Tax advice for freelance English language teachers

Can anyone tell me how much tax a freelance English teacher should pay or where on TT I can find the info? Thanks guys!

For professional advice send an email to TT advertiser Thomas Zitzelsberger. He'll give you a free quote for how much he charges, no obligation to actually use his services. See also the related topic: Taxes and the freelancer in Germany.

Work on around 45-50% of your income going out again in taxes, insurances, etc.

Rules are different for freelancers, so the 50% thing doesn't apply. The only tax you pay (unless you register for MwSt) is income tax, which is tax-free up to around 7,500 (before further allowances for expenses etc) and then jumps to 16% for each additional euro, a figure that rises as your income increases. You don't pay ANY health insurance, unemployment insurance, pension, church or any other such social taxes. If you want health insurance or a pension etc then you must arrange this privately and must pay for this yourself, although these expenses can increase your tax-free allowance.

Hi,

I am working as a freelance english trainer and have just recieved a tax form and also have been told I must do my tax every month. How do other people do this? Do I need a Steuerberater? Are there any recommended ones?

Will I ever understand german tax? I guess not.

I am looking for current advice as I believe that the system has changed yet again.

You most likely need a Steuerberater.. they will save you more money than they cost most of the time.. I use Thomas Zitzelberger like Editor Bob has suggested above and he is good.

I second Hutcho's advice. A tax advisor will do all the mind-numbing paperwork.
All you have to do is supply the details of your income/expenditure on a monthly basis.
A good tax advisor will also take on all correspondence with Inland Revenue leaving you
free to get on with the more important task of client acquisition.
You have got to avoid allowing IR to set prepayments which can be
astronomical - and this is only avoided by your contacting the IR before they contact you!

Hello!

I think you guys get this questions a lot and i already was searching through the board but could not get a good answer.

I am German and my wife is a graduated English Teacher from the US living with me here in Germany.
Recently she got a job offer from a company and they offered either to hire her full time for 20h a week or to work as a freelancer.
I am currently on tax bracket 3 and she will be 5 and therefore paying 50+% tax if she takes the full-employment position. In addition, currently she has family health insurance status with me.

Could you guys tell me what the situation will be like if she would work as a freelancer?

How much tax would she pay?
Can she still be family health insured with me or is there a limit where she would have to get her own insurance?
What does she need to set up the freelancer status?

And what is a current market hourly wage for professional english lessons to charge to a company?

We really would appreciate any help on the current situation..

Markus

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If she is a freelancer she will be able to earn up to €400 a month and remain on your health insurance. After that she has to pay her own.

Tax is also payable on freelance earnings - she will be able to keep receipts, possibly claim for Arbeitzimmer, travel, meals away from home etc and declare her earnings and expenses when you do your tax declaration at the end of the year.

Above €400 she will also have to pay pension contributions as a freelancer - currently 19.4%. This has been enforced since 2001.

She doesn't need a Gewerbeschein. Depending on how much she earns she may become Mehrwertsteuerpflichtig.

If she is freelancing there will be no holiday pay, and she will have to deal with cancellations (how to charge for these).

I am a Canadian in Düsseldorf on a Youth Mobility Visa. I plan to freelance as a business English teacher for a few months and was wondering what was a fair wage (I have an MA in Sociology) and what the tax situation is. Do I need to pay taxes if I'm only here for a few months? Do I need to get German health insurance even though I already have a detailed traveler's insurance plan?

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I am in Germany looking for work as an English teacher but a lot of the offers I have had have been for Freelance positions. I would like to know what sort of wage would be good, how much tax and everything comes out of it, and what dept. I have to go and see to organise becoming a free-lancer. I really have no clue about working for myself, as I have been employed by firms before abroad and in the UK. Also, what happens if you are employed by a firm and then also do a freelance work as well?

Thank you for any advice.

