Surviving as a Freelancer w/high taxes and insurance?

11 posts in this topic

Up until this year, I was a low-earning freelancer (less than 1k a month). Now, I've recently scored some lucrative contracts and my income has almost tripled. At first, I was psyched -- I finally "made" it! But then the giant increase in taxes and insurance payments dawned on me. I feel rather demotivated, knowing that the entirety of my next paycheck will be used for taxes, and not my actual living expenses.

 

I know that this is part of the gig, but is it just me, or is it particularly difficult to survive as a middle-earning freelancer in Germany due to the taxation & insurance system? How much does a freelancer actually need to make so that they can still reap the fruits of their labor? Should I just go back to earning 1k a month?

 

(And yes, I am looking for salaried positions -- there just don't happen to be many in my field, so for now, I have to keep freelancing.)  

 

 

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59 minutes ago, eliotstreet said:

I know that this is part of the gig, but is it just me, or is it particularly difficult to survive as a middle-earning freelancer in Germany due to the taxation & insurance system? How much does a freelancer actually need to make so that they can still reap the fruits of their labor? Should I just go back to earning 1k a month?

 

The entire German social security system was designed around the assumption that only the priveledged class would be self-employed/freelance and everyone else would be employed. For this reason certain groups of freelancers are required by law to contribute into the public pension system; these were freelancers who were assumed to come from less affluent circumstances and could not be trusted to save enough without being forced to do so. (I didn't design the system, so don't shoot the messenger).

 

IMHO only those with high earning potential should bother freelancing in Germany (high earners can take advantage of many tax breaks and write offs).

 

1 hour ago, eliotstreet said:

 

Should I just go back to earning 1k a month?

 

 

Is that the lifestyle you want?

 

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I am a bit confused... you write about being a freelancer and then about getting a paycheck..which is usually connected with being an employee? So what is it?

 

When you are self-employed, your overall initial financial burden is far lower, because you do not have to pay into public pension, unemployment insurance etc. Just taxes and health insurance (public or private whereas employees with even 3k EUR income will always have to pay into public insurance). At the same time, of course, you do not have the benefits later from unemployment insurance when out of work or pension payments when retiring. 

 

And as a self-employed you have at least a chance to write off some expenditure which is also for you personally in some clever means and thus reduce your tax liability even further.  Thus I do not fully understand your complaint, to be perfectly honest.

perhaps you can bring a few more details and numbers for better understanding?

 

Cheerio

 

I am a professional independent insurance broker, financial adviser, and authorised advertiser. Contact me.
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4 hours ago, eliotstreet said:

Up until this year, I was a low-earning freelancer (less than 1k a month). Now, I've recently scored some lucrative contracts and my income has almost tripled. At first, I was psyched -- I finally "made" it! But then the giant increase in taxes and insurance payments dawned on me. I feel rather demotivated, knowing that the entirety of my next paycheck will be used for taxes, and not my actual living expenses.

 

I know that this is part of the gig, but is it just me, or is it particularly difficult to survive as a middle-earning freelancer in Germany due to the taxation & insurance system? How much does a freelancer actually need to make so that they can still reap the fruits of their labor? Should I just go back to earning 1k a month?

 

(And yes, I am looking for salaried positions -- there just don't happen to be many in my field, so for now, I have to keep freelancing.)  

 

 

May I ask how you are currently health insured? If public, fine.( I am presuming public insurance ). Payments depend on income...so that can be difficult if your earnings improve.

If private - no difference to payments as income is irrelevant for the price. Age, health, chosen tariff/benefits are what count for the price.

I am a professional independent insurance broker and authorised advertiser. Contact me.
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2 hours ago, Starshollow said:

I am a bit confused... you write about being a freelancer and then about getting a paycheck..which is usually connected with being an employee?

 

- I took that literally to mean the next cheque that he receives as payment, rather than a "paycheck" from an employer.

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Good point, rob!  (just checked, though..it´s a lady OP!). 

Lady OP: I hope you´re not oversensitive. Robinson is also a lady and a very charming one, by the way!

I am a professional independent insurance broker and authorised advertiser. Contact me.
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36 minutes ago, john g. said:

May I ask how you are currently health insured? If public, fine.( I am presuming public insurance ). Payments depend on income...so that can be difficult if your earnings improve.

 

She has public health insurance, with Techniker (source):

On 1/29/2018, 1:52:56, eliotstreet said:

Well, for the record I do have public health insurance, TK. 

 

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5 hours ago, engelchen said:

 

The entire German social security system was designed around the assumption that only the priveledged class would be self-employed/freelance and everyone else would be employed. For this reason certain groups of freelancers are required by law to contribute into the public pension system; these were freelancers who were assumed to come from less affluent circumstances and could not be trusted to save enough without being forced to do so. (I didn't design the system, so don't shoot the messenger).

 

Thanks for the background information — that actually explains a lot about why the system seems to fail those who are not high-earning. Still odd, though, since for me, being a freelancer is not really a privilege, but a necessity. 

 

At this point, I think that making 1k a month with minimal taxes versus what I earn now with higher taxes is almost the same in the end. The only difference is that I work a lot more. 

 

 

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57 minutes ago, PandaMunich said:

 

She has public health insurance, with Techniker (source):

 

Haha, wow, I’ve been cited! Yes, that’s true. 

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1 hour ago, robinson100 said:

 

- I took that literally to mean the next cheque that he receives as payment, rather than a "paycheck" from an employer.

 Yeah, I just meant the next payment I’m getting from my freelancer employer for my next assignment. I don’t receive a regular salary. 

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