Calculating net freelance salary

15 posts in this topic

Hello,

 

I am based in Bavaria and thinking about going freelance. Is there any calculator out there can can tell me for a gross salary, how much net I get?

I know this one:

https://www.icalculator.info/germany.html

 

but assumes I am being employed by someone. Also, do I need an accountant or can I do everything myself? If I need an accountant, how much do I need to pay him per month in general? I know it depends on the person but are we talking 20-50, 50-100, 100-150?

 

If you know of any books or online resources in English on going freelancer in Germany, it would be appreciated.

 

Kind regards,

 

Paulo Matos

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12 minutes ago, Paulo Matos said:

Hello,

 

I am based in Bavaria and thinking about going freelance. Is there any calculator out there can can tell me for a gross salary, how much net I get?

 

Actually freelancers have no salary – it makes more sense to construct a calculation from the other direction: So 'what do I need' and how high must my hourly or daily rate therefore be?

 

This hourly rate calculator (only in German available) is very helpful: 

 

http://www.guru-20.info/tools/fhour/

 

If you then want to know exactly how much tax you have to pay on your profit (not turnover!) based on the calculation, you can actually use any income tax calculator.

 

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16 minutes ago, someonesdaughter said:

So 'what do I need' and how high must my hourly or daily rate therefore be?

Hope he doesn't need a villa on Mallorca and a private jet to get there, otherwise his clients are gonna be hit with some sky high rates.

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13 minutes ago, catjones said:

Hope he doesn't need a villa on Mallorca and a private jet to get there, otherwise his clients are gonna be hit with some sky high rates.

 

If the customers pay that everything is ok. ;)

 

More seriously: Many founders simply forget what they have to spend money on as self-employed, that administrative time is not paid by anyone, that holidays and sick days have to be financed by themselves, etc. 

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It's hard to be specific because of multiple variables in our personal situ, plus business set up.  In general, for someone like me who's set up was simple and was middle-income, basically just apply income tax (including soli) to your net business income but not the other deductions of an employee.   That's all that happens for a lot of us really.  Obviously you have to pay healthcare separately.

 

There's no thunderbolt either way in my experience - we don't get bled but neither do we feed off some magic fabulous concessions.

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26 minutes ago, someonesdaughter said:

 that holidays and sick days have to be financed by themselves, etc. 

 

And as a freelancer you think twice about whether you really need those two weeks off to fly to greece, as the money you don‘t earn may be higher than the cost of the holiday itself. 

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OK, I probably should have explained more. I won't be a normal freelancer with possibly no work. I will actually have a foreign contract with a company but from the perspective of the German Government I will look like a freelancer so I will be guaranteed holidays, sick pay, salary, etc. My question is... if the company hires me as a freelancer for X Euros / year. How much of that will I see in Net after removing everything I need to pay? I assume as a freelancer I will need to get health insurance and a private pension scheme on my own.

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You won't look like a "freelancer" to many governments probably, and not to the German one.  That's - as you say with these descriptors - employment.

We don't have a salary, we charge fees.  We decide when and how much we work (or not) and when.  We dont get "sick pay".  And so on.  All of what you list is employment.

 

To my earlier comments, I should add of course that without the typical employment benefits (which include contribution to your pension scheme etc), the income needs to be substantially higher than a permanent role.

 

Quote

And as a freelancer you think twice about whether you really need those two weeks off to fly to greece, as the money you don‘t earn may be higher than the cost of the holiday itself. 

 

Personally I always saw it the other way.  If I could not afford two weeks` holiday when I wanted it, it was being freelance that was the problem :D.   Evidently I would not be making enough.

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12 minutes ago, swimmer said:

You won't look like a "freelancer" to many governments probably, and not to the German one.  That's - as you say with these descriptors - employment.

 

I think you are referring to the term Scheinselbständigkeit. I am not sure exactly what's required but is there any english explanation of what exactly this means?

 

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It's not even fake employment.   That's operating typical freelance structures like issuing an invoice to customers and asking for a fee for your services and collecting VAT, and then you pay your income tax and so on - but just not having a diverse enough customer base, relying too much on one.

 

No salary.   No holiday pay.  No sick pay.  None of that.   Just a payment to a supplier (you) and the associated VAT.   Nothing you write here indicates they understand you will be billing them and asking for VAT as per German law regarding freelance employment. 

 

What you have articulated is - truly - just employment.

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2 minutes ago, swimmer said:

It's not even fake employment.   That'd mean operating typical freelance structures like issuing an invoice to customers and asking for a fee for your services and collecting VAT, and then you pay your income tax and so on - but not a diverse enough customer base.

 

No salary.   No holiday pay.  No sick pay.  None of that.   A payment to a supplier (you) and the associated VAT.   Nothing you write here indicates they understand you will be billing them and asking for VAT as per German law regarding freelance employment. 

 

It's just employment.

 

Not really employment, because the company is not based in Germany (but it is registered in Europe) and this would be remote work, therefore I would be simply registered as a freelancer charging my salary to the same 'client' (if you will).

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No.   We cannot register employment as freelance work.  It's not freelance work.  That bit is easy.

 

Freelance work here is what I described.  You will be reporting income from employment.   Your employer (wherever) or you cannot decide that income from employment is freelance income here.     The authorities will also spot that mistake a mile off.

 

As soon as we register as freelance, we are required to submit invoices to clients (no employer now) and monthly VAT returns to the tax authority that report our freelance income and the VAT elements and so on.   Where we get our income from does not matter.  We reside here, we report our income from wherever it arises.   I am not sure your employer really understands that - or perhaps more likely does not want to?

 

I also do not really understand why you'd bother to want to be freelance.    There seems no reason to do this anyway, never mind that you would run in to potential issues with Finanzamt.  Sounds perfectly OK as it is :huh:.   It is perfectly OK to work for a foreign employer when based here and report employed income from it.

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1 hour ago, Cammiede said:

 

And as a freelancer you think twice about whether you really need those two weeks off to fly to greece, as the money you don‘t earn may be higher than the cost of the holiday itself. 

We all need a holiday. I lose a fortune when I'm away. 3 months away a year is fantastic though. Tis only money.

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56 minutes ago, swimmer said:

You won't look like a "freelancer" to many governments probably, and not to the German one.  That's - as you say with these descriptors - employment.

We don't have a salary, we charge fees.  We decide when and how much we work (or not) and when.  We dont get "sick pay".  And so on.  All of what you list is employment.

 

To my earlier comments, I should add of course that without the typical employment benefits (which include contribution to your pension scheme etc), the income needs to be substantially higher than a permanent role.

 

 

Personally I always saw it the other way.  If I could not afford two weeks` holiday when I wanted it, it was being freelance that was the problem :D.   Evidently I would not be making enough.

Well said. The last part I mean.

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1 hour ago, Paulo Matos said:

OK, I probably should have explained more.

 

Yes. Unfortunately, your topic is completely different from the one you initially gave us. :( You will not be a freelancer. Full stop.

 

Basically you have two options:

 

1) Get on the US payroll of that company and get seconded to Germany (usually 1-2 years, in rare circumstances up to the max of 5 years) get some decent health insurance and pay income taxes in Germany. Being on a US payroll you will not be covered under German laws regarding unemployment or holidays etc. and you can't profit from the German pension insurance (and the resulting tax relief either). 

 

2) Get employed under German law, on a German employment contract and payroll. There are a number of service providers to do the payroll stuff for foreign employers. This would allow you to join German health insurance (public or private, with 50% co-pay from your employer) and other benefits like unemployment insurance and German company pension schemes. 

 

 

 

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