Contractors’ Question: Contracting in Germany, am I a Freiberufler or Selbstständig?

Contractor’s Question: I spotted that this Contractors’ Questions article on working in Germany as an umbrella company contractor refers to ‘Freiberufler’ but apart from Freiberufler (‘freelancer’), there is also ‘Selbstständig.’

And although the Q&A does not mention Selbstständig (‘self-employed’), that classification requires the holder to pay ‘Gewerbesteuer’ (‘business tax’) and depending upon the role you do, you could fall into that category. Also, I believe that it is referred to as ANÜ, or Arbeitnehmerüberlassung (‘temporary work’),  and not ‘AÜG’ as in the Q&A. Am I right?

Expert’s Answer: Thanks for your interesting feedback and looking closely at our previous guidance-based answer.

Actually, there is not a very clear distinction between a freelancer (‘Freiberufler’) and a commercial freelancer (‘Gewerbetreibender’). To find out which they are, a candidate must submit a copy of their degree, ideally in the relevant sector (IT, or Engineering for example) to the tax office. And the candidates must describe their type of work. Be aware that a degree is a must, and without a degree it is problematic to qualify as a Freiberufler.

No guarantee

But having a degree does not automatically mean that you will be classified as Freiberufler! Rather, it is the job description which will be pivotal.

Further be aware that if the German tax office defines an individual as a commercial freelancer, the individual will be required to pay trade or business tax (‘Gewerbesteuer’) to the individual’s local commune. Fortunately, this trade tax is typically deductible from the individual’s income tax burden once they file their tax return.

One and the same

Finally, you mention ANÜ and AÜG. Both are correct. Labour leasing in Germany (abbreviated ANÜ or AÜG) is defined as a scenario where employees are leased out by an employer (staff leasing) to a third party (end-user) for a defined period of time and for a defined fee. We hope these clarifications help.

The expert was Michelle Reilly, chief executive of 6CATS International.

Wednesday 22nd Sep 2021
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Written by Michelle Reilly

Michelle Reilly is the CEO of 6CATS International and Founder of 6CATSPRO. With over 20 years experience in developing and managing contractor workforce solutions, she is an expert in international tax compliance.
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