Permanent Job + Freelancing: Freelance Tax Payment steps

9 posts in this topic

Hi,

 

I have a permanent Job but in November 2016 I opened/started (and declared to Finanzamt) an activity as Freelance. Freiberufler and not "one-man company".  When the Tax Consultant was asking me data for filling the form for the opening of the activity (in order also to receive the tax number for freelancing) I had to declare forecast incoming for 2016. I declared the truth, zero.

 

In 2017 I had my first income. They are under the 17500 euro limit. So we are in the little "Unternehmen" case.  Income from my permanent job are definitely prevalent here. The freelancing is a "side activity", authorized also by my employer with a signed paper. No problem on this.

In 2017, for my freelancing activity, I just declared about 240 euro losses due to the Steuer berater fee i Payed.

 

In 2018 I will declare the freelance income of 2017. Probably i will go to a Steuerberater although I have to say that a well known online software  the past year helped me a lot in making the tax declaration really straightforward, without any assistance.

 

My doubt is only if I missed some steps. Maybe I had, in 2017, make a kind of freelance income forecast declaration to the FinanzAMT, then Pay in anticipation taxes and then fix/balance all (according to the real income) in the annual tax declaration of 2018 ?

 

 

 

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42 minutes ago, Frantic said:

My doubt is only if I missed some steps. Maybe I had, in 2017, make a kind of freelance income forecast declaration to the FinanzAMT, then Pay in anticipation taxes and then fix/balance all (according to the real income) in the annual tax declaration of 2018 ?

 

No, don't worry, you didn't miss any steps.

If you do the 2017 tax return by yourself you have to submit it by 31. May 2018 (if you let a Steuerberater do it, the deadline is 31. December 2018), and only after that 2017 tax return has been processed will the Finanzamt tell you as part of that Bescheid for 2017 how much you should pre-pay in tax in the future for your freelance activity, in the section "Vorauszahlungen":

 

5a60d0fd537be_2018-01-1817_51_23-Start.j

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1 hour ago, Frantic said:

 

Freiberufler and not "one-man company".

 

As a single freelancer you are a "one-man company", the German term is Einzelunternehmer. You stay that as longs as you don't choose another coporate form.

 

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3 hours ago, someonesdaughter said:

 

As a single freelancer you are a "one-man company", the German term is Einzelunternehmer. You stay that as longs as you don't choose another coporate form.

 

 

Sorry, I confused with definition with my origin country, Italy.

I meant that I am Freiberufler and not Gewerbetreibende.

 

@PandaMunich  while I knew about the May/December selfdone/steuerberaterdone deadlines, it is not clear to me the "milestones" of the process of phisically paying taxes for freelance income.

For example, let's take what I am going to do this year for the 2017 declaration.

I will declare my income as freelance...together to the remaining stuff related to my employee status. Last Year, in late August, Finanzamt finished to examine my declaration and gave me back some money. What will happen this year ? What are the milestones ?

Should I expect around Septmber a paper from Finanzamt that says "ok, you have to pay this, before the end of this date" ? If yes, what is this date/deadline ? And together with the taxes for 2017 incomes will I pay also the anticipation of taxes for 2018 that I will declare in 2019 ?

 

by the way, the picture you posted is referred to a declaration of 2012 incomes, made in 2013 ?

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41 minutes ago, Frantic said:

 

Sorry, I confused with definition with my origin country, Italy.

I meant that I am Freiberufler and not Gewerbetreibende.

 

Ah, ok.

 

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@PandaMunich  while I knew about the May/December selfdone/steuerberaterdone deadlines, it is not clear to me the "milestones" of the process of phisically paying taxes for freelance income.

 

The "milestones" are:

 

1. You do your tax declaration

2. You get your tax assessment

3a. You pay what you owe (or get back what they owe)

3b. You have to prepay for the future (or not, if they owe)

 

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For example, let's take what I am going to do this year for the 2017 declaration.

I will declare my income as freelance...together to the remaining stuff related to my employee status. Last Year, in late August, Finanzamt finished to examine my declaration and gave me back some money. What will happen this year ?

 

This year you have income from 2017 that is not yet taxed. It gets's taxed (based on your total income), you pay the rest, what you owe. 

 

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What are the milestones ?

Should I expect around Septmber a paper from Finanzamt that says "ok, you have to pay this, before the end of this date" ?

