In Germany, being classed as a member of a liberal profession (Freiberufler) brings significant tax and administrative advantages over running a commercial business (Gewerbe). However, the final classification is decided by the tax office.

The main advantages of Freiberufler status

Freelancers in the liberal professions do not have to register a trade and do not pay trade tax (Gewerbesteuer). They do not need double-entry bookkeeping – a simplified income statement (Einnahmen-Überschuss-Rechnung, EÜR) is enough. Small commercial businesses can also use the EÜR as long as they stay below certain turnover and profit thresholds. Freiberufler are also not members of the chamber of commerce (IHK).

The liberal professions under Section 18 of the Income Tax Act

The Income Tax Act lists the so-called catalogue professions (such as doctors, lawyers, architects, engineers, journalists and translators) and similar professions. The key criterion is a personally provided, highly qualified intellectual, scientific or creative service without commercial trading.

Grey areas: developers, web designers and marketers

Software developers are classed as Freiberufler if their work is engineering-like (designing architecture, complex algorithms). A relevant degree helps, but according to the Federal Fiscal Court (BFH), comparable self-taught knowledge can also be proven. If someone mainly installs ready-made CMS templates, sets up hosting or sells software subscriptions, the tax office will usually classify the activity as a Gewerbe.

The risks of mixed activity

If a freelancer also starts selling physical goods or licences, there is a risk that the commercial activity “taints” the rest (gewerbliche Abfärbung), and the tax office may treat all income as commercial. According to the BFH, a small commercial share (no more than 3% of turnover and no more than €24,500 a year) does not cause this. With a larger share, tax advisers often recommend moving the trading into a separate business with its own accounts.

What to check

  • Check whether you can show a relevant degree or comparable knowledge.
  • Assess the share of creative or engineering work in your client orders.
  • Keep the resale of ready-made goods and equipment out of your freelance services.
  • Agree the description of your activity with a tax adviser before submitting the questionnaire.

Example situation

A UI designer registers as a Freiberufler for UX/UI design but sets up a separate Gewerbe to sell printed merchandise, keeping the tax advantages for her main income.

Next step

The tax office decides your status based on your actual contracts and qualifications; if in doubt, it is safer to get a written ruling.

Official information on this topic

Checklists and examples are organisational recommendations. Requirements depend on the procedure, the city and your situation; check them with the relevant office before you act. Please discuss legal and tax questions with an authorised professional.

This article was prepared with the help of AI. The example illustrates the approach and does not describe a client case.