Do's and Don'ts of Self-Employment
If you are looking to start a business, or are otherwise exploring the option of self-employment in Germany, the first step is to apply for a residence permit. The permit will be valid only for a set period of time, although it will usually have an option for renewal.
In order to obtain a residence permit, you must be able to provide the following:
- A business plan
- An overview of your qualifications and previous work experience
- Details of your planned financial investment
- Your business's impact on employment and vocational training
- Your overall contribution to either the regional or national economy
- Innovation, and research competition with established companies
As a general rule, self-employed immigrants who plan to invest a minimum of €250,000 in the country, creating at least five new jobs in the process, will obtain a residence permit automatically. However, in virtually all other cases, your application will be considered carefully before a final decision is made.
Registration
Self-employed people living in Germany are not required to follow the same registration policies as business companies. Nevertheless, they must register with the local tax authorities and the appropriate professional association.Registering with local authorities is a straightforward process and can be done via an informal letter or even by email. However, registration with the responsible professional association is a more formal process and you will be required to fill out various official forms and be able to present any necessary documents.
Social Security
Under the terms of legislation known as the Social Law for Artists (Kuenstlersozialversicherungsgesetz), those working as either artists or journalists are required to contribute towards the following:
- Pension insurance: 19.6 percent of total income
- Health insurance: 15.5 percent of total income
- Care insurance: 1.95 percent (for those with children) or 2.20 percent (for childless individuals) of total income.
Freelancers working in other roles are not legally obligated to contribute towards German healthcare, pension or unemployment insurance. With that said, it may be sensible for such individuals to make their own personal arrangements for the following:
- Private health insurance
- Health insurance
- Disability insurance
- Life insurance
It should also be noted that, since 2009, all ex-pats, including those engaged in self-employment in Germany, are required to hold valid health insurance while living in the country.