 

Basically yes, the "when" depends on when you do your declaration/get the tax assessment.

 

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If yes, what is this date/deadline ?

 

4 weeks.  

 

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And together with the taxes for 2017 incomes will I pay also the anticipation of taxes for 2018 that I will declare in 2019 ?

 

Yes. You declare your 2018 income in 2019, get the tax assessment ... 

 

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by the way, the picture you posted is referred to a declaration of 2012 incomes, made in 2013 ?

 

The picture is only an example illustrating the "Vorauszahlung"/prepayments.

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Last year in August, i.e. in August 2017, at the same time that you got the money from the 2016 tax return, you got some pages in a letter from the Finanzamt.

These pages were the Bescheid for 2016 (= see the above example Bescheid, also repeated below, that is somebody else's Bescheid for 2012, which was issued in 2014) which listed all your income, how much income tax you had pre-paid (through your employer retaining the Lohnsteuer from your salary, and finally how much income tax you really should have paid, with the difference being the amount they gave you back, by transferring the money into your bank account.

 

5a6116d8f3116_post-244179-13946178175007

 

This year, you will have to submit your tax return by 31. May 2018, they will then take about 6 weeks to process it, and then around July 2018 they will issue you a Bescheid for 2017.

 

Let's assume that you earned 2,000€ as freelance income, and that the extra income tax that you will owe because of those extra 1,000€ in income will be 780€.

The Finanzamt will write on the upper half of the first page in that Bescheid that you have to transfer the 780€ into their bank account up till a specific date (the date will be the date the Bescheid was issued + 1 month + 3 days).

If you look into the above example Bescheid, that person was told to transfer the 780€ by 13. March 2014, so presumably they had submitted their tax return for 2012 through a Steuerberater in December 2013, and it took until 10. February 2014 to process it. 

 

Then comes the lower half of the first page of the Bescheid, this section "Vorauszahlungen" tells you what you have to pre-pay 4 times a year in income tax.

You see, they assume that the next year and the year after that, you will also have the same amount of freelance income and will therefore have to pay about the same (well, a bit less, because every year the tax-free amount rises, so you will pay less tax on the same income in 2018 than you did in 2017) amount of income tax as for 2017.

 

If you look above, they asked that person to pre-pay 4 * 129€ = 516€ for the current year, in your case that would be for 2018.

However, if your Bescheid will only be printed in July 2018, you would have already "missed" the first two payment dates (they are always 10. March, 10. June, 10. September and 10. December). So in your case, they would have to split the 516€ that have to be paid across the last two remaining dates:

pre-payment for 2018:

  • by 10. September 2018: 258€
  • by 10. December 2018: 258€

In the next line, they would write the pre-payment for 2019:

  • by 10. March 2019: 129€
  • by 10. June 2019: 129€
  • by 10. September 2019: 129€
  • by 10. December 2019: 129€

So you would keep on transferring the above amounts at these dates into the Finanzamt's bank account (or you simply give the Finanzamt permission to take that money out of your bank account by giving them a SEPA-Lastschriftmandat - there's a different one for every Bundesland, here's the one for Bayern), giving your tax number as the reference so that they know whose money that is, until you receive your next Bescheid, the Bescheid for 2018, which you will get sometime in September 2019 (they have prolonged the filing deadline from 31. May to 31. July from next year), and this Bescheid will take into account the 516€ you had pre-paid for 2018 in the 2 instalments by 10. September 2018 and by 10. December 2018, and will again tell you how much tax you still owe for 2018, which will probably a bit more since I assume that your income grew from 2017 to 2018 and again giving you ca. 1 month to pay it.

 

And again you will see Vorauszahlungen at the bottom of the page of the Bescheid for 2018, and since it is already September 2019, you will have already pre-paid for 2019 the first 3 instalments à 129€, so they will have no choice but to make the 4th instalment on 10. December 2019 bigger, to reflect the larger income tax you owed for 2018, since that is their estimate for the income tax that you will owe for 2019.

 

And so it continues, on and on.

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Hi friends,

 

I have similar questions and i thought is better to ask here because the topic already exist.

 

Probably i have previously mentioned that I am MSc. Software Engineer, and working in one company like Software Developer.

