Employed and extra income

14 posts in this topic

Hi,

 

I am a software developer with a full time job. On my free time I have developed and Android app which I would like to publish at Google Play Store. That app has ads, which means I will get some extra income from it (even if it is a tiny amount).

 

So I was reading if I needed to register a business or something, so here is my question:

Do I have to register as a freelancer, self-employed or register a business? I am not sure if I understand the difference and which one applies to me.

 

Also, whenever I have to do my taxes, the taxes on my self-employed income are treated separately or do they add that to my full time job income and calculate them altogether? Do I have to pay taxes on the self-employed income even if it is a tiny amount?

 

Thanks in advance

 

 

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6 minutes ago, catjones said:

I think I'd wait and see if there's any income.  No income = no business = no worries.

 

Well, there will be income, although negligible... At which point can someone consider to make it a formality?

 

Thanks

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1 hour ago, diyeys said:

Do I have to pay taxes on the self-employed income even if it is a tiny amount?

If it's less than €20'000 per annum, I wouldn't bother, it could be far more hassle than it's worth.

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If it's just small change, don't worry about it.  No one is going to be checkig=ng your accounts forensically and asking about a few hundred extra Euros coming in each month.

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I would wait and hope @PandaMunich ( tax consultant ) makes her professional comments- if she has time.

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5 minutes ago, Sroka said:

If it's just small change, don't worry about it.  No one is going to be checkig=ng your accounts forensically and asking about a few hundred extra Euros coming in each month.

Exactly, - though of course first of all they have to come to know that these accounts even exist, which could be tricky if the account is not declared and/or not in Germany. :)

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What difference does it make if your activity is all about the perks? If you've ever tried to access a store's website from your smartphone, you'll immediately notice how inconvenient it is to use. Very small print, pages that don't fit on the screen. Every now and then you have to zoom in and move the page, losing track of the details you need. The mobile application is fully adapted to the size of the smartphone screen - this is the main advantage of the application for the client. Also on mobile you can play game apps that pay instantly to Paypal. Moreover, only a mobile device allows some of the functions of the app (e.g. push notifications, calls, geolocation) to work. Good luck to you!

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On 29/06/2020, 16:05:13, diyeys said:

Do I have to register as a freelancer, self-employed or register a business?

You have to register a Gewerbe: http://www.muenchen.de/dienstleistungsfinder/muenchen/10164604/

 

and apply for a tax number (Steuernummer) your local Finanzamt (in your case, Finanzamt München).

 

On 29/06/2020, 16:05:13, diyeys said:

Also, whenever I have to do my taxes, the taxes on my self-employed income are treated separately or do they add that to my full time job income and calculate them altogether?

All your income gets added up and then the tax rate is looked up on your total income.

 

On 29/06/2020, 16:05:13, diyeys said:

Do I have to pay taxes on the self-employed income even if it is a tiny amount?

In theory, if you are an employee and your freelance profit is up to 410€, you do not have to file a tax return, see §46 (2) Nr. 1 EStG: https://www.gesetze-im-internet.de/estg/__46.html

  • (2) Besteht das Einkommen ganz oder teilweise aus Einkünften aus nichtselbständiger Arbeit, von denen ein Steuerabzug vorgenommen worden ist, so wird eine Veranlagung nur durchgeführt, 1.
    wenn die positive Summe der einkommensteuerpflichtigen Einkünfte, die nicht dem Steuerabzug vom Arbeitslohn zu unterwerfen waren, vermindert um die darauf entfallenden Beträge nach § 13 Absatz 3 und § 24a, oder die positive Summe der Einkünfte und Leistungen, die dem Progressionsvorbehalt unterliegen, jeweils mehr als 410 Euro beträgt;
  • (2) If the income consists wholly or partly of income from employment from which tax has been deducted, an assessment shall be made only,
    1.
    if the positive sum of the income subject to income tax which was not subject to tax deduction from wages, reduced by the amounts due thereon in accordance with section 13(3) and section 24a, or the positive sum of the income and benefits subject to the progression proviso is more than EUR 410 in each case;


However, in practice, the Finanzamt will force you to file a tax return once they know you have opened a Gewerbe, since they say they cannot know how high your profit was until you file a tax return

--> your profit will be taxed, no matter how low it is.

