ! You can then use theFrequently asked questions of my readers choose a suitable one including my answer. For all other unanswered questions, please visit the Founders Lexicon Facebook group , where you will receive free help on the subject of freelancers, among other things
Who is a freelancer?
Freelancers are described in Section 18 (1) No. 1 of the Income Tax Act, where it says:
"Freelance work includes independent scientific, artistic, literary, teaching or educational work, the independent work of doctors, dentists, veterinarians, lawyers, notaries, patent attorneys, surveyors, engineers, architects, commercial chemists, auditors, tax advisors and people's advisory services - and economists, certified accountants, control agents, medical practitioner, dentists, physiotherapists, journalists, press photographers, interpreters, translators, pilots and similar professions . a member of professional services within the meaning of the sentences 1 and 2 is also freelance, when extending Served with the help of professionally trained workers; the prerequisite is that he is on the groundown specialist knowledge is active in a managerial and independent manner . A representation in the case of temporary hindrance does not prevent the acceptance of a managerial and independent activity ... "
Freelancers are self-employed entrepreneurs who carry out a scientific, artistic, literary, teaching or educational activity. Section 18 of the Income Tax Act (EStG) is used to differentiate the freelancer from the trader. In § 18 EStG, all freelance activities are listed as a catalog (catalog jobs). Self-employed people who work in one of the professions listed are classed as freelancers.
According to the Income Tax Act, the following professions are among the liberal professions:
Independent scientific, artistic, literary, teaching or educational activity
Doctors, dentists, veterinarians,
Lawyers, notaries, patent attorneys,
Surveyors, engineers, architects,
Commercial chemist,
Auditors, tax consultants, advisory economists and business economists, sworn auditors, tax agents,
Naturopaths, dentists, physiotherapists,
Journalists, photo reporters, interpreters, translators,
Pilots ...
What is meant by similar professions?
In the above list, in addition to the list of freelance activities, there are also similar professions the speech. However, the law is formulated in an open manner. Not only a state professional training or a state-recognized professional qualification enables the work as a freelancer in the corresponding professional branch, also a non-state education, a long professional experience, in addition to a qualification or a corresponding approval paves the way to work as a freelancer. For these reasons, for example, health professions are also among the activities that are permitted as freelancers. Last but not least, activities in health care are also freelance. The individual case should always be clarified by a tax advisor, the financial administration or by a corresponding existing (or new) court judgment.
How do I become a freelancer?
You now know the difference between freelancers and freelancers. In practice, however, it is much more important for you to clarify what you need to do to become a freelancer. By determining the start-up strategy with regard to business or freelance work at an early stage, you can register your business start-up either with the trade office using the trade registration form or with the tax office with an informal letter. Therefore, the start-up strategy must be considered beforehand and not after the business registration, for example.
Who is a trader?
All self-employed persons who do not carry out any activities in accordance with the catalog professions or similar professions are tradespeople.
Can I choose freelance?
Now you have to know that the entrepreneur cannot choose the freelance work, but there is a clearly defined occupation catalog (§ 18 EStG, the so-called catalog occupations) as well as activities determined by judicial judgments and decisions, which fall under the freelance activities. Very often there are doubts or activities and jobs that have not yet been decided, here a tax advisor has to decide together with the start-up whether a lawsuit and thus the legal establishment of a freelance activity is actually worthwhile. Freelance work in itself is not a free ticket for the future. If the entrepreneur earns too high commercial income or if he receives too high an employee salary, the freelance work can be denied by the tax office.
What advantages can freelancers use?
Entrepreneurs whose activities are listed in Section 18 of the Income Tax Act (EStG) generate income from freelance work . The thesis that freelancers have enormous advantages over entrepreneurs is widespread among founders. We would like to get to the bottom of these supposed advantages below.
The following advantages summarized in advance:
No compulsory membership in the IHK or Chamber of Crafts
no business tax
no accounting
Reduction in social insurance through the artists' social insurance fund (for artists and publicists)
Start-up - freelance or commercially self-employed?
Business start-ups who are active in the long term with the intention of making a profit are demonstrably self-employed. The founder must now check to which profit income type his activity can be assigned. Should the founder exclude the profit income from agriculture and forestry and from self-employment, he earns income from commercial operations. There is also the possibility that the founder pursues different activities that are treated differently for tax purposes. An example of a so-called mixed activity is an IT lecturer who also sells hardware or offers PC equipment and repairs.
I've always been a freelancer, isn't there customary law?