I want in my free time to work on some projects from UpWork like freelance, i asked in FinanzAmt and they told me that first i have to ask and to get approvement from the company where i work full time that i can work like a freelance software developer in my free time.

So my questions are:

1. I dont understand, why should i ask because from the start i am sure that the answer will be negative, and how they are related with the FinanzAmt?

2. Also they FinanzAmt told me that i need to register myself as freelancer for Gewerbeschein in Rathaus, and as i read on TT because i work as a Software Developer but i am with Uni. for software development jobs i dont need Gewerbe, what should i do?

3. I dont think that i will make more then 17500eur per year, how the money from my freelance job will be calculated, will they be calculated together with my regular salary because in that situation i'll be over 17500eur or as long i am bellow 17500 per year i dont have to charge the VAT?

4. How is software development taxed and which taxes should i pay?

5. Is the using of Payoneer card safe here in Germany and should i pay taxes if the money are payed on Payoneer account which belong on Bank of America or the money should be payed on my bank account in Germany?

6. Because i am not sure that and how many different clients will i have and how long will i work on their projects, will make that some problem or as freelancer i must work with different clients?

 

For now those are my questions :)

 

Thanks

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7 hours ago, ZPopovski said:

Hi friends,

 

I have similar questions and i thought is better to ask here because the topic already exist.

 

It would have been even better if you'd used the forum search. Most of your questions have been answered umpteen times. Reading in other posts also helps to ask the right questions. 

 

7 hours ago, ZPopovski said:

 

1. I dont understand, why should i ask because from the start i am sure that the answer will be negative,

 

Because it is a legal requirement to obtain permission from the employer. In most cases, the employer cannot refuse the permit, but there are cases where he may: If you are competing with him or if the sideline affects your employment. For example, because you are too tired to do your job. If such a case occurs and you work without a permit, you can be dismissed without notice.

 

Does your residence permit allow you to work independently at all?

 

7 hours ago, ZPopovski said:

and how they are related with the FinanzAmt?

2. Also they FinanzAmt told me that i need to register myself as freelancer for Gewerbeschein in Rathaus, and as i read on TT because i work as a Software Developer but i am with Uni. for software development jobs i dont need Gewerbe, what should i do?

 

Do not register a business, fill in the questionnaire for tax registration, state exactly what you do in it and then submit the questionnaire to the tax office. 

 

7 hours ago, ZPopovski said:

3. I dont think that i will make more then 17500eur per year, how the money from my freelance job will be calculated,

 

What do you mean by "calculated"? You have to do all calculations on your own (or let a Steuerberater do this).

 

7 hours ago, ZPopovski said:

 

will they be calculated together with my regular salary because in that situation i'll be over 17500eur or as long i am bellow 17500 per year i dont have to charge the VAT?

 

If your total turnover (!) is below 17500€ in a full 12 months (1.1.– 31.12) and you checked in the questionnaire that you are making use of the small business regulation, you do not have to or are not allowed to report VAT. However, this only applies to sales tax/VAT. 

 

7 hours ago, ZPopovski said:

4. How is software development taxed and which taxes should i pay?

 

Income is taxed as income no matter what you do. So your profit (!) from self-employment is added to your other income and all your income is taxed. Your advance payments from the employee activity are deducted, the rest you must pay back (and from the 2nd year also pay in advance).

 

7 hours ago, ZPopovski said:

5. Is the using of Payoneer card safe here in Germany and should i pay taxes if the money are payed on Payoneer account which belong on Bank of America or the money should be payed on my bank account in Germany?

 

I have no idea what that Payoneer card is. 

 

7 hours ago, ZPopovski said:

6. Because i am not sure that and how many different clients will i have and how long will i work on their projects, will make that some problem or as freelancer i must work with different clients?

 

You have to work for  different clients. It is well known that IT projects take longer, but you can't work for just one client for years. 

 

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For now those are my questions :)

 

Yeah, nice. Where should I send the bill? ;)


Please use the forum search before (!) further questions.

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Hi someonesdaughter,

 

Sorry for my delayed reply. I am EU citizen so i think that i dont need special permit for working in other EU country. Right now i am fighting with myself to talk with my CEO for allowing me to work also like a freelancer in my free time and also i am searching the TT forum for more questions / answers.

Thanks for now, i will try to dig a little deep, and for the bill... its not a problem i am paying in special currency Beer ;)

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