Want to know how to pay freelancer taxes in Germany? Learn how you can easily file taxes as a freelancer in Germany – all by yourself in simple English and without spending thousands of euros!
As a freelancer in Germany, you may find the German tax system too complicated to manage by yourself. In this post, we will introduce an online tax tool dedicated to international freelancers in Germany.
Continue reading this guide to learn how Sorted can help you file your taxes as a freelancer in Germany (in English).
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What taxes do freelancers pay in Germany?
Here is an overview of German taxes for freelancers.
Freelancers in Germany must pay the following key taxes:
- VAT (Umsatzsteuer)
- Income Tax (Einkommensteuer)
As a freelancer, you will have to pay both of these taxes to Finanzamt ‘in advance’.
- Advance VAT Report (Umsatzsteuer-Voranmeldung)
- Income Tax Prepayments (Einkommensteuer-Vorauszahlungen)
Read our beginner-friendly guide to German freelancer taxes here.
What exactly is Sorted?
Sorted is an online tax tool created to serve the tax needs of freelancers living in Germany. It was developed by Zeitgold, a leading fintech firm that provides digital bookkeeping platforms for small/ medium businesses.
Sorted is available in simple German and English.
This tool single-handedly takes care of ALL stages of being a freelancer:
- it guides you through your registration process as a freelancer with your local Finanzamt
- it helps you keep track of your expenses and invoices
- it helps you file your Income-tax return (Steuererklärung), Annual VAT return (Umsatzsteuererklärung), Annual profit report (EÜR), Advance VAT declaration (Umsatzsteuer–Voranmeldung)
- it also gives you access to on-demand help from your dedicated tax consultant at an additional charge
Click here to try out Sorted for FREE!
Let’s take a look at who can use Sorted, and how you can prepare your freelancer taxes in Germany on your own and without paying an insane fee to a tax advisor.
Who can use Sorted?
Sorted is a tool for freelancers, especially expat freelancers in Germany. You can use Sorted if:
- You want to become a freelancer in Germany
- You are a non-German-speaking freelancer who would prefer to use an English tax tool
- You are registered as Kleinunternehmer in Germany
- You charge VAT as a freelancer in Germany
- You have clients on Upwork or similar online freelance portals
- You have clients in or outside of Germany
- You are a sole trader selling goods
- You need occasional professional advice from tax consultants in Germany
Who cannot use Sorted?
Unfortunately, Sorted does not support UG or GmbH companies.
How can Sorted help you with freelancer taxes in Germany?
Sorted is a simple but powerful tool for freelancers in Germany. It can single-handedly support your freelance journey in Germany right from the beginning.
It helps you register as a freelancer in Germany
The first step to becoming a freelancer in Germany is to fill up a form called ‘Fragebogen zur Steuerlichen Erfassung‘.
If you are considering becoming a freelancer in Germany, you can simply sign up with Sorted to register yourself as a freelancer with German tax authorities.
They offer a step-by-step guide in English and directly send the finished tax form to your responsible Finanzamt. It is a free service provided by Sorted.
Click here to register as a freelancer in Germany (completely in English)
It helps you track your freelance expenses and income
When you log into Sorted, it will ask you to add expenses and income.
For adding income, Sorted UI lets you upload documents in various formats. You can also create invoices for your clients within Sorted and directly email them to them. When your client pays the invoice, it’s automatically added to the income.
It is also super easy to add expenses. Sorted comes with a number of predefined categories which make it simple to group your business outgoings.
If there are some recurring expenses you can simply select the frequency of the expenses. This feature is particularly handy because it automatically adds fixed expenses such as monthly internet or phone bills, legal insurance payments etc. You don’t need to add a new expense manually each month.
It automatically prepares your German freelancer tax reports
Your tax reports are automatically prepared by Sorted based on the income and expenses you enter. You submit your tax reports electronically to the Finanzamt through Sorted.
Sorted helps you prepare and file your:
- Advance VAT declaration (Umsatzsteuer-Voranmeldung)
- Annual VAT return (Umsatzsteuererklärung)
- Annual profit report (Anlage EÜR)
- Income-tax return (Steuererklärung)
The tool will guide you through adding your income and expenses and will automatically prepare your tax reports.
It directly sends your tax reports to Finanzamt (without an ELSTER account)
Sorted submits your tax reports directly to the Finanzamt through the official online ELSTER interface. It is connected with the Finanzamt through their official software provider, ELSTER. There is no need for the user to create an ELSTER account or certificate for submission.
Once you submit your tax reports via Sorted, you will immediately receive a document confirming that the reports have been sent to the Finanzamt. You can also download your tax reports immediately and anytime in future.
PS: It may take a few weeks or even months before the Finanzamt reviews your tax reports and sends you a tax assessment via post.
It gets you on-demand help from certified tax consultants in Germany
Even though Sorted is intended as a DIY tool for freelancers in Germany (albeit with several step-by-step guides and knowledge base), there are going to be moments when you may want to get professional tax advice.
For this, Sorted has a database of tax consultants in their network. When you sign up on Sorted, they automatically pair you with a dedicated tax firm. This tax firm supports you on demand and whenever you need additional guidance or reports for your specific case. Your tax consultant on Sorted can answer your complex tax questions in an easy-to-understand language, in English or German.
The consultation can be a simple ‘Ask a Tax Question, ‘Schedule a call’ or ‘Review Your Tax Report’ etc. Each consultation is charged at a fixed rate upfront so you always know how much you will pay to your tax advisor.
Freelancers looking to renew their German freelancer visa can also easily get a certified profit and loss statement – an important document required for visa extensions for international freelancers in Germany.
How much does Sorted cost
You can take advantage of Sorted’s several features even with your FREE account. Sorted offers THREE types of subscription plans for freelancers in Germany.
1) Starter Plan: With this plan, you can register as a freelancer for free. You can also take advantage of Sorted’s several bookkeeping features with this plan e.g. connect your bank account, create invoices, and track income and expenses for free.
2) Kleinunternehmer Plan: This is a new subscription plan for small businesses that earn under 22,000 EUR per year. With this plan, Kleinunternehmer can file its annual tax reports in Germany. The plan is priced at €80 per year including VAT.
3) Pro Plan: The Pro plan is suitable for freelancers who have to file multiple tax reports in a year – such as monthly or quarterly advance VAT reports. Pro plan subscription costs €60 per quarter (€240 per year).
Check out the full Sorted features and pricing here.
If you are looking to manage freelancer taxes in Germany, it is totally worth trying out Sorted. You can expect to pay a maximum of €240 per year with Sorted, which is a fraction of the cost of a Steuerberater in Germany.
Click here to try Sorted for FREE