Freelancing or operating a business?

"Artistic activity" is not defined in Germany; it can be performed by employees (Arbeitnehmer*in/Angestellte*r) as part of an employment relationship or independently (selbstständig).
If an artistic activity is carried out independently, a distinction is made between freelance activity (freiberufliche Tätigkeit) and a business enterprise (Gewerbebetrieb). In general, it can be stated that commercial transactions and capital investments are typical characteristics of business enterprises, while freelancers tend to focus on their own work and on artistic services or works.

The distinction is particularly relevant in relation to the tax authorities and social insurance institutions, each of which have their own criteria for classifying an activity. Since there are differences with regard to registering an activity and, most importantly, with regard to taxation, the tax office ultimately determines the classification. Anyone who is not recognised as a freelancer is automatically considered a businessperson.
Information on the taxation of the various activities as well as on social security for self-employed persons and employees will soon be available on this website.

In general, independent artistic activities fall into the category of freelance activities. In principle, this applies to all sectors. There are certain criteria that speak in favour of an artistic activity: education (e.g. a university degree in a particular artistic discipline), participation in art exhibitions, awards, scholarships or memberships in relevant professional associations.
The Praxishilfe Freiberufliche Künstlerinnen und Künstler (in German only) of the Federal Ministry for Economic Affairs and Energy (Bundesministeriums für Wirtschaft und Energie) provides an overview.

The following are examples of activities performed by artists and creatives that are generally classified as business enterprises:

 

  • operation of a music label or the distribution of sound recordings.
  • operation of a publishing house, gallery, artists' agency or advertising agency.
  • sale of serially produced art on a market – this requires an itinerant trade license (Reisegewerbeschein).
  • designing of objects for daily use with little creative effort.


Important!
Artists and creatives who apply for a residence permit in Germany before taking up self-employment should be sure to apply for the correct permit, i.e. for a freelance activity (Section 21 (5) German Residence Act – Freelancing) or a business enterprise (Section 21 (1) German Residence Act – Self-employment). This distinction is also relevant with regard to the residence title. The purpose of the stay can be changed subsequently, but this involves additional administrative effort.

Registering a self-employed activity and obtaining a tax number
Self-employed persons must declare their self-employment by applying for a personal tax number (Steuernummer) at their local tax office (Finanzamt). A personal tax number will then be issued, which is valid for the activity registered and is associated with the respective local tax office. A new tax number will be issued if you move to the catchment area of another tax office or change your activity. If several different activities (freelance and business enterprise) are engaged in at the same time, several tax numbers are often issued.
The tax number is required for filing an income tax return (Einkommensteuererklärung). In addition, invoices pertaining to self-employment work may only be issued if they include a valid tax number (or, if available, a VAT identification number (Umsatzsteuer-Identifikationsnummer)) (see also Writing invoices when self-employed at www.touring-artists.info).

The activity can be registered with the responsible tax office online (Tax offices in Germany – Online search) using the tax registration form ("Fragebogen zur steuerlichen Erfassung" – pdf template, German). This form can be mailed in or delivered in person. If the tax identification number is not received after two weeks, we recommend that you contact the tax office.

Important!
The personal tax number (persönliche Steuernummer) should not be confused with the tax identification number (Steuer-Identifikationsnummer), which is assigned automatically, either immediately after birth or when you first register a residence in Germany. It is valid for your entire life and is referenced in any communication with the tax office. The number is linked to personal data such as date of birth, place of residence, responsible tax office, etc.

Registering a business enterprise
Businesspeople must register their business enterprise with BOTH the tax office (Finanzamt) and the trade office (Gewerbeamt)!
The responsible trade office is the trade office in the city in which the business is run or where the business is headquartered. The authority responsible for the registration varies depending on the city. In most cases, the responsibility lies with the regulatory authority (Ordnungsamt), the city hall, the citizen's office (Bürgerbüro) or the trade office itself. The best way to find out which office is responsible is to ask at the local city hall (Online trade office search, in German).
Some cities offer an online registration procedure (Business registration template, in German). Registration of a business is subject to a fee (between 10 and 60 euros depending on the location).
A business can also be registered retroactively. A delay of one to two months should not have any negative consequences if you approach the trade office yourself.

The trade office sends information pertaining to the registration to the relevant tax office and, if applicable, the trade association (Berufsgenossenschaft). These authorities may request additional documents from the applicant. Some paperwork is therefore required and extended waiting times are possible.

Businesspeople must join the Chamber of Industry and Commerce (Industrie- und Handelskammer, IHK) and pay an annual fee, which depends on the annual turnover and the legal form of the enterprise. Exemptions from the obligation to pay the fee are possible for certain reasons.
The local IHKs provide detailed information on their websites (IHK search, in German).

Information on business registration can be found at www.gewerbeanmeldung.de

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