Freelance Professions: What you need to know about freelance profession

There are numerous misunderstandings about free professions . Confusion or simply wrong information. This is due to the similarity of different terms, but they do not all belong together. Freelancers, freelancers, freelancers or freelancers - who shuns these over a comb and uses simply synonym, makes thereby already a serious mistake. For a better understanding of the liberal professions, it helps to look into the legislation, as clear rules can be found here. So that you do not lose track, we show you what you need to know about the liberal professions and answer the most important questions ...

Definition: What is a free profession?
Freelancers Definition List Examples Trade Explanation Catalog professionsThe distinction and thus also the definition of a free profession can be found in German tax law, more precisely in § 18 (1) sentences 1 and 2 of the Income Tax Act , which regulates the income from freelance work.

According to this, freelance professions are generally self-employed scientific, artistic, literary, teaching or educational activities . An extensive list of the so-called catalog professions, which includes all the various occupational fields of the liberal professions, is supplemented by the law [...] which states that the self-employed profession of ...

doctors
dentists
veterinarians
Lawyers
Notaries
patent attorneys
Surveyors
engineers
Architects
commercial chemist
Auditors
tax consultant
consultant economists and business economists
sworn accountant
tax agents
Naturopaths
dentists
Physiotherapists
journalists
press photographer
interpreter
translator
guide
and similar professions.

What counts among these similar professions is not always so clear. The most important criteria are the training as well as the actual activity, which must be similar and comparable to one of the catalog professions .

The definition of liberal professions is broadened in the Partnership Companies Act (PartGG) , which literally states in Section 1: The liberal professions are generally interested in personal, autonomous and professionally independent provision of higher-quality services on the basis of special professional qualifications or creative gifts the client and the public to the content.

Here is another list of the catalog professions, but there are four jobs that are not mentioned in the Income Tax Act. The independent professions also include midwives, massage therapists, psychologists and chief technical experts .

Freelance professions: What matters is the actual job performed
Free Professions List Example Catalog Professions Commercial Education EStG Income Tax ActFor a better understanding of liberal professions, it should also be mentioned that, of course, classification is based on the job you are currently practicing - not on an activity you may have learned during your training or in which you have previously worked.

For example, a trained tax consultant who now works in another area is no longer necessarily a freelancer .


The role of the tax office in liberal professions
An activity in one of the above professions automatically means that you are a freelancer? This conclusion is obvious, but not always correct. So it is quite possible and in practice often the case that self-employed work in a liberal profession, but are not classified as a freelancer, but as a trader .

It depends on the individual situation and the final decision is made by the Finance Ministry , where you have to report as an alleged freelancer in any case, to apply for and receive a tax number, with which you can then write bills.

In the beginning, the tax office is the most important contact person for liberal professions , since no business has to be registered first - unless the tax office classifies the activity as a trade.


Which tax regulations apply in the liberal professions?
As long as independent professions are not regarded as a trade and do not have to be registered with the relevant trade office, there is no trade tax for freelancers . There are a number of advantages and benefits associated with this: You do not have to double the bookkeeping required by other businesses.

You simply have to present the tax office with a simple revenue surplus bill that compares your income and expenses. It is not even required by law that a private account must be kept for liberal professions - so theoretically you can also use your private account for business purposes. In practice, however, this can lead to problems if the various transactions and transfers are to be separated.

While the trade tax does not apply, for non-profit professions income tax and VAT have yet to be paid, with exceptions and special regulations. Thus, the value added tax currently stands at 19 percent, but there may be a reduced value added tax for the granting, transfer and exercise of rights arising from the Copyright Act apply ( § 12 paragraph 2 number 7 c sales tax law )

This applies to journalists, writers or even designers who can use the reduced tax rate in their invoices. Medical services are even completely exempt from VAT, as long as they are not cosmetic operations.

With the so-called small business regulation , it is possible for all liberal professions to be exempted from VAT. This will take effect if sales last year were below € 17,500 and, in all likelihood, will not exceed € 50,000 this year.

Freelance Professions: You have to think about that
Finally, we have listed three important points that should be remembered when working in a liberal profession:

Think about social security
In the liberal professions, you urgently need to know how best to protect yourself in social security. For example, there is no basic pension insurance obligation, but there are exceptions for example with educators or midwives. Also chamber occupations (for example, doctors or lawyers) have a special rule, are a member of the respective pension scheme and pay over it contributions to the pension insurance.

For the health insurance you are responsible in independent professions and bear the full costs, which is why a thorough research and direct comparison of different providers is worthwhile.

Look for possible compulsory memberships in chambers
For some free professions there is a compulsory membership in the respective chamber. A classic example is doctors, who in any case must belong to the medical chamber of their federal state. This chamber also decides in the worst case whether a freelancer can be withdrawn from admission.

Beware of a joint foundation
If you decide to start a business with other people and start your own business, there are a few things you need to be aware of when working in a liberal profession. Important is the legal form - for freelancers there is the special form of the partnership society. However, each shareholder must bring their own expertise and count to the liberal professions. If this is not the case, the incorporated company is regarded as a business enterprise.

Even if you decide to set up a corporation with other freelancers, it will in any case become a business enterprise, even if the activity corresponds to the liberal professions.

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