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On 29/06/2020, 17:44:27, lunaCH said:

If it's less than €20'000 per annum, I wouldn't bother, it could be far more hassle than it's worth.

 

That would be tax evasion, which is a crime in Germany.

Please read §370 AO: https://www.gesetze-im-internet.de/englisch_ao/englisch_ao.html#p2615

Section 370
Tax evasion

(1) A penalty of up to five years’ imprisonment or a monetary fine shall be imposed on any person who

1.  furnishes the revenue authorities or other authorities with incorrect or incomplete particulars concerning matters that are relevant for tax purposes,

2.  fails to inform the revenue authorities of facts that are relevant for tax purposes when obliged to do so, or

3.  fails to use revenue stamps or revenue stamping machines when obliged to do so

and as a result understates taxes or derives unwarranted tax advantages for himself or for another person.

(2) Attempted perpetration shall be punishable.

 

Tax evasion is not dealt with lightly in Germany, even the father of star tennis player Steffi Graf went to jail for tax evasion: https://www.washingtonpost.com/archive/sports/1997/01/25/grafs-father-given-nearly-4-years-in-jail/6ec78e68-6db7-47e8-9d54-6b6e8dd4cfff/

Hiding 20,000€ of income from the Finanzamt won't get you jail time, but it will get you a criminal fine and a criminal record.

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Hi Panda! Brilliant, as usual❤️

I can't help but remember being at the Fischmarkt in Hamburg around 4 am and a newspaper seller shouting out " Stefis Vater darf nur Brot und Wasser!)"😀

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Hi,

i am in the same situation like @diyeys, i have developed some projects that i am planning to monetize and thanks to all infos provided thru years by  @PandaMunich i have learned alot. Right now i have only one or two questions :)

1. Because i already work for one company full time i thought that as a Software Engineer i don't need to apply for Gewerbe and only need to apply for a new Steuernummer from Finanzamt, is that correct or Gewerbeschein is required?

2. Because my projects are not direct concurrent with what we are working in the company, should i inform my managers or not, do i need permissions from my managers to monetize my projects?

 

Thanks

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4 hours ago, ZPopovski said:

1. Because i already work for one company full time i thought that as a Software Engineer i don't need to apply for Gewerbe and only need to apply for a new Steuernummer from Finanzamt, is that correct or Gewerbeschein is required?

If you have a university degree in computer science or as an engineer and the freelance work that you do is one-off, intellectually challenging "engineer-like" work, then you are a Freiberufler and therefore only need to file the "Fragebogen zur steuerlichen Erfassung" via ELSTER to get assigned a freelance tax number, yes.

 

If, on the other hand, you do not have a university degree in this or have developed a mass-market app of which you sell copies to numerous customers, then what you do is not "engineer-like" but more like being a trader and you are a Gewerbetreibender. This means that additionally to filing the Fragebogen via ELSTER, you also need to apply for a Gewerbeschein at the city.

 

For details, please scroll down to the section "What kind of self-employed are you?" in here.

 

4 hours ago, ZPopovski said:

2. Because my projects are not direct concurrent with what we are working in the company, should i inform my managers or not, do i need permissions from my managers to monetize my projects?

Look into your employment contract, most contracts oblige the employee to inform/get permission from the employer if they intend to freelance on the side.

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I would add once other concern here. I read a few stories of patent trolls targeting apps which are successful and then trying to exhort money from developers. I imagine it's a fun experience to receive a legal letter in the post demanding 250K+ Euros for tripping over some stupidly approved patent like position of a window on a phone screen. So actually I would only ever develop an application as a company.

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