The tax office determines the tax base, which also includes the type of income, for only one year. Entrepreneurs cannot derive customary law from years of assignment to a certain type of income. If, in accordance with tax regulations, the tax office now determines commercial income after years of freelance work, the entrepreneur usually has to accept this decision. This re-qualification of the income has an effect for entrepreneurs whose income is above the trade tax exemption. And all the more so because not only the previous tax year can be affected, but all tax years in which there is no final tax assessment.
Can or must freelancers create an income-surplus invoice?
A freelancer can always determine his profit using the income-surplus-calculation (EÜR). The commercial worker must adhere to certain limits for this. The annual turnover must not exceed EUR 600,000 and the profit must not exceed EUR 60,000 per year. The trader is only obliged to draw up a balance sheet when the limits are exceeded.
Is the actual taxation of freelancers influenced by the turnover?
Freelancers can, upon request, choose the actual taxation method. This option is also open to commercial workers. In contrast to freelancers, traders may not exceed an annual turnover of EUR 600,000 in order to be able to apply the actual taxation.
Do freelancers pay trade tax?
Freelancers do not have to submit a trade tax return and do not pay any trade tax. Traders, on the other hand, have to pay trade tax if the trade income generated exceeds the tax exemption of EUR 24,500.
Is there a compulsory chamber for freelancers?
Certain professional groups also have to fulfill a chamber obligation, for example doctors are obliged to join the medical chamber, lawyers have to join the bar and tax advisors are obliged to join the chamber of tax advisors. Special rules apply to professions subject to compulsory chambers. If an occupation is one of the liberal professions that are subject to compulsory chambers, the entrepreneur must register with the relevant chamber of registry. The freelance professions that are subject to chamber law include:
doctors
pharmacist
Architects
Consulting engineers
Notaries
Patent attorneys
Psychotherapists
Lawyers
tax consultant
Veterinarians
Auditors
dentists
However, there is no obligation for the Chamber of Commerce and Industry or the Chamber of Crafts.
Does the freelancer have to go to the artist's social security fund?
The artists' social fund is the pension scheme for artists, musicians and publicists. There are many other pension funds available for the various liberal professions. The artists 'social insurance fund (KSK for short) takes on the portion of pension, health and long-term care insurance that the employer would pay for employees; it is more or less an artists' social insurance scheme. For this reason, it contributes enormously to the liquidity of the freelancer. Read in the founder's lexicon on the subject of artists' social security , we answer many more questions about the KSK.
Commercial or freelancer: do I have the right to vote?
Whether or not you are a freelancer is not your decision. As soon as you become self-employed, this status is automatically based on your training and / or your job. The decisive factor is whether your job is one of the so-called catalog professions. The legislator has firmly anchored this in Section 18 (1) No. 1 EStG:
scientific, artistic, literary, teaching or educational activity
Doctors, dentists, veterinarians, naturopaths, dentists, physiotherapists
Lawyers, notaries, patent attorneys
Surveyors, engineers, architects
Commercial chemist
Auditors, tax consultants, advisory economists and business economists, sworn auditors, tax agents
Journalists, photo reporters
Interpreters, translators
Pilots
For many of these activities, the appropriate training is absolutely necessary in order to be allowed to take up the professions (e.g. doctors, lawyers), while others can also become freelancers without special training, as long as they are active in the respective field and have appropriate professional experience ( e.g. journalists, translators).
When and how must the activity be reported to the tax office?
If you are of the opinion that you are working in one of the catalog professions, register as a freelancer with the responsible tax office within four weeks of starting your self-employment. The tax office always determines whether you are actually considered a freelancer or subject to the trade regulations.
In many cases, however, this is not checked until a tax audit takes place years later. If you are then subsequently classified as a trader, the trade tax for the previous years must be paid retrospectively. Freelancers should therefore clarify with the responsible tax office at the beginning of their self-employment whether the classification as a freelancer is correct in order to avoid horrific additional claims.
Can I subsequently become a freelancer?
Even if you have been a trader for years, this does not mean that you cannot become a freelancer after all. If you work in one of the catalog occupations but do not have the required training, you can prove your freelance status, for example, through your work experience and work samples. It is then necessary to object to the current trade tax assessment notice and to apply for changes to notices that have already become legally effective.
If you can successfully provide the proof, you will subsequently receive the freelance status and a refund of the trade tax that was wrongly paid. There have already been some judgments on this in the past, which often concerned computer scientists, web designers and programmers, but which were subsequently awarded freelance status.
