A freelancer has clear advantages over a commercial trader. As a freelancer, you do not have to register a trade or pay trade tax. There is also no double-entry bookkeeping requirement and you are exempt from compulsory membership of the IHK (Chamber of Industry and Commerce). Furthermore, you can form a special form of company, the so-called partnership company (PartG), together with other freelancers.
However, you must register with the tax office in order to form a sole proprietorship.
Which occupational groups are considered to be freelancers is defined in various laws (see Section 1(2) Partnerschaftsgesellschaftsgesetz (PartGG; German Partnership Company Act) and Section 18(1) Einkommensteuergesetz (EStG; German Income Tax Act)).
The basis of the liberal professions is usually a special professional qualification or an artistic talent of the professional. Freelancers provide services of a higher order independently and on their own responsibility. The “hard core” of freelancers includes, for example, doctors, lawyers, architects and journalists. But freelancers may also include service providers in the creative field (e.g. advertising copywriters, web designers, etc.) or in the healthcare professions (e.g. masseur, occupational therapist, etc.).
Other liberal professions are listed in this legal catalogue.
The circle of freelancers is not exhaustively defined. New developments in the field of research, science or culture give rise to new professions that fall under the above criteria.
If you have any doubts about your professional status, the following questions may help you to orientate yourself:
- Do you have an academic degree or higher education?
- Does experience show that hourly rates are high?
- Is your activity of a content-related or conceptual nature?
- Have you completed extensive additional training that is necessary for your job?
- Is there a special relationship of trust between you and your customers?
- Is the creative aspect of your service particularly important?
If your answer to most of the questions is yes, it is very likely that you are a freelancer.
Farmers are also not merchants and do not carry on a trade within the meaning of the Gewerbeordnung (GewO; German Industrial Code). A farmer is a recognised training occupation that involves producing plant or animal products on a cultivated area. These include stock-raising, agricultural, forestry, horticultural, viticultural, fishing and mining enterprises. This type of business may sell products without registering a trade. However, farmers are subject to the obligation to register with the Chambers of Agriculture.