Freelancer Tax in Germany: VAT, Kleinunternehmer & Invoicing (2026)

Germany distinguishes between two self-employed categories — and your category determines whether you pay Gewerbesteuer (trade tax):

Freiberufler (freelance professional) — for "Katalogberufe" listed in §18 EStG: doctors, lawyers, architects, journalists, consultants, software developers, designers, translators. NO Gewerbesteuer. Register with Finanzamt only.

Gewerbetreibender (trader) — anyone selling goods or services not in the Katalog. Register with Gewerbeamt AND Finanzamt. Pays Gewerbesteuer (3.5% × Hebesatz, ~14% effective) on profits over €24,500.

Classification is determined by the Finanzamt and can be disputed. Software developers and consultants often qualify as Freiberufler, sparing them Gewerbesteuer.

Germany's standard VAT rate is 19%, with a reduced 7% for specific goods (books, food, hotel stays, cultural services).

All freelancers must charge VAT on invoices UNLESS they qualify as Kleinunternehmer (small business — see next section).

Exempt activities:

• Medical / therapeutic services (§4 Nr. 14 UStG)
• Education and training (§4 Nr. 21 UStG)
• Insurance and financial services
• Exports outside the EU
• B2B services to EU clients (reverse charge — no VAT)

If your turnover is under €22,000 in the previous year AND under €50,000 expected in the current year, you can opt for the Kleinunternehmer-Regelung (§19 UStG):

• You do NOT charge VAT on invoices
• You CANNOT deduct input VAT on business expenses
• You must include the disclaimer "Gemäß § 19 UStG wird keine Umsatzsteuer berechnet" on every invoice

Good for: low-revenue freelancers, those with few business expenses, B2C work.

Not good for: B2B services (your clients can't claim input VAT), those with significant expenses, or planning to grow past €22K soon.

You can opt out voluntarily — but you're locked into the standard system for 5 years.

German invoices (Rechnung) must include (§14 UStG):

• Word "Rechnung" clearly displayed
• Your full name and address
• Your Steuernummer OR USt-IdNr (VAT ID)
• Client's full name and address
• Sequential invoice number (Rechnungsnummer) — unique, no gaps
• Invoice date (Rechnungsdatum)
• Service date or period (Leistungszeitraum)
• Quantity, description, and unit price for each item
• Subtotal, VAT rate, VAT amount (or Kleinunternehmer disclaimer)
• Total amount payable
• Payment terms / due date (recommended, not required)

Simplified invoices (Kleinbetragsrechnung) allowed for amounts under €250 — fewer fields required.

Umsatzsteuervoranmeldung (VAT pre-filing):

• Monthly — if your prior-year VAT owed was over €7,500
• Quarterly — if between €1,000 and €7,500
• None (annual only) — if under €1,000

Due by the 10th of the following month/quarter (or 10 days after with Dauerfristverlängerung).

Einkommensteuererklärung (annual income tax):

• Due July 31 of the following year (without a tax advisor)
• Due end of February of the second following year (with a Steuerberater)

Gewerbesteuer (if applicable): annual filing alongside income tax.

All filings via ELSTER (the German tax authority's online portal).

Germany allows deductions for ordinary business expenses (Betriebsausgaben):

• Home office — €1,260/year flat (Homeoffice-Pauschale) OR actual costs if dedicated room
• Equipment — laptops, software, office furniture (depreciated over useful life or expensed if under €800 net)
• Travel — €0.30/km for car, €0.38/km from km 21 onwards (2026)
• Meals while working — €15-€30/day depending on duration (Verpflegungsmehraufwand)
• Professional services — Steuerberater fees, lawyer fees
• Insurance — Krankenversicherung, Berufshaftpflicht, business liability
• Coworking / office rent — full deduction
• Training & books — directly related to your activity

Keep receipts for 10 years (Aufbewahrungspflicht) — Finanzamt can audit retroactively.

Mistake 1: Issuing invoices without Steuernummer. Every German invoice MUST show your Steuernummer or USt-IdNr. The Finanzamt assigns it after you register — file a Fragebogen zur steuerlichen Erfassung immediately upon becoming self-employed.

Mistake 2: Opting for Kleinunternehmer when you have B2B clients. B2B clients can't claim input VAT from your Kleinunternehmer invoices. They may prefer paying a VAT-charging freelancer to save on their own tax. Run the math before opting in.

Mistake 3: Missing the monthly VAT deadline. Umsatzsteuervoranmeldungen are due by the 10th — late submission incurs Säumniszuschlag (1% of the amount per month).

Mistake 4: Forgetting to register the trade name. If you're a Gewerbetreibender, register with the Gewerbeamt before starting business — operating without registration is a Verstoß and triggers fines.