Hi All,

I have a NE with EG and now want to work as an IT freelancer. Could you kindly advice me on following things.

1) What is the difference between Selbständig arbeit and freiberufliches arbeit.

2) Which option is better in case I want to work on contract basis with some company?

3) Are there any formalities for doing that, if yes in which office I can do that and what are those?

Help here will be apreciated.

Thanks in Advance.

Best Regards,
-inditrozen

Hi,

I am working as Selbständig since I got my NE in May 2006. To my knowledge there is no difference between Selbständig and Freiberufler.

To register as Selbständig, I went to the Finanzamt of the city where I live and got the right form. I then took the form to my Tax consultant and they helped me to fill it. I then sent it by post to the Finanzamt. Few weeks later I got a letter with my Tax number and instruction to tranfer the VAT on a monthly basis before the 10th of each month, if you work as Selbständig you will need to charge VAT on top of your invoices.

It went very smooth with no problems.

There are few tricks to save taxes as Selbständig, I advice you to stick with agood tax consultant from the beginning. My tax consultant costs me about 700€ per year, of course it can change from one person to the other.

Regards,

W.

Hi,

Thanks for the reply, initially I thought I will have to go to some office(Arbeitsamt or KVR) to get permission to work as freelancer.

Some more questions.

if you work as Selbständig you will need to charge VAT on top of your invoices.

1) So I just have to transfer VAT to finanzamt and no other tax right? I just saw one offer saying 45Euro per hour all inclusive, so it looks like I will pay VAT from this amount and not charge on top of it, how much % VAT would it be?

3) Do I still have to pay rente versicherung, what if I do not want to pay it, whom to inform or how to do it?

4) Other than VAT, rente versicherung and kranken versicherung is there something else which should be deducted to calculate my net income?

Thanks in advance.

Best Regards,
-inditrozen

>>>>1) So I just have to transfer VAT to finanzamt and no other tax right? I just saw one offer saying 45Euro per hour all inclusive, so it looks like I will pay VAT from this amount and not charge on top of it, how much % VAT would it be?<<<<<<

Up to end of 2006 it is 16%. Your invoices have to show "Netto" + 16%x"Netto". The 16% amount has to go to Finanzamt every month for the total VAT you got during the month.

Example:

You have an invoice which you charge yu client 1160€, you have to split it to 1000€ (your money) + 160€ (VAT to Finanzamt)

I strongly advice you to contact a good tax consultant, you need to learn few things to make sure you will handle everything correctly. It is not a complicated job but there are few details which you have to learn. For an example, all invoices have to have certain information to be accepted by the Finanzamt, this is to make it easier whenever you do your final tax declaration.

Sometimes the Finanzamt can ask you for prepayments for the "Einkommensteuer" based on your predictions for your income. In my case I did pay the taxes for 2005 all together few weeks ago after I did my tax declaration. They now asked me to do prepayments for 2006 . The final amount shall be calculated after I make my tax declaration for 2006.

>>>3) Do I still have to pay rente versicherung, what if I do not want to pay it, whom to inform or how to do it?>>>>

I think you have the option not to pay rente versicherung, just stop paying it, that's all. After 3 years if you can't prove that you have more than one customer you might be contacted by BFA to ask you to pay. Check with your Tax consultant for more details...

>>>4) Other than VAT, rente versicherung and kranken versicherung is there something else which should be deducted to calculate my net income?>>>>

Nothing more as far as I know.

>I just saw one offer saying 45Euro per hour all >inclusive, so it looks like I will pay VAT from >this amount and not charge on top of it, how >much % VAT would it be?

i dont think, VAT also would be included in this 45 Euro per hour deal. Because for a normal software company VAT payable to you (as a consultant) is not a burden as such, since the VAT would be finally paid by the end user.

i would suggest you go with a managment company probably outside deutschland, so that both, your invoice to the managment company & their invoice to the software company do not caryy VAT component.

i hope this helps

Hi All,


i dont think, VAT also would be included in this 45 Euro per hour deal.

I have some intermediate company between me and the client. And intermediate company had said that rate would be 45Euro all inclusive. Thats why I think it will be including VAT. Tomorrow I will clarify this.

Are the job offers on internet mentioning hourly rate always are including VAT? Or they are exclusive and we have to charge VAT on top of it? Because in the offer text it is never mentioned.

i would suggest you go with a managment company probably outside deutschland, so that both, your invoice to the managment company & their invoice to the software company do not caryy VAT component.


Do you know any such Management company, with it I would be able to save VAT. And do you know how much they charge normally.

Thanks in advance.

What is with Krankenversicherung if you do not pay it?
What if you need doctor???
If you would pay KV how to calculate it?

What is with partly freiberufler?
If you work normal and do something aside as a freelancer?

Are the job offers on internet mentioning hourly rate always are including VAT? Or they are exclusive and we have to charge VAT on top of it? Because in the offer text it is never mentioned.

--> Yes. as far as i know, they are quoted exclusive of VAT. As i told you before, for e.g., if an agency/Management company brings a consultant to a german company, the invoice does not carry VAT legally.


Do you know any such Management company, with it I would be able to save VAT. And do you know how much they charge normally.

Pl. give your email id here, i shall contact you.
i have been with this Ireland based Management company for more than 2 years. their service has been very good till now. they charge 5% flat.

What is with Krankenversicherung if you do not pay it?
What if you need doctor???
If you would pay KV how to calculate it?
i am always with Private Krankenversicherung, so i dont know the answers, if i do not have KV, other than the obvious answer that you have to pay yourself. :-)

but if you have Private Krankenversicherung, then as a freelancer, you have to pay Mandatory Nursing care insurance(die Pflegeversicherung) yourself. that is the only other difference besides the obvious one that you pay completely. No employer contribution !!.

What is with partly freiberufler?
If you work normal and do something aside as a freelancer?


i dont know about this case.

Hi kalakkal,

My email id is inditrozen@yahoo.com.

Best Regards

Hi,


Is it possible for software programmer to register as Freiberuflich or he has to register himself as Gewerbe?

My tax consultant told me that Computer programming is not part of Freiberuflich, I should go to Gewerbeamt in KVR and register myself. Is that correct? Or it is having some exception by which programmers can register themselves as Freiberuflich?

Differences between Freiberuflich and Gewerbe are as following.

Gewerbe:-
Selling Goods

Disadvantages:
Trade Tax
Pay VAT upfront (possibly)
Balance Sheet (possibly)

Registration: Gewerbeamt, KreisVerwaltungReferat

Freiberuflich:
Selling Knowledge

Requirement: Professional Skills

Traditionally: Doctors, Architects,
Teachers, ENGINEERS, BUSINESS
CONSULTANTS and SIMILIAR.

Registration: only in Finanzamt.


Best Regards,