Simulate your taxes
Understand how much taxes you will have to pay as a self-employed professional in Germany. Depending on your profession you can chose typical deductible costs and save taxes.
FAQs on taxes as a self-employed professional
An employee can easily see their net income on their pay slip, while a self-employed individual needs to manually calculate their gross and net income, taking into account various deductions.
- When you subtract weekends, holidays, sick days, etc. there remain around 216 working days per year.
- Now add up all your costs that have to be covered: Insurance, living expenses, taxes, internet, etc.
- Calculate your hourly rate with this formula: Cost/working time = hourly rate.
Example: Your total monthly costs are €6,000, your working hours are 90 hours a month. Then your hourly rate would have to be at least €66 net to avoid making a loss. However, since you want to make a profit and also have to provide for bad times, you should add a profit markup of at least 10% to your hourly rate.
No, it is often difficult for self-employed professionals to determine their net income without examining their bank statements or estimating based on their revenue and expenses. Here you find our guide on calculating your income.
Let’s take this example to understand how to calculate taxes for self-employed professionals:
You earned €42,000 last year and were able to deduct €2,500 as business expenses. The amount on which you have to pay tax is therefore €39,500.
The income tax rate for this amount is 19%. This corresponds to an income tax liability of €7,663.
But don’t forget that you also have to plan for deductions for social security contributions. This includes at least health insurance and pension insurance, as well as other insurances if applicable. You can find more about it here.
While health insurance is mandatory, pension insurance is not. However, considering a private pension plan is advised, as relying solely on the state pension may not be sufficient. These are your options.
The taxes you have to pay depend on the amount of your income and the structure of your business:
Every self-employed person must file an income tax return and possibly pay income tax. If you are subject to VAT (value added tax), you have to calculate the VAT and pay it with a regular VAT return. If you have registered as trade person (Gewerbe), you may also have to pay trade tax (Gewerbesteuer).
Read real stories of people who dared to take the step into self-employment and successfully realized their dream of owning their own business.
Lauren Ashcroft and Philip Grave decided to start their own business in the middle of the Corona pandemic and launched their company Ultimate You Planner.
They share why they finally felt confident to take this step and what difficulties they faced.
Read their story here.
Start-ups need a lot of visibility and must be able to tell their success story properly. That’s where Magdi comes in. She specialises in young tech companies and supports them with PR and marketing campaigns.
This is what her everyday life as a self-employed person looks like.
Jacob McPherson began his career as a freelancer in New York. Then he decided to move to Europe to explore freelancing in a completely different world. Here, he tells us how he managed to build his business as an expat.
Thorsten has developed his own brand that deals with sports in everyday life. He doesn’t like to spend the whole day in the office and therefore often works on the road.
Konstantinos is professional dancer and also teaches modern dance. The way to becoming self-employed in Germany was not always easy. Here is how he succeeded.
Ask a Tax Coach
Do you have further questions if self-employment is right for you? Simply send us a message and receive an answer by our Accountable Tax Coaches within one day.