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There are three options for working as a contractor in Germany:

  • Freelance or Freiberufler
  • Employment under AuG
  • Contracting in Germany via a Limited Company (PSC)

Today, we will talk about the first two options that are the most in demand.


Self-employment is Germany’s most lucrative and popular way to ‘go’ contracting. However, while freelancing is very simple as a way of working, for one to move to Germany to work as a freelancer, you must meet the rules of the German Federation, which are complex to understand.

The first thing that third-country specialists are planning to move to Germany faces is applying for a freelance visa.

If you are not an EU or EEA citizen or permanent resident, you must apply for a German freelance visa to become self-employed, which takes 3 to 6 months. You can only work once you get the residence permit. You should apply for your visa to the German Embassy or Consulate in the country where you reside.

However, if you already have a work visa or a Blue Card (essentially residence permits), it might allow you to freelance.

If you come from Australia, Canada, Israel, Japan, New Zealand, South Korea, the United Kingdom or the United States, you can stay in Germany for up to 90 days without a visa. You can come to Germany and apply for a freelance visa there.

Step two – finding accommodation before arriving in Germany.

Finding accommodation is essential as housing costs vary from city to city, and you will need a residential address for the next step.

Step three – Getting your German identification number, Tax Number and VAT number

As a freelance visa holder, you must register at the “Bürgeramt” or Local Registration Office in the respective German city seven days after being lodged. Registration consists of arranging an online registration meeting, which does not take much time.

You must also register for tax (and simultaneously VAT), which can also be done online with the ‘Finanzamt’ (Tax Office).

Step four – Opening a Freelance Bank Account

You will need a bank account to receive client payments as a freelancer. There are different options for opening a bank account.

Step five – Obtaining Health Insurance

As a self-employed person, you are solely responsible for your social security. Employees will have this taken care of for them by their employees. Because you’re not subject to compulsory social insurance, you must take care of your financial security should you fall ill or have an accident.

You can choose between private (PKV) and public/statutory health insurance (GKV).

It is a temptation to choose the cheapest health insurance. Don’t. At AUGSIGHT, we can help you select the optimal approved insurance coverage and obtain it in the shortest possible time.

Accounting costs

You will need help with your VAT returns and your income tax declaration. For this, people often turn to local accountants such as AUGSIGHT. It is very sensible as it minimises expensive mistakes and penalties if you plan to handle accounting and taxes independently. Secondly, it enables you to apply for available tax incentives of which you may need to be aware.

Well, now you have become a freelancer in Germany!

The main benefits of being a freelancer in Germany are:

1) High Earning Potential: freelancers can charge a higher than average hourly rate or fixed price, which is logical since freelancers in Germany are considered skilled professionals in their fields.

2) Freedom to choose clients and no restrictions on the number of contracts

3) Tax Incentives: Even though Germany is well known as a high-tax country, you may claim several tax benefits as a freelancer.

– There are numerous several expenses that you can claim as business expenses and reduce your tax burden.

– As a self-employed person, you can choose your insurance, which is different for employees.

Are you a genuine freelancer?

Some employers hire “freelancers” but treat them like employees. This way, they try to avoid paying social costs and healthcare, and this is so-called false self-employment (Scheinselbstständigkeit), and it’s illegal.

If the answer is that you are not independent of your client and can show sufficient ‘badges of trade’, then you should consider the option related to employment through AuG, which we will discuss further.

What is AuG in Germany?

Labour leasing, also known as temporary employment (AÜG) in Germany, is a type of employment in which an employer (the leasing company) rents out its employees to other employers (the client companies) for a fee. The employees remain employed by the leasing company but work at the client company’s premises and under the client company’s direction.

Labour-leasing is a common form of employment – you officially work for a company that pays you a monthly salary.

In Germany, an AUG (Arbeitnemeruberlassung) Licence is mandated for companies wishing to hire foreign contractors.

Here are some of the benefits of being employed via AuG compared to the freelance option:

  • An attractive option where you do not fulfil the criteria for self-employment,
  • Job security due to protection under the German employment law.
  • Employed people are covered by the Social Security system, which provides health insurance, unemployment benefits, pensions, paid time off, sick leave
  •  and other employment benefits.
  • The employer deducts income tax and social charges from your salary, so you do not need to worry about calculating how much you must pay.
  • AuG is suitable for temporary positions of less than eighteen months’ duration.

Now, how can a payroll company like AUGSIGHT help with working in Germany?

  • Our local immigration experts will be able to assist with preparing documents and obtaining a work permit in Germany.
  • We will also help register you as a freelancer or an AuG employee, depending on which option is more optimal for you, including obtaining identification, tax, and VAT numbers, the last in the case of the self-employed option.
  • We will assist you with gathering documents to open a bank account.
  • Calculate and pay your taxes and social security contributions.
  • Provide access to our online portal where you can see all the information about your contracts and, in a convenient form, submit the necessary documents for lightning-fast payroll.
  • Provide you with support and advice on various topics, such as taxation, employment law, and immigration.

Schedule a free consultation with one of our experts:

Tel: +49 (6105) 4074016