Freelancer guides
Freelance Taxes in Germany — Freiberufler vs Gewerbe
The difference between Freiberufler and Gewerbe, the Kleinunternehmer VAT rule, and what self-employed Germans actually owe.
8 min read · Reviewed March 2026
Two kinds of self-employment
Germany splits the self-employed into two categories with different tax treatment. Freiberufler are 'liberal professions' — doctors, lawyers, engineers, writers, many IT consultants and designers — and Gewerbetreibende run a trade or business (shops, agencies, most product businesses).
The key difference: Gewerbe must pay trade tax (Gewerbesteuer) and register a business, while Freiberufler are exempt from trade tax and have lighter registration. Which category you fall into is decided by the nature of your work, not your choice.
Income tax is the same; trade tax isn't
Both pay normal progressive income tax on profit, using the same §32a scale as employees. The divergence is trade tax: Gewerbe pay it above an allowance (with much of it credited back against income tax), Freiberufler don't pay it at all.
Both also handle their own health and pension arrangements — there's no automatic employer split — which is a major cost the employee payslip hides.
The Kleinunternehmer VAT rule
If your turnover is small (below the current Kleinunternehmer threshold), you can opt out of charging and remitting VAT, simplifying your invoicing and admin. It's popular with side-businesses and early-stage freelancers, though it stops you reclaiming VAT on your own purchases.
Above the threshold you must charge 19% VAT (or 7% for some services) and file regular VAT returns.
Plan for the bill
Because nothing is withheld at source, freelancers must set money aside for income tax (paid via quarterly prepayments), VAT, and their own health and pension contributions. A common mistake is spending gross income and being caught short at tax time.
Our Germany freelancer calculator gives a rough after-tax estimate, but speak to a Steuerberater for anything beyond a ballpark.
Related
Frequently Asked Questions
+What is the difference between Freiberufler and Gewerbe?
Freiberufler are liberal professions (doctors, lawyers, many IT consultants) exempt from trade tax; Gewerbe run a trade or business and pay trade tax (largely credited against income tax). Both pay normal income tax on profit.
+What is the Kleinunternehmer rule?
It lets small businesses below a turnover threshold skip charging and remitting VAT, simplifying admin. The trade-off is you can't reclaim VAT on your own business purchases.
Estimate only — not tax advice. Figures are estimates based on publicly available tax rules and may not reflect your full circumstances. See our methodology & sources (last reviewed June 2026). Always confirm with an official tax authority or a licensed adviser before making decisions.