Need a pointer on tax for relocating to Germany

37 posts in this topic

Posted

Hi all,

I've recently moved to Berlin and have been living off savings whilst generally just hanging out and enjoying a break from work for nearly 2 months. I'm living in a WG and area that I've fallen in love with and have decided to stay pertinently (I've wanted to get out of the UK for a while now) and that would mean moving my business from England to Germany.

I speak almost fluent german as I learned german at school/6th form and had a german partner in the UK for many years, and now live with other native germans, so there is no language barrier. I have sorted a bank account and all the stuff, but before I can start working again, I need to know the deal with Tax! :blink:

I give private music lessons and so could start working fairly quickly. However my income was/will be extremely low... 100% going to be below tax threshold for at least the first year, but that's OK! I survive on very little money.

This means I won't actually pay any tax, but obviously I still need to fill out a return and getting a steuerberater is not an option as I simply cannot afford one. :(

So my question is... what do I actually do to work legitimately in terms of tax? Do I go somewhere and register and then they send me a welcome pack or something like in england? If not, where do I get tax return forms from? How do I switch from the english tax system to german?

I'm experienced with doing my own tax returns in the UK, but just don't know what to do in germany....

Any "getting started" help on the subject would be highly appreciated!!!

:D

Thanks in advance!

James

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Posted

Hi James, welcome to TT!

About the most important thing anybody new hear has to learn is where the "search" box is and how to use it - take a quick peek at the top right of this page and see if you can locate it.

Now try entering things into it - maybe "freelancing" for a start - you will come up with loads and loads of results, which you can read through and find a LOT of useful information.

Also, since you speak German "almost fluently" why not simply go along to your local Finanzamt and ask them all of the questions you feel necessary?

(forget the "welcome pack" though - this is Germany :D )

And last but not least, don't forget that you will need to get health insurance!

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Posted

Robinson100 is right. You'll need to get in touch with your Finanzamt anyways in order to register as a freelancer (Selbstständiger) and obtain your tax IDs (your Steuernummer and Steueridentifikationsnummer). I recommend you do this in person, i.e. get up early, go to the Finanzamt and speak to someone at the Infozentrale, which is kind of the central customer service board (at least at FA Kreuzberg, but I guess it's similar all over the city). This way you make sure you get all your sign-up paperwork done and you'll also have a chance to talk to someone directly to answer some of your questions. Btw, you should consider opting into the Kleinunternehmerregelung for very small businesses, which saves you the hassle of VAT return, and allows you to charge your clients VAT-free services.

As for filling out your tax return, go ask your German friends to help you. Pretty much everyone who grew up here knows how to handle a simple tax return, and walking a newcomer through it takes an afternoon's time and some cups of coffee. If anything is missing or filled out the wrong way, the Finanzamt will let you know soon enough, and next year you'll be able to do it yourself.

Good luck!

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Posted

Please see Freelancing as English Teacher for details on what the steps are to register as a freelancer.

Since you will also be a teacher, you also fall under the law that you have to pay public pension contributions, at the moment they are 18.9% of your profit.

Regarding your tax return, please see the turquoise section of the TT Elster wiki (that's the one for Kleinunternehmer) for step-by-step instructions.

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Posted

Thanks for the replies!

To clarify, I speak passable german but know NOTHING about german government. This is all new to me... I didn't even know that there were places called the Finanzamt. I tried searching but just got thousands of unrelated pages come up about people buying cars and immigration from america and I'm quite slow so gave up and just thought I'd just ask!

You've REALLY helped me out with the heads up on the Kleinunternehmerselbstständigkeit.... :D

If I understand correctly, I just need to keep a basic but comprehensive profit/loss book of relevant business expenses and earnings, I don't need to charge MwSt (but also can't claim it back on business purchases like music gear), the tax return is pretty easy and I just need to go to the Finanzamt, get a steuernummer under the Kleinunternehmer category, start a profit and loss book, and bobs your uncle?

