full time employed and side job/incomes

25 posts in this topic

I searched but I failed to find and answer to my question(s). Also some thread are quite dated so I fear info are not updated.

 

I'm an EU expat in Germany. I'm employed full time, permanent contract. Since from selection for this job I made clear to the interviewer that I was involved in a personal project for which I would have been paid. This is a project that I'm doing for a friend of mine who will pay me for this. I work to this project because it's my passion and hobby too, so I work when I want and when I have time (there's no a fixed  amount of hours I have to work on it). For sure, the hours per week I spend on it are a lot less than the hours I spend as an employee. At the same time I'm working intermittently on it since 3 years (and another 1 or 2 will be needed to complete). Also, the total gross income, will be between 25% and 40% of the yearly gross salary that I take from my permanent job. Of course it will be a "one shot" income that we can also split and spread in 2 years in order to stay under some threshold that can help me to manage in a more easy way all the fiscal stuff.

Of course I want to pay all the taxes that I have to pay but I'm quite lost and before going to a Steuerberater I would want to prepare my self about the topic.

How I should proceed ?

I read about the 17500 threshold. What's and how it works ? Should I ask a new Stuernummer ? Should I register(?) as a freelance or a little company ? Is the 17500 threshold only for side income ? Or should I add the income of my permanent job ? In this case I will be far beyond that threshold.

Also consider that my friend that will pay me is not in Germany but in my home country, an EU one. This will force me to open a VAT number and say bye bye to the 17500 stuff ? But in that case, due to the fact I have only one  "big" customer, I should not be permitted to have a VAT, right ?

I also read that if the side jobs is not predominant (and I think that's my case) then I have not to pay all the "welfare" stuff such as pension, health, etc but only taxes. Is this correct ? 

 

As you can see there's a total confusion in my mind :).

I made my homework when I was in my homeland for the same case (employed with freelance job) but here I'm lost, also due to the language that I don't know (yet) :(

 

I would thank who would be so kind to help me.

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The Kleinunternehmer (= not have to charge VAT) limit is just for the self-employed turnover, but you are allowed to take in up to 50,000€ in one year and only have to charge VAT starting with the following year. So if this is a one-off thing you won't mind this obligation since you won't have any self-employed income the next year anyway.

 

However, be advised: the limit is pro-rated from the date that you tell the Finanzamt that you will be self-employed. You do this by applying for a Steuernummer (= tax number) in a 8-page form called "Fragebogen zur steuerlichen Erfassung". One of the questions in there is when you started being self-employed, so in that case it would be wise to fill in there 1. January 2016 as your starting date (you will get a stern letter informing you that the "proper" way of doing things would have been to apply for a Steuernummer first and to only then start being self-employed, but I think you can shrug off that reproach - there's no fine involved).

 

Example:

If you tell the Finanzamt that you will be self-employed from 1. April 2016.

--> your VAT free limit is only 37,500€ (= 9/12 * 50,000€), since there are only 9 months left between 1. April and 31. December 2016.

 

I assume that this is a programming sideline job and you have a university degree in engineering or computer science.

If this is not the case you will have to pay an additional business tax (means an extra 3% to 5% tax, depending on where you live in Germany) on any profit above 24,500€.

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50 minutes ago, PandaMunich said:

However, be advised: the limit is pro-rated from the date that you tell the Finanzamt that you will be self-employed. You do this by applying for a Steuernummer (= tax number) in a 8-page form called "Fragebogen zur steuerlichen Erfassung". 

 

I already have a Steuernummer because of my employed job. How it match this with the end year formular I should compile ? I mean, does both incomes (employeed and freelance) cumulate or, due to the fact that they refers to 2 different Steuernummer, they "travel" on 2 distinct roads ? So for example if with my freelance activity I will gain in a year 15.000 I will be taxed as if 15.000 is my only income for the year. Or does the 15,000 cumulate on top of my employed income and so get taxed with the current higher % ?

 

Also, if I declare myself a freelancer but I have one only customer, am I covered from the Scheinselbstständig risk thanks to my main job as employed ?

 

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I assume that this is a programming sideline job and you have a university degree in engineering or computer science.

If this is not the case you will have to pay an additional business tax (means an extra 3% to 5% tax, depending on where you live in Germany) on any profit above 24,500€.

 

Wow, this is new to me. Yes, this is a software developing job. I'm an engineer with university degree but not in IT domain :D

This means I have to pay this tax in case profit goes above 24500. By the way what do you mean with profit ? Gross income or net gains ?

 

Also, is the 17500 stuff ok if the customer is outside Germany but in EU ?

 

Should I pay from my freelance job all the Social Contributions (Obligatory Pension Scheme, Health, Unemployement, Disability) ? Or it's fine what I pay from my employed job ?

 

 

 

Quote

 

 

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No, unless you have already filed a tax return you do not have a Steuernummer (assigned by your local Finanzamt), you just have the Steueridentifikationsnummer (assigned centrally by the Bundeszentralamt für Steuern) that even babies have.

