Whoever becomes self-employed either runs a business or belongs to the liberal professions. The distinction between commercial and freelance activity is important, as some special features apply to the liberal professions.
For example, there is no need to register a business for liberal professions. In addition to income tax and under certain circumstances also turnover tax freelancers do not have to pay trade tax.
Therefore, please notify the intended freelance activity to the Tax Office informally at least four weeks after commencing the activity.
Due to the special features applying to freelancers, it is important that at the beginning of your self-employment you get the Tax Office to establish in a binding manner that you are a freelancer and do not pursue a commercial activity. The Tax Office is responsible for the clarification. However, it is not a formal recognition of the freelance nature by the Tax Office, but a classification as a freelancer in terms of tax law. However this type of determination by the tax authorities involves very high requirements.
Note: When assessing whether an artistic activity is carried out as a freelance activity and not commercially, in case of doubt it might be helpful to hear the opinion of an expert in the field. For such an expertise, you could contact the Association of Professional Artists (Verband Bildender Künstler und Künstlerinnen Württemberg e.V.) (VBKW).
The personal work input is a significant distinguishing factor of a freelance activity compared with a commercial activity. If freelancers work in a managing function with personal accountability due to their own special knowledge, then the involvement of professionally qualified manpower, who is possibly also working as a freelancer, does not result in a commercial activity.
The managing function with personal accountability has to cover the whole activity and not only a partial aspect of the job. By management, we not only mean the laying down of the foundations for the organisation and execution of the activity, but also the decision-making and monitoring of fundamental issues in accordance with specified principles, i.e. the full technical responsibility for each individual order.
There is also the possibility to work both as a freelancer as well as commercially. Your tax consultant or your lawyer or even the Institut für Freie Berufe Nürnberg (IFB) will give you more detailed information on these and other matters.
A freelance activity however cannot be compared with a person working for a company on a freelance basis.
The German original version of this text was drafted in close cooperation with the relevant departments. The Finanzministerium, represented by the Oberfinanzdirektion Karlsruhe, released it on 21.08.2019. Only the German text is legally binding. The Federal State does not assume any liability for the translated texts.
In cases of doubt or if you have any questions or problems, please contact the relevant authorities directly.