If so, that's stupidly easy, painless, and I don't understand why tax seems to be such a confusing, mysterious and complex deal in germany... or am I missing something massive here? :unsure:

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Posted

One more thing: Not sure how this is handled in the UK, but in Germany you're required to keep all your tax-relevant records (i.e. all invoices and receipts you issued or received) for at least 10 (yes, ten) years. It's also recommendable to get at least superficially used to the basics of German accounting principles, such as the "Einnahmenüberschussrechnung" or EÜR (a simple profit/loss sheet that will be part of your tax return) and the categorization scheme for business expenses that's reflected in the tax return forms as well. For instance, expenses for office material will go into a different column of the form than, say, phone and Internet costs, travel expenses or insurance costs.

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Posted

Thanks for the heads up on teachers tax... I'll look into that.

However, I've already registered with my local doctor (just using my EU health card) and have already seen used their services twice without any hassle... I get monthly B12 vitamin injections as I am a triathlete and like to keep my B12 levels high for good performance. I practice optimum nutrition (B12 is part of that) so have absolutely no fear of chronic illness (which is my belief, your opinion may be different) and I buy my own medication (my B12 costs €15 per year for the best quality stuff and vitamin D during winter costs about the same). In the case of being run over by a car, if I live to tell the tale, won't my EU health card cover emergency hospital care in the event of that kind of stuff?

In terms of medication etc, because of my lifestyle, previous bad experiences with doctors and taking medication, and also spiritual beliefs, I now refuse to take any pharmaceutical product except hydroxocobalomin (clean B12) and would not ever consider any type of surgery, so unless there's a type of insurance I can get that literally just covers me for emergency care due to accidents caused by others, then I don't think I'd be very interested.

I'm not sure what the deal is here with health insurance IE why it is so much, it would be substantially more than my income after rent!

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Posted

won't my EU health card cover emergency hospital care in the event of that kind of stuff?

No. The EHIC is only intended for vacations and limited-term visits. As soon as you establish residency in Germany, you are required to purchase BAFIN-approved health insurance. If you've been paying into NHS, you can get into the public system, which should be substantially cheaper at your low income level than a private policy. As a freelancer, you'll have to pay both the employer's (7.3%) and employee's (8.2%) share, however, for a grand total of 15.5% of your gross income.

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Posted

As a bit of an aside from the title topic, I wonder if you have already registered the fact that you live in Berlin? If not, you had better do so pronto!

You are expected to have health insurance coverage from the time you register, and in some cases they ask for back-payments if you "forget" to get insurance straight away - basically, whatever you do, they´ll get you in the end!

(once again, feel free to use the search function!)

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Posted

Then you cannot live in Germany.

Working against your will for a thing you don't want (medical insurance) under threat of punishment (legal consequence) is the very definition of slavery. I can't accept that Germany mandates slavery. So I'm going to look into this issue and see if I can find a solution - I'm not someone who complains about the law - because there is always remedy in law when you look for it in the form of exceptions, conditions, loopholes and allowances.

:)

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Posted

For a free quote for private health insurance please contact either:


These guys have already done the research. Why not just ask them?

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Posted

Thanks for the heads up on teachers tax... I'll look into that.

However, I've already registered with my local doctor (just using my EU health card) and have already seen used their services twice without any hassle... I get monthly B12 vitamin injections as I am a triathlete and like to keep my B12 levels high for good performance. I practice optimum nutrition (B12 is part of that) so have absolutely no fear of chronic illness (which is my belief, your opinion may be different) and I buy my own medication (my B12 costs €15 per year for the best quality stuff and vitamin D during winter costs about the same). In the case of being run over by a car, if I live to tell the tale, won't my EU health card cover emergency hospital care in the event of that kind of stuff?

In terms of medication etc, because of my lifestyle, previous bad experiences with doctors and taking medication, and also spiritual beliefs, I now refuse to take any pharmaceutical product except hydroxocobalomin (clean B12) and would not ever consider any type of surgery, so unless there's a type of insurance I can get that literally just covers me for emergency care due to accidents caused by others, then I don't think I'd be very interested.

I'm not sure what the deal is here with health insurance IE why it is so much, it would be substantially more than my income after rent!

