Freelance while employee

22 posts in this topic

Hello

 

Before starting my topic description I would like to say hello to all the community. It is a pleasure to be part of Toytown Germany.

 

About the topic, I'm a Product Designer enrolled with a company in full time contract as a Praktikant. A few days a go I was approached by a start-up company also in Germany interested in having me as a consultant for the development of their first in house Product.This would be a short term project as the timeline points for a possible lunch in the beginning of the year, so we are talking here about 3 months. So from the law perspective it would be a "freelancer" job and not a "self-employed worker"...I think.

 

The odds in getting a permanent position with the company that I'm working at full time are good so I would like to keep this position at least until February 1st (when my full-time contract comes to an end). But this project is also very interesting from the perspective of experience, network and also extra budget.

 

What I would like to ask is if it is possible to do the external consultancy work and still be enrolled in my full time work, or might be there any issues related with Registration, Taxes ( My Praktikum is not mandatory by the university so I'm paying a percentage on taxes)or Insurance (I'm insured by TK with my current employer).

 

I hope this is a clear description, and thanks for the advices.

 

Best Regards

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I think it would also depend if you have a restricted visa or not.

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I can't answer all your but a part.

 

OP seems to be Portuguese, so there won't be any visa problems.

 

"Freelance" is actually a subset of "self-employed"; it's a particular type of self-employment, which is a little difficult to get through the Finanzamt - there's a catalogue of professions which are accapted as genuine freelance, and they all have to do with using your own mind/skills to performa a service. That said, from the sound of the job, you could probably push it through as freelance - just be careful when wording the description.

 

There is nothing in itself preventing your from working on the side in a second, freelance job. I'm not sure if there are specific rules pertaining to doing additional work to a Praktikum (considering what they pay, there shouldn't be)...but in normal work situations, you are supposed to get permission from your boss to do an extra job on the side. Essentilly, bosses have th right to stop you doing something else if it will interfere with your ability to do your main job (if you miss days at work, or arre very tired, or taking calls all the time/working on the freelance thing while in yuor main job).

 

The main issue for you is that it will complicate your tax return, so that you may need to get a tax advisor (which could be rather expensive related to the money you bring in) - for the freelance work, you'll get paid gross and need to include that in your tax return in addition to your other earnings and subsequently pay a little extra tax.

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Thanks for all the answers so far :), really appreciate

 

Yeah I'm Portuguese so no problem with the residence permit, being a EU citizen I can do my professional activity in any one of the states members.

 

What would you say its the first thing to do, speak with my boss about it?

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I would suggest you read your "praktikumsvertrag (Contract)" See if there is a clause regarding second employment. If there is no such entry, you are in the clear. You do not need to notify anyone if this point is not written in the contract. The only second point that could be in the contract is the point of working on projects that come in direct competition to the company your doing your Praktikum with.

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I have a query that's somewhat connected to the OP's question - hope I'm not hijacking the thread by asking it!

 

I'm part-time at my job1 and thinking about going freelance here in Germany with my job2. The question has to do with the medical insurance: if my job1 is paying for my medical, do I have to pay something on top of what they're paying if I go freelance (supposing I'll be earning more than in my job1), or switch to paying medical by myself (which I'd like to avoid for obvious reasons), or something third that hasn't crossed my mind yet?

 

I'm asking because I have a friend who was employed by a language school, but also freelancing on the side. Lang. school was paying for his medical, but at one point he got a call from his medical insurance house, demanding to pay some ridiculous amount on top of what his school was paying, because he was earning more as a freelancer. He asked a friend who's in the insurance business how to proceed, and got told that he might be in the gray zone, but that he's not really sure. Very soon afterwards he got a full-time job somewhere else so it stopped being an issue, which consequently made him useless for answering my question. :D

 

I'd appreciate any help if someone knows the answer to this one!

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How much tax would I pay for the income that comes from freelancing on the side, while at the same time being full time employed? 

 

Are there any links/pointers for this specific situation online?