How does the freelancer differ from the trader?
Anyone who is classified as a freelancer has a great advantage. In contrast to a trader, a freelancer does not have to pay trade tax. A freelancer does not need to draw up a balance sheet regardless of the size of his profit. He can always submit an EÜR. One may ask why is one self-employed person treated differently from the other? The trade tax flows into the sack from the cities and municipalities. The cities use this to maintain their infrastructure. In the case of freelancers, it is assumed that they hardly use the infrastructure. In contrast to a building contractor, a lawyer does not drive a truck through the streets and pollutes the city with stench or noise, according to the theory.
How is a mixed job classified?
The BFH also issued a landmark ruling on this under Ref .: XI R 10/06 of October 18, 2006. According to this, a company in which mixed services are provided must be qualified according to which activity is actually carried out.
Separable mixed activity
If the freelance and commercial activity can be easily separated, e.g. a veterinarian sells jewelry on the side, income from self-employed and commercial operations is incurred for the self-employed. The different types of income should not be recorded in an accounting or in a bank account.
Inseparably mixed activity
If the freelance activity is inextricably linked to the commercial activity, the entire income counts as income from commercial operations. For example, an architect sells turnkey houses and contributes his architectural work.
What are the judgments about freelancers?
The Federal Fiscal Court had to pass three judgments in which the tax classification of independent IT service providers was the subject of the proceedings.
A state-certified IT business administration graduate had trained himself as an autodidact in setting up and maintaining system software and independently looked after companies with this activity. The BFH found that the breadth and depth of his duties corresponded to those of a qualified computer scientist and that he was practicing an engineering-like, i.e. freelance, profession.
BFH, Az: VIII R 63/06
The BFH also granted the status of a freelancer to another autodidact, who was a state-certified business assistant (DV). The plaintiff had provided IT system consulting for his customers and managed company-wide IT projects as an external person. According to the judgment of the court, the performance was very similar to an engineer, even if the training did not include an engineering degree.
BFH, Az: VIII R 79/06
In another case, a graduate engineer for technical informatics worked as a freelance system administrator for several companies and monitored the company networks with the help of his own service programs, among other things. The BFH classified the activities as classic engineering services and approved the status of a free occupation.
BFH, Az: VII R 31/07
Anyone who recognizes their own independent activity in the precedent judgments should inform their tax office as soon as possible that they would like to be classified as a freelancer. This should take the form of a detailed description of the activities carried out and also contain supporting documents (e.g. invoices). If the tax office follows the explanation, all tax notices that are not yet final will be changed and the trade tax notices repealed.
But be careful : If the trade tax disappears, the income tax rises and this can sometimes trigger considerable demands for additional payments, for which everyone should be prepared.
How do freelancers and freelancers differ?
Do the terms freelancer and freelancer name different activities or are there only two terms for one and the same activity? In common parlance, we often come across the term freelancer and freelancer as a common synonym for freelance workers. The emphasis here is on the word free - permanent employees or bogus self-employment are to be strictly separated from this.
Note: A freelancer can be a freelancer, but does not have to be. A freelancer can also be a solo self-employed person.
Freelancers do not have to register a business and do not have to pay business tax. However, you must report the start of your self-employed activity to the tax office, which usually happens after the establishment with the tax registration sheet .
As a freelancer, you should always insist on a written contract with your client before you begin to provide services. This must precisely describe the classification as a freelancer and the service to be provided. Further components are the payment, the compensation for any travel and material costs incurred as well as the circumstances under which both parties can withdraw from the contract.
Can a freelancer also be a freelancer?
This combination is of course also possible. A tax advisor or notary can easily work as a freelancer. But that doesn't change his status as a freelancer. Even if the tax advisor works as a freelancer on a certain project, he remains a freelancer.
How do freelancers and freelancers differ?
When you first listen, you might think that the terms describe one and the same thing and indeed, many start-ups quite unconsciously confuse freelancers and freelancers.
Freelancers (also called freelancers, freelance workers or freelance workers) are initially entrepreneurs just like freelancers and therefore work on an invoice basis. The freelancer, however, is an entrepreneur who usually carries out orders personally for another entrepreneur under a service or work contract , as a kind of subcontractor. Very common form of procurement in the service sector. The type of employment relationship is described as different from the employee. The freelancer can also be a freelancer as well as a commercial entrepreneur.
The enumeration of the synonymous use of the term freelancer at this point already suggests that the difference between freelancers and freelancers is to be seen
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