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I run a website as a hobby. I have to pay for hosting, I don’t earn anything with it.

I want to include advertisements/affiliate links, so it’s likely that I will earn some money with this website. (Potentially a lot of money.)

Does that make me a freelancer? Or, do I have to register a business or do I need to do something else?

(I’m mostly interested in Germany, but it might also be interesting if there are big differences in other countries.)

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In Germany, according to § 15 Abs. 2 EStG, you must register a business if you

  1. are self-employed ("selbständig"),
  2. plan to generate income ("mit der Absicht, Gewinn zu erzielen")
  3. in the long run ("nachhaltig"),
  4. deal with others ("Beteiligung am allgemeinen wirtschaftlichen Verkehr"), and
  5. are not working in agriculture and forestry or a so-called "free" academic profession ("freier Beruf") (e.g. physician, lawyer, artist, architect, journalist, scientist, etc.).

Here is the relevant paragraph in full:

Eine selbständige nachhaltige Betätigung, die mit der Absicht, Gewinn zu erzielen, unternommen wird und sich als Beteiligung am allgemeinen wirtschaftlichen Verkehr darstellt, ist Gewerbebetrieb, wenn die Betätigung weder als Ausübung von Land- und Forstwirtschaft noch als Ausübung eines freien Berufs noch als eine andere selbständige Arbeit anzusehen ist.

You do not have to register a business if you just sell your old stuff on a flea market or through the internet.

The height of your income does not matter for the necessity to register a business, but you don't have to pay taxes if your income is below a certain threshold. You still have to declare every cent you earn in your tax declaration.

In sum, as these two lawyers explain for the examples of Google AdSense and Amazon Associates ("Amazon PartnerNet"), you must register a business if you create revenue through internet advertising, no matter how little.

2

You never HAVE to become a freelancer or business. Even if you generate income. As long as you declare the income on your yearly tax statement it's all official (and don't receive any VAT from customers of course). The reason people become freelancers or start a business is because there is less taxation if it is income from employment, freelancing or business ownership than "general" income put straight into your yearly statement. I'm quite sure this works the same in most EU countries.

Some clarification on this: there is a difference between having the most appropriate setup tax-wise and being allowed to generate income. You can always generate income as long as you officially declare it in your taxes.

On a practical note, if you generate a few bucks just don't bother. If this becomes a structural income, say a few hundred euros per month, you may want to make it official.

(I'm an EU national, not DE)

  • 2
    Although I'm across a big ocean from you, can you point out any references for your answer? As it stands right now, it seems like you are offering legal advice without any reference. Can you edit your answer to add more info from reputable sources? Thanks – Canadian Luke Mar 15 '14 at 20:20
  • I could point to references, but they would be in French, German or Dutch... also, the fact that any income is OK as long as you declare it in your taxes (the difference between black and white money basically). I.e., income is income, whether you are a business or not. Having a business changes the taxation rate, it does not change the fact it is taxed. – user3244085 Mar 15 '14 at 20:23
  • If you can reference it, it just helps the answer for future visitors. Again, I'm in Canada, where the laws are different then what's posted. That's why we're asking for clarification – Canadian Luke Mar 15 '14 at 20:28
  • Can you point to references for that claim? :) Income is income, in Canada as well. You do not need to be a business to generate income as long as you declare it in your taxes. – user3244085 Mar 15 '14 at 20:31
  • You are correct: as long as it's declared, but it can be declared differently as a Sole Proprietor, a Partnership, a Corporation, or individually – Canadian Luke Mar 15 '14 at 21:25
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The first answer to questions regarding taxes and creating a business structure is to consult tax and legal professionals.

I don't know about Germany, but you mentioned that you are interested in other countries as well, so I will answer this for the United States.

Again, you should consult the above mentioned professionals no matter which country you are in.

In the U.S. you are automatically a business when you make money which isn't already accounted for by some other tax scheme. In other words, the money isn't from your employer (which is a W2 form in the U.S.) and it's not counted as income from another business you own. In the U.S. that makes you a sole proprietor. There is nothing special that you need to do for having your own sole proprietorship. It's automatic.

I imagine Germany is similar because there needs to be a tax form to deal with that income. There is nothing blocking payments just because you didn't formally setup a business structure. You got paid, now you need to pay your taxes. There will be a way for Germany to get its share.

Additionally, there is likely some local things that you may need to do. Generally the city requires that you get a business license or something similar. That has nothing to do with your business structure though. There also might be laws regarding where you are able to work from. Generally these laws are in place to make sure you aren't setting up a factory in a residential area. How many people in your situation actually bother getting their businesses licensed is another question.

Another item to note is that in some cases, income from abroad is taxed differently from income which comes in from within your country. For example, in the Philippines (where I'm currently living) there are special economic zones in which you get a tax holiday for all income from abroad while operating from those zones. Other countries have similar.

Of course, I'm not a tax or legal professional. Do your own research. If you feel that consulting pro's is too much for the income that you expect to receive, then I imagine Germany has a website where you can get more info. Download the forms. read the info. I'm sure you will see boxes on the forms you typically fill out for income which is for everything that's not your employer.

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