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Hi folks -
Great forum - a fountain of interesting and useful info. I have a question regarding tax in Deutschland. I am moving over to Stuttgart in mid Sept to live with my girlfriend - at the moment my German is pretty basic (Im am working on improving this) however with limited verbal and written German communication skills I know my job options are fairly limited...I have been looking into the whole language school shenanigans and I am aware of the whole lack of contract situation with them and how this affects your tax. My girlfriend keeps telling me that without a contract I would be crazy to work for them as I would have to pay my own health insurance etc and I would end up making tuppence for my effort. Is this the case? Any freelance teachers here who could educate my on the the whole tax issue? Is it worth the bother, (as in the teaching)? I am of the opinion that freelancing me lead to a contract after a couple of months if you prove to be a good teacher. I guess there are always some menial jobs out there, is a trip to the Arbeitsamt advisable?(even with very limited German!). Thanks very much, look forward to reading the replies

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Well, first thing first. Don't expect to just walk into an EL teaching job (let alone one offering a contract, full time work and top rates of pay in the field). You also can't expect people to say it'll suit you as we are all different.

I do some but, like most of my colleagues, it's a sideline, not my full-time gig. Different schools operate in different way and offer vastly different rates. But chances are that you'd be expected to be freelance / self-employed.

Whether that's good or bad is a matter of opinion. Some people find it important to have an employer guaranteeing employment, paying healthcare and other social taxes etc. Others (like me) actively don't want that. Some people want 40 hours a week work. Others actively seek just a fraction of that.

Same applies to income generating capacity. Rate of pay vary. Hours offered vary. One person's good / adequate pay rate is another person's "wouldn't get out of bed money" according to their personal circumstances, value judgements, qualifications etc.

By and large, the profession is best suited to the footloose and fancy free, the affluent who have made their money, the second earners and those without overheads (eg. the time and costs of getting to clients). I could certainly live off the money from just a couple of days a week - but I have low outgoings. Someone with dependents may find even full time work not enough and with not enough security.

Your tax is subject to the same rates etc as an employee and you can get the usual deductions. You are responsible for your healthcare payments (but it is tax deductible). You can offset the costs of your work (eg. home office, transport) against your income etc.

I have a couple of questions though that maybe you can shed some light on???

I am wondering about the whole VAT thing. I work for Inlingua and a small, family owned company. I do not think either charge VAT, so I therefore cant charge VAT as well. BUT, I have heard that when I make over 17,500 euros per year, I must charge VAT. Is this right? And, do you know if it is 17,500 total or per company that you work for.

Also, do you know anything about what expenses you can deduct from the total income per year when doing taxes? I would like to deduct expenses for my monthly bus ticket, private health insurance, Internet costs, any paper, teaching materials, snacks and food for class, part of the telephone bill (I heard 70% can be deducted) and of course all other bills relating directly.

For the final income total, do you know if I take my total income minus 19% pension tax from Germany, 8% Solidarity tax (for the east and west Germany) and then just the general income tax amount and get the final amount I keep!!! I heard different things about what tax we must pay.

Any advice would be great. We have a tax consultant, but we are not meeting with her until next year. I will not make enough money this year to even have to pay taxes (under the 7600 euros or so)

Thanks so much!!!

Faithanns82

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I suspect that you will probably keep being told different things with this sort of question - therefore, you may need to your adviser now. At the very least, buy one of your teaching colleagues a meal and get them to explain how it works.

Basic principle on income tax (probably). I am assuming you are self-employed (but you don''t say if your tax status is freelance or running a small company). In general, you collect your income, offset your costs, and you wait for the authorities to work out how much tax to pay after they apply the relevant rates and give you relevant allowances. In future years, they will probably expect you to make a quarterly payment based on what you paid previously and a settlemwent of difference is made at the year end.

Other income is also taken into account - eg. savings account interest.

There's loads of stuff on this site about the tax system and this includes some links to excellent sources of (English language) information about the basics of the system.

My general opinion. It's your money, your income, your livelihood. If you are self-employed, nobody else is going to bother doing it for you (except Finanzamt administering their processes for the state benefit). So educate yourself - know the basis such as how the tax rates apply and how the pension system might work. And use your adviser as much as possible (but make sure you understand what they are doing for you and why).

You are meant to register for VAT if your turnover (incoming + outgoing money) passes the limit (though you'll be doing well as a English teacher if you do that). Once you do, it has to go on all your invoices.

You should consider the teachers pensions issue carefully if you freelance. A lot of steuerberaters don't even know it exists.