Declaring both freelance and normal income

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Hi,

 

I have a work visa and I'm allowed to have a formal full-time job and soon also to do freelance in my spare time. My question is regarding declaring both incomes.

 

- In the Ausländerbehörde they mentioned I might have to file 2 separate tax returns, is that correct?

- Does one income affect the other or are they completelly independent? For example, if I earn 100k on my full-time job, does it count for the 22k revenue limit for freelancers to be exempt from charging VAT? Does the income tax affect the combined income or individually on each income?

- Since I'll only be doing freelance in my spare time and probably not earn a lot, do I pay income tax if I earn less than 9k (considering I already earn more in my main job)?

 

Thank you,

Luis Mesquita

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Luis,

The overall income tax rate you will pay is on your combined income. If you really earn 100K in a full time role, you'll be paying a lot of in

income tax on that additional freelance income, unless you happen to be married to a spouse who earns very little. There are various tax calculators you can use, but the marginal rate of income tax (what you pay on the last Euro) is quite high in Germany.

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The tax you pay is calculated on your TOTAL German income.

So if you earn 100k from employment, plus only 5k from freelance, a high percentage of these 5k will go in tax.

 

I submit ONE tax return per year (combined with my wife), and this includes all sources of income, one Anlage for each source.

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On 7/21/2021, 12:41:25, LuisMesquita said:

- In the Ausländerbehörde they mentioned I might have to file 2 separate tax returns, is that correct?

 

Might be.  It depends on what they were talking about.

 

If they were talking about the different types of tax, i.e. income taxes vs. value added tax (triggered by your self-employment income), then yes: 2 returns, one for each type of tax.

 

If they were talking about Germany and the country you came from, then you might indeed have to file 2 returns in the year of your arrival: one for the country you left and one for Germany.

(If you are a US citizen you will always file 2 separate returns even after the year of arrival.)

 

If they were talking about tax forms, as opposed to tax returns then yes, you will report your wage income on Anlage N and your self-employment income and expenses on Anlage S (+Anlage EÜR).

 

 

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I am both angestellt and freelance. I submit 1 return. 

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On 30/07/2021, 07:39:14, Gambatte said:

The tax you pay is calculated on your TOTAL German income.

So if you earn 100k from employment, plus only 5k from freelance, a high percentage of these 5k will go in tax.

 

I submit ONE tax return per year (combined with my wife), and this includes all sources of income, one Anlage for each source.

 

So as an example, 2021, assuming you earned ONLY freelance income

 

100K income = 34,670 Euros in tax as a single person, 23,988 as a couple.

105K income = 36,885 or 25,948 Euros for single/married.

 

So +5K in income results in +2,215 Euros in taxes, leaving you with +2,785 Euros. Marginal tax rate is 45%, you you get just 55% of what you earned.

Results vary if you are married, have kids, pay/do not pay church tax.

 

Freelance income means you cover the social costs yourself, where as, as an employee half of these are covered by your employer in hidden salary that's added to the Bruto rate quoted to you. For illustration, 100K salary results in 14,591 Euros social costs to the employee and a similar amount again to the employer. A 100K Bruto salary (single person) results in only 56,839 in income, but yet again, it depends on many factors.

 

Calculator: http://www.parmentier.de/steuer/index.php?site=tax-income# 

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but...

as freelancer you are allowed to substract

- Arbeitszimmer

- computer etc

- kilometer expenses

- gas fees (no, not ether :-)

- electricity

 

and don't underestimates new contacts...

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