 

Thanks in advance!

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17 minutes ago, infraredgirl said:

How much tax would I pay for the income that comes from freelancing on the side, while at the same time being full time employed? 

 

Are there any links/pointers for this specific situation online?

 

Thanks in advance!

 

This would definitely be of interest to me, too.

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  1. Go to the Parmentier wage calculator: http://www.parmentier.de/steuer/steuer.htm?wagetax.htm
  2. Enter your yearly gross salary.
  3. Write down the amount next to "remains as taxable income per year (lump sums deducted and rounded)" =  taxable part of salary
  4. Write down the amount next to "Sum of the taxes"
  5. Add your  yearly freelance profit to the amount from point 3. Enter the resulting amount into the Parmentier income tax calculator: http://www.parmentier.de/steuer/incometax.htm
  6. Write down the amount "Total tax burden" in the column "for singles"
  7. Deduct the amount from point 4 from the amount in point 6. The result is the extra tax that you will pay on your yearly freelance profit.
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Would you be able to advise me for the following situation? 

I work 50% TVL-E13 at the university, and do freelance proofreading/copy-editing for a journal published by universities (I'm paid at an hourly rate/in lump sums depending on the work) and do not earn more than €7000 per year for this second work. I always have to tell the party that pays me if I am umsatzsteuerpflichtig.

I just started the first work, which I see as my main work, in April, and have been doing the second side job since 2015.

Would I have to pay taxes now for this second work, starting from April? Should I tell the party paying me for the copy-editing task that I am now umsatzsteuerpflichtig?

Thank you in advance for your advice.

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8 minutes ago, Sen Te said:

Would you be able to advise me for the following situation? 

I work 50% TVL-E13 at the university, and do freelance proofreading/copy-editing for a journal published by universities (I'm paid at an hourly rate/in lump sums depending on the work) and do not earn more than €7000 per year for this second work. I always have to tell the party that pays me if I am umsatzsteuerpflichtig.

 

Do you charge Umsatzsteuer/VAT or not? That's the important question. 

 

8 minutes ago, Sen Te said:

I just started the first work, which I see as my main work, in April, and have been doing the second side job since 2015.

Would I have to pay taxes now for this second work, starting from April?

 

If you'd charge VAT you'd have to pay it to the Finanzamt until the 10. of the next month. 

 

Apart from that you will have to do a tax declaration for 2017 in 2018 and the probably pay income tax – calculated on your total income in 2017.

 

8 minutes ago, Sen Te said:

 

Should I tell the party paying me for the copy-editing task that I am now umsatzsteuerpflichtig?

 

Are you or aren't you? 

 

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Hi Someonesdaughter, thank you for your reply. 

Thus far I do not charge VAT.

I think that's the problem: Now that I've started this 50% job, I'm not sure if I should start charging it, given this change in income. Before this, I was a full-time student (MA, 2013 to mid-Aug 2016) and worked as a HiWi from Sep 2015 to March 2017 (and was still paid until May 2017 because of overtime work). When I started to do the proofreading/copy-editing (PCe) work, the lecturer in charge of it at the university said I probably didn't charge VAT. These were very small jobs so he was probably right. I was also earning mostly under €450 per month as a HiWi, so I want earning much per month. 

After the MA, in October 2016 I worked more hours as a HiWi, and was earning more (~€900 brutto, and I made all the necessary social contributions).

Should I have already started to charge VAT for my mini job of PCe at this point?

 

I just started my 50% job at another university in April 2017 (teaching and doing my PhD), and have continued to do the PCe work because they are rather sporadic and do not affect my 50% work. And as you can imagine, I'm paying the required social contributions - I do this whenever I need to, so I'm not trying to avoid paying what I'm supposed to pay to the state.

 

I just want to get things right and follow the correct rules, but at the moment (and after looking on the Web for answers), I'm still unsure as to what I should do. I have to write one bill now (only for €120) and I'm stuck because I'm not sure if I should start to charge VAT.