 

And anyway, in the larger cities even if you have a Steuernummer because you already filed a tax return as an employee, you will get an additional one for your business.

 

The incomes are added together and you are taxed on the sum --> higher tax rate.

 

No need to worry about Scheinselbständigkeit, the Deutsche Rentenversicherung cannot go after a foreign employer. Though by your description what you are doing is bona fide self-employment, you work on your own time and only get paid if your client likes the results.

 

With an engineering degree you don't have to worry about Gewerbesteuer, you are by definition a freelancer (= Freiberufler, who are exempted from Gewerbesteuer), see "Ingenieure" in §18 Absatz 1 Nr. 1 EStG.

 

turnover = business_income = the money that enters your business

profit = turnover - business_expenses

 

Being a Kleinunternehmer is about you, not your clients. The Finanzamt will only care about the German side. 

That EU tax department could legally ask for their VAT from your client (because of the EU-wide reverse charge system for VAT), but most EU tax departments don't bother. 

Why? 

Because your client can at the same time recuperate said EU VAT, so it would only mean additional bureaucracy but no money gained for that EU tax department.

 

In Germany, you do not pay social security contributions on self-employed income, except public health insurance, but they don't ask for anything extra as long as your employee income is higher than your self-employed income.

 

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Wow PandaMunich thanks a lot for your very detailed answers :o

 

Quote

 

No need to worry about Scheinselbständigkeit, the Deutsche Rentenversicherung cannot go after a foreign employer. Though by your description what you are doing is bona fide self-employment, you work on your own time and only get paid if your client likes the results.

I forgot to specify an important detail: altough my citizenship is not german my fiscal residence is now in Germany. So, I don't know how much "foreign" I will appear to the  Deutsche Rentenversicherung :)

 

 

Without meaning to take advantage of your  kindness, may I ask you a last question ?

Can I deduct expenses for my freelance activitiy from the freelance income that will be taxed ?

When I create the invoice for the customer/friend is it enough to put into the  Steuernummer   ?

 

Quote

 

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In a Scheinselbständigkeit scenario:

  • employee = you, if you were deemed "scheinselbständig" (= only appearing to be self-employed, i.e. fake self-employed, but in reality being employed)
  • employer = your client, who is not in Germany and whom the Deutsche Rentenversicherung therefore cannot touch up for social security contributions

But anyway, this discussion is moot, what you're doing is not a case of Scheinselbständigkeit.

 

Yes, only the profit is taxed.

 

Regarding what your invoices have to contain, please read: 

 

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I’m a little late to this group - but wanted to ask as felt like it was the most relevant discussion. I’m British moved to Germany 2.5 years ago for a full time job, I have just had a baby and having 1 year plus a bit off on maternity, returning to full time work in the autumn, I’m currently on elternsgeld.. 

so I have a micro project I have been working on both crafting goods to sell and selling a curated selection of vintage home goods, it’s very small at present and I’m not really turning over anything yet, kind of like Etsy but I’m cutting out the seller platform and doing direct to consumer, but it really it small and homespun, I just want to make sure I am doing everything by the book, I have health insurance, I am a tax payer and have a tax id. Can I be a freelance artist ??? Will this work ?  I don’t expect I am going to be selling more than €3k a year as it’s more of a hobby, but what steps can I take to insure nobody will hunt me down for not being a law abiding citizen, I’m a bit scared as I know regulations are a bit different here. Thanks ?? based in Düsseldorf BTW

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10 hours ago, Emmy lou said:

 Can I be a freelance artist ??? Will this work ?

 

Maybe, maybe not. It's a the Finanzamts discretion to accept you as an artist or not. Did you study arts? Have a book? Have you had exhibitions? That would ease being accepted as an artist. Selling stuff on Etsy not so much.

 

10 hours ago, Emmy lou said:

 I don’t expect I am going to be selling more than €3k a year as it’s more of a hobby, but what steps can I take to insure nobody will hunt me down for not being a law abiding citizen, I’m a bit scared as I know regulations are a bit different here. Thanks ?? based in Düsseldorf BTW

 

You have to register your business and do a tax declaration for 2018 next year. Start by reading this thread, Panda gave all necessary advice already. 

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The time has come :)

This year in my tax return I will declare my first income as a freelance (together with my income as employee).

As mentioned  in my previous old post, income from freelancing is a little bit under the 17500 threshold and represent about 24% of my employee income and about 19% of my total 2017 incomes (freelance+employee).

 

I have one last missing point. Pension payments.

In her post @PandaMunich says:

Quote

In Germany, you do not pay social security contributions on self-employed income,

 

Is Pension payments included ? In other words, should I pay pension contributions from my freelance income ? How ?

Or I will pay just taxes ?

 

For my KrankenVerischerung I am fine, I am already paying the maximum possible as an employee.

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2 minutes ago, Frantic said:

In other words, should I pay pension contributions from my freelance income ?

 

Only if you're a freelance teacher.

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Hi! I have almost the same problem as @Frantic, however I want to ask a couple of stupid questions anyways.

