Freelancing in Germany: am I a Freiberufler or Gewerbe?

Question

I arrived to Germany recently and do not yet speak German. I would like to do some work in my spare time which consists of creating visual artwork.

In Germany, it is important for tax purposes to decide if one is a "freelancer"/"Freiberufler" or "tradesman"/"Gewerbe". The distinction seems to be tricky sometimes, and I would like to restrict my activities to those that can be done as a "freelancer" (the simpler and more advantageous tax class).

I am looking to potentially do the following types of work:

1. Create commissioned artwork (painting, drawing, graphic design, etc.). The client tells me what they want and I create it for them.

2. Create artwork of my own choosing (painting, drawing), then sell the unique framed copy.

3. Create artwork of my own choosing, then sell multiple framed prints.

4. Create artwork, then print it on mugs, t-shirts, etc. and sell them for a significantly higher price than the cost of the plain mugs/shirt/etc. on sites like Etsy.

My question is: Which of these qualify as "freelancing" for tax purposes in Germany?

I am certain that 1. does, and I suspect that 4. does not (though I am unsure). 2. and especially 3. are less clear to me.

While any response is welcome, I am primarily looking for referenced answers. I find some of the categorizations non-obvious. For example, I learned from google translating this webpage that if operating a dance studio, ballet counts as "freelancing" but standard dance does not.

Advice on how I might go about researching the answer is also welcome. This is a hobby for me that would generate very little income, so going to a tax advisor is too expensive for the moment.

Answer 1

IANAL, but Freiberufler is actually pretty well defined: Most ventures that you need to be uniquely qualified for can be done freiberuflich - Meaning lawyers, engineers, educators; Artists are deemed to be uniquely qualified across the board, as nobody can really rate art... . Gewerbe is mostly selling not-your-own/plain products, or working in a tradecraft (carpenters,...) . Beware, though: Freiberuflichkeit can be 'infected' by Gewerbe, and then looses all bonuses: So you need to make extra clear that it is only your artworks that get onto those mugs and T-Shirts, no other works, no plain mugs, otherwise your whole enterprise will be judged a Gewerbe as a whole.

Best you just hit up the Finanzamt for advice on what to do and not to do. Go there in person, and describe what you plan, they'll give you advice on what to avoid - they have no interest in hassling you, and will give you fair advice.

Answer 2

To my knowledge (IANAL) your occupation is one of the classical "Freiberufler" ones, as I would think it all qualifies as "Artists or Graphic designer" as long as the artworks are your own work.

Here is a very good starting point.

If it is really an advantage to be "Freiberufler" then "Gewerbetreibender" is up to a lot of factors, and depends on your individual place of residence (Gewerbesteuer), turnover and your customers (VAT-Deductible or not?).

I would strongly recommend to get individual counseling on that and also any implications it might have on your social security status.

You can also often get some free consulting at your local Arbeitsamt and IHK. But also invest some € for someone professional - changing things down the road or even be re-classed by the Finanzamt when you are somwaht succesful down the road will hurt much more than the few 100€ now.

Answer 3

If we are talking about a small yearly turnover (some hundred to some thousand EUR) it will no really be a big difference.

One general question to ask when it comes to taking risks about taxation is always: What is the largest possible collateral? What I mean is: If you make 5.000 EUR a year and you have a tax burden of in between 1.000 and 2.000 EUR from that and someone finds out later you have done it wrong and you need to pay another 500, then those 500 are you risk. You don't want to pay 700 EUR to prevent a loss of 500.

If you ask people like the Finanzamt or the IHK or whoever, the problem with that is that whatever they will tell you, they will either tell it in such a complicated way that it will not mean yer or no to you and / or you will not be able to hold them reliable later for what they have said upfront. Also rules change over time.

If you are looking for some practical advice and if you stay below 17.500 EUR, make yourself familiar with the Kleinungternehmerregelung for VAT (https://de.wikipedia.org/wiki/Kleinunternehmerregelung_(Deutschland)), register a business with the Gewerbeamt and do your tax return once a year. You should be able to do that yourself online or through some cloud service which will charge you some ~30-50 EUR for the yearly tax return.

Should you become successful, re-think the whole think then.

The discussion about "gewerblich" or "freiberuflich" is mostly about having to pay Gewerbesteuer (municipial business tax) or not. That makes a difference (usually less than people think, at the end of the day) if you are making some 50.000 EUR of revenues per year or more. There is deduction of 24.500 EUR, so if your profit (not your revenue) is less than that, your Gewerbesteuer will be 0,00 EUR anyway.