Hey, all you freelancers out there! If you’re not registered as a Kleinunternehmer, then chances are you’re required in Germany, by law, to submit your VAT taxes monthly (or perhaps quarterly or semi-annually by now).
In my case, I was required for the first two years of registering as a freelancer to submit my VAT taxes to the Finanzamt Düsseldorf on a monthly basis.
At first, this drove me absolutely bonkers! