"Gewerbeanmeldung" for freelance English teachers

sorry to post another thread on this topic, but can anyone give the definitive answer?

If I want to freelance (which I already am doing) should I submit a Gewerbeanmeldung
does this confer any tax advantages? ie If I buy a computer can I get sales tax back
or is that possible anyway? Can I claim for travel expenses etc
I'm teaching English, and I'm also setting up a composing/music
business, so I presume this is intellectual work.

I'm English, have all the paperwork needed to be here, mot receiving Arbeitslosgeld,
as we still have a house in the uk

regards
Steve

You should really get a tax consultant. Try offering English lessons to tax consultants. You might find some work and you'll get some free advice in English.

Advantages and obligations. You can claim tax back on any business related expenses (appliances, travel, even your car) but you are subject to additional tax laws such as VAT, gain and loss reports and corporate tax (depending on your income). I have never encountered any problems with my tax returns but am consindering handing my documentation over to a consultant.

I agree with vicar, you should ask a tax consultant.

Teaching English as a freelancer and Composing are two different undertakings and have to be dealt with each on its own.
Both are (to my knowledge) "freiberufliche Tätigkeit" and dont need a Gewerbeanmeldung. Im assuming that your "music business" means you are working as an artist/musician. If you are planning to build a recording studio and rent it out to others, that would probably be a "Gewerbe" that needs a "Anmeldung".

You can only get sales tax back, if in return you are "umsatzsteuerpflichtig". So if you are writing invoices to your clients with sales tax and you do your regular "Umsatzsteuervoranmeldung" you can deduct the sales tax of bought items (bought for your business of course) from the sales tax you demanded from your clients. (as sb wrote)

hi

I'm not umsatzsteuerpflichtig, so I don't request sales tax on my invoices.
does this mean I won't get tax back on computers and suchlike??

How does this all tie in with a tax number (which I don't have, only been here since sept last. and didn't do any work in Germany)
thanks
Steve

Exactly. If you want to look it up: §15 (2) Nr.1 UStG


You will have to apply for one at your local Finanzamt or ask your tax consultant to do it for you. It´s not just used for VAT but also for your income tax statement.

I went to the Gewerbeschein office and they said that a freelance English Teacher doesn't require this special permit. I visited the tax office to ask about invoicing and they said simply to note your tax number on the invoice and that it's better not to charge MwSt because you get taxed on that even though you hand it over to them.

The way the tax office explained it to me was: say you invoice 100€ and tax of 17€ (for example), total 117€. You have to pay income tax on 117€ AND give that 17€ directly to the tax office.

So you are taxed on money you don't even get to keep!

Some companies insist that your invoice show tax on it - it doesn't have to (said the tax office) but to appease your customer you can simply reflect the additional tax burden in your fee. Companies can never explain why they believe YOU need to show tax on your invoice... and it's because you don't need to.

Regarding deductions... there's more to it than the average tax consultant is prepared for so find one that you are convinced knows what you need. I learned this after some years here. There is a special section for Teachers (just like with the Gewerbeschein) and the other for freelancers and with the right tax consultant you can deduct your computer and pretty much anything and everything work related - as it should be. However, it could depend on your employment "status", which is fairly easy to have altered, within reason, for tax reasons. My immigration office balked at the idea of altering it at first but after a nice letter explaining it from my tax consultant, they changed it right then and there.

And yeah, my tax consultant is a former student. It's a good way to get tax assistance and earn money!

No you don't. Any Mwst is included in your total income, but the money you pay to the Finanzamt is deducted from your taxable income. The only time you will pay tax on Mwst. is if you receive some in December and don't pay it to the Finanzamt till January. If you do this it will be deducted from your taxable income the following year, which is why it is worth paying any Mwst. received in December before the 31st December.

Absolutely what I thought too, and I was corrected very clearly that I had it wrong and that yes, it is unfair, and that yes, it is stupid, and unfortunately yes, it is so. I'd be happy to be wrong about it.

Be happy - you are wrong (or rather they were). Taxes are established on profit. Profit is established from net income less net outgoings. VAT is independent of both these calculations.

Let's say for example that you do €2000 of (net) work and invoice it to your customer. You add 19% and he gets a bill for €2380 total
While doing that work you incur €595 (gross) of expenses. Of this €595, Of this €95 (15.966%) is VAT content.

On your VAT return you show €380 on inputs and €95 on outputs. As a result you have a VAT liability of €285 to pay to the taxman
On your income tax return you have a profit of €1500 (net turnover less net costs) to report for taxation. If you've already consumed your allowances and your marginal tax rate is 20% you pay €300 in income tax. This is not affected in anyway by the VAT elements in your accounts.

Of course, if you had a decent tax consultant he'd tell that it's possible for English lessons to be VAT exempt. If you look at invoices from most language schools you'll notice that you're not charged VAT.