 

I am a software developer, quitting the current job, nevermind. I has found a contract for 3 months starting from mid-July which should bring me ~12k eur. So, should I or should I not add these 12k to the amount I earned at my not self-employment job, which of course would exceed 17.5k threshold. This would exceed even this 50k threshold @PandaMunich mentioned. Completely confused here.

 

Another funny thing: I am trying to complete the form in MyElster. And when I say that my predicted turnover (correct term?) will be those 12k it throws an error message. Apparently it thinks that if I start from the mid-July (i.e. the middle of the year) I should've been earned 24k (12*2). I proved this hypothesis giving values under 17500/2 = 8750 and above that. So, is it something I should also care about? I mean, to give them a paper copy where 12k is set is not a problem, but I am trying to understand is it a software mistake or something I should care about?

 

And the last question: if I plan to find a non-self-employment job anyways, may I put 0 as my predicted turnover from self-employment for the next year or is it better to put some safe number like 10k?

 

Thanks in advance

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This 3 months contract is a self-employment one ? Or is a kind of fixed term employing contract ?

In the first case, did you register yourself as self empoloyed to the Finanzamt, paying attention to specify if you are a freelance or a single-man company  (this depends from how you are defining your activity when you register) ?

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What's the best course of action to bill for 452 Euros one time? It was basically a job disassembling temporary structures. Do I have to get the steuer number for freelance?  Seems like a lot of paperwork for a one-off tiny amount. From the form I've been filling out, it looks as if I am committing to opening a business, which is not what I want to do.  But is that what I have to do? This is the form: 

Fragebogen zur steuerlichen Erfassung


 

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3 hours ago, BobCov said:

What's the best course of action to bill for 452 Euros one time?

 

If it's really a on-time-thing the easiest way is to add it to the 2018 tax declaration.

 

3 hours ago, BobCov said:

From the form I've been filling out, it looks as if I am committing to opening a business, which is not what I want to do.  But is that what I have to do? This is the form: 

Fragebogen zur steuerlichen Erfassung

 

 

Yes that's the form for registering as a self-employed person, who told you to fill that form?

 

 

 

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The problem is they cannot pay me without a Steuer number.  Do I just give them my normal one (the ID nr or the other one?)? And how do I know how much of the 452 to withhold? I don't think it will be worth the effort to deduct the 85 euros of equipment I needed to buy to do the job because then that gets into the whole opening a business thing. 

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I am unable to figure this out. I was told to go to the gewerbeamt but that process also seems to rely on my creating a company structure.I will see if somebody with an ID can submit an invoice and claim the funds.

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You probably don't need to create a company, just register as self-employed.    Whether anyone else would bill for you is debateable.  For a start, it's not normal to transact other people's work that is nothing to do with us and we'd need to invest time in making such a transaction regular .   On top of that, it'd need to be someone with the same type of business as yours, as all we can trade is our own specifically stated fields.   And then it may have tax implications for them.  In general, lack of transparency with a tax authority is not the best idea.

 

This question is not meant to say you are stupid - but are you sure you do not already have such a number?  I would not have asked if you were new here but you've been here four years and so you must have had some dealings with your local tax authority.  Is there not one floating round from the past?  Not one lurking on a previous tax return?  (I've only ever been self-employed, so have no idea how it runs for one like you but I thought, say, many employees still get issued with one, the first time they do their return).

 

If you do have to complete that form it's not that big a deal.  I looked at mine recently - only my name, my type of business, my type of income, an estimate of my start income (tiny) and VAT situ (irrelevant for you).   Much self-employment is very small, only turns over a few grand max, or get dipped into occasionally.  It's not even just for that income, but various non-employed: also pensions and such.  Process can't be onerous.    It is really just a basic record set up thing.

 

It may also very much be worth dropping by the Finanzamt and asking them.   I know people who conduct very occasional business like this and they basically just seem to somehow get let off doing much but I do not know the detail.   They definitely get to self-certify "I only earned a tiny bit this year" rather than have to do a full tax return.

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Hello I need some advice, by reading this thread and a couple more on this forum I see that as a fulltime employee I'd have to register as a freelance and get the according visa in order to earn extra money. but what if this extra money is small?

I work as full time soft. developer in NRW and been 2 years living here. I want to create an app and upload it to the Google playstore or (any online publisher), just to earn a couple of extra money (from 0 to 50 euro a month... as you see not much, im just going to test waters) just a little extra to buy more games or go to cinema etc.

In this case I will also need to register as a freelance? even so is very little extra?

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7 hours ago, Rodolink said:

 but what if this extra money is small?

 

That makes no difference, if you want to work as a freelancer, you need an appropriate work permit. 

 

7 hours ago, Rodolink said:

In this case I will also need to register as a freelance? even so is very little extra?

 

Whenever there is an intention to make a profit, the activity must be declared for tax purposes. And the profit is taxable, no matter what you subsequently spend it on. 

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My friend who works for a riding club (Verein, not private club) as an instructor reckons the tax man doesn't want to know about the first 3000€ she earns with them, and if it is a Stiftung, the first 2,400€. Is this correct, and are there any details/complications to that situation.

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