Taxes for self-employed people in Germany

1. Which taxes can apply?

Simplified concept for individuals: revenue minus allowable business expenses equals profit. Tax accounts use statutory recognition and valuation rules, so cash movement alone is not always the answer.

2. VAT and input tax

A VAT-registered business charges Umsatzsteuer on taxable outputs and may deduct qualifying Vorsteuer on business inputs. The standard rate is 19%; 7% applies only to legally qualifying supplies. Exemptions and cross-border rules can override this beginner model.

3. Kleinunternehmerregelung: current thresholds

Since 2025 the domestic exemption applies where previous-calendar-year total turnover did not exceed €25,000 and current-calendar-year turnover does not exceed €100,000. These are turnover, not profit. Once the current-year ceiling is exceeded, the exemption ends from the transaction that crosses it.

Kleinunternehmer invoices do not charge VAT under this exemption and generally do not provide the normal input-tax deduction. Opting out can bind the business; assess the customer and cost structure.

4. Gewerbesteuer

Natural persons and partnerships receive a €24,500 trade-income allowance; corporations do not. The municipality applies its Hebesatz, so the actual burden varies. Freiberufliche income generally is not trade-tax income, but classification and mixed activities matter.

5. Bookkeeping and business expenses

Keep invoices, receipts, revenue and expense records. EÜR can be available in qualifying cases; corporations and other businesses may require double-entry books and annual accounts. Do not assume every self-employed person uses EÜR.

Equipment, software, professional services, office, travel and telecommunications may be deductible to the extent business-related and properly evidenced. Home-office treatment depends on current statutory conditions, not old pandemic rules.

6. E-invoicing in 2026

Domestic businesses must be technically able to receive compliant B2B e-invoices. Through 31 December 2026, issuers can generally use another invoice format under the transition; issuers with prior-year turnover up to €800,000 have an extended issuing transition through 2027. Statutory exceptions include qualifying small-value invoices.

A PDF is not automatically a structured e-invoice. Preserve the original structured record and use current BMF guidance.

7. When professional help is valuable

A Steuerberater is especially useful for cross-border tax, mixed employment and business, VAT, payroll, companies, property income and restructuring. It is not legally required for every freelancer, but correcting a bad setup later can cost more.