There IS an insurance people take out in case they get the blame for causing an accident or injuring someone´s health. It´s called private Haftpflichtversicherung(private liability insurance.).same goes for you - you accidentally knock someone over in the street whilst not paying attention - they crack their skull or whatever, have 6 months in hospital and are maybe paralysed. YOU pay..for EVER, if necessary.

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Posted

Working against your will for a thing you don't want (medical insurance) under threat of punishment (legal consequence) is the very definition of slavery. I can't accept that Germany mandates slavery. So I'm going to look into this issue and see if I can find a solution - I'm not someone who complains about the law - because there is always remedy in law when you look for it in the form of exceptions, conditions, loopholes and allowances.

Well, when you do find this loophole, or whatever you wanna call it, let us all know. I'm sure most, if not all, of us would love to save the hundreds per month we fork out. I could have had a nice little nest egg over the 9 years I've been here, had I known earlier :(

Just goes to show; you think you know everything there is to know after being here for so long, eh? Well, we live and learn ;)

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Posted

I came to this forum in hope of a few friendly pointers to help me in becoming a completely legitimate and hopefully useful part of society in Berlin. However most of your posts have been extremely negative and in some cases actually insulting.

I find nothing wrong or distasteful about what I have previously said and would like to clarify that I would be very willing to pay for an insurance that covered 3rd party and emergency treatment, which is what I'm currently researching to see if there is such a thing because my requirements are different from probably everyone else who has commented here concerning medical insurance...

If any of you for example were to get a chronic illness such as CVD, cancer, diabetes, hypertension (a few of the most common), you would want medical help with pharmaceutics drugs and treatments... I however would not under any circumstances and this is what you are paying for with medical insurance.

So I'm looking for reduced cover because I do not want or require cover for chronic illness, whether that sounds strange to you or not.

Thanks for the help, but I think I'll leave the forum because it doesn't seem to be the friendliest place in general.

-13

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Posted

james - in the UK, because we have the NHS, medical care is not something we need to worry about or put our minds to - we are free to use it or not. Germany has an insurance based medical system, and there is no magic money pocket to cover an unforseen situation.

If you are delivered unconscious to a hospital needing vital treatment, at some point along the way, the transport and treatment is going to need paid for, and that is why here it is a legal requirement to have medical insurance, so that the good people in the medical facilities get their reward. No-one likes to have to pay, and the whole thing must feel a bit byzantine when you are personally choosing to opt out of all that the insurance would cover you for, but it is enshrined in law here, and so it's kind of tough. Unfortunately, there are people who come on here regularly who blame TT for answers they don't like, to things that members of this forum have knowledge about, but no control over.

John g - can he use a form S1 for the first 2 years? Or am I remembering that all wrong...?

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Posted

Instead, you come here and think that it's fine to pay no tax for a year and look for "loopholes" to avoid paying health insurance.

...

The problem is that you don't like the (factually accurate) advice you've been given and are in denial of reality.

...

Do you think we care? If you want to break the law, that's your funeral (possibly literally).

I wasn't going to post again but feel like you have represented me badly here. Firstly I have no intention of avoiding tax and want to get my tax up and running BEFORE starting work... don't know why you thought I was avoiding tax.

Secondly, I didn't say I wanted to find a loophole to avoid health insurance. I said, as I am now aware insurance is mandatory, I wanted to find suitable insurance cover for my needs which includes emergency treatment only and not chronic medication - I'm thinking there probably is such a thing. Car insurance is also mandatory for drivers but you can be 3rd party only or fully comp. I want the least amount of cover to tick the box, that's all.

I'm not trying to avoid tax. I am not trying to find a loophole out of any legal requirements. Please don't put words into my mount.

And this is by far the least friendly forum I've experienced having read many other threads too on tax, health insurance and other topics on Toytown and see how other people in need of advice are insulted and ridiculed.

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Posted

Thanks for the help, but I think I'll leave the forum because it doesn't seem to be the friendliest place in general.

Flounce winner!

Seeya.

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