 

By the way, maybe this is important: I'm not registered as a freelancer. I read that I'd have a new Steuernummer if I'm registered. Is it only then that I can charge VAT?

In addition, a lady at the Rentenversicherung told me that since the earnings are low, I would not be required to declare them when doing my taxes. Is this in any way related to the VAT?

 

Thanks so much again, I look forward to your advice.

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You only need to charge VAT if your freelance earnings is over 17.500€ per year. VAT is not the same as your income tax -- you'll (probably) have to pay income tax on the freelance income, but it sounds as if you don't have enough freelance turnover to trigger the VAT requirement.

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3 hours ago, Sen Te said:

Thus far I do not charge VAT.

I think that's the problem: Now that I've started this 50% job, I'm not sure if I should start charging it, given this change in income.

 

No. :)

 

Your 50%-job-income has nothing to do with VAT. VAT is only relevant with your freelancing activities.

 

You have to charge VAT when your freelance turnaround is more than 17.500 € per year, you can volunteer to charge VAT if your turnaround is less (VAT-charging clients prefer that because they can reduce their VAT by subtracting yours as you can deduct all VAT expenses too) but that's voluntary.

 

3 hours ago, Sen Te said:

Should I have already started to charge VAT for my mini job of PCe at this point?

 

No. :) VAT is only connected to your freelance activities. 

 

3 hours ago, Sen Te said:

I just want to get things right and follow the correct rules, but at the moment (and after looking on the Web for answers), I'm still unsure as to what I should do.

 

Watch your turnaround, as long as ist less than 17.500 everything is fine and you don't charge VAT. When your get above 17.500 you have to start charging VAT the following year (and do

a 'Umsatzsteuervoranmeldung' monthly).

 

3 hours ago, Sen Te said:

By the way, maybe this is important: I'm not registered as a freelancer.

 

You need to be registered and you need to do a yearly tax declaration. Besides VAT there is income tax. Income tax is calculated based on your taxable income and that taxable income includes all sorts of income – freelance and employee income in your case. Your income tax on the employees part is deducted automatically, but your freelance income is unknown to the tax office ...

 

3 hours ago, Sen Te said:

I read that I'd have a new Steuernummer if I'm registered. Is it only then that I can charge VAT?

 

No, forget the VAT thing now. But doing freelance work without being registered could get you in trouble anyway.

 

3 hours ago, Sen Te said:

In addition, a lady at the Rentenversicherung told me that since the earnings are low, I would not be required to declare them when doing my taxes. Is this in any way related to the VAT?

 

No, it's not related to VAT, it's related to income tax. How small is your freelance turnaround?

 

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Thank you for your advice! 

My income from the side job is perhaps between 3k and 7k per year. It depends on how much work is available. Is that all right? I have an Excel file to track the earnings but cannot find it at the moment. I recall it not exceeding 7k last year, which a friend told be is vital (that is, not to exceed 7,400€ or a similar amount per year).

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9 minutes ago, Sen Te said:

Thank you for your advice! 

My income from the side job is perhaps between 3k and 7k per year. It depends on how much work is available. Is that all right?

 

No, it definitely has to be taxed! And you need to register asap.

 

Quote

I have an Excel file to track the earnings but cannot find it at the moment. I recall it not exceeding 7k last year, which a friend told be is vital (that is, not to exceed 7,400€ or a similar amount per year).

 

There is the amount ("Grundfreibetrag") of 8.820,00 € in 2017 that is (income) tax free - but that is for all taxable income and with your total income you are clearly way above that! 

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Okay. I'll look for a Steuerberater. I have bought books and other things for my studies and work, and I heard that these should be included in the tax returns - is this right? It would certainly take a while to gather these - unfortunately I didn't know that these would come in useful re. taxes.

I also moved to another city for my current job, and I've kept all the receipts related to the move this far.

I hope I'm not missing out on anything else. 

Any further advice would be very much appreciated!

Thanks so much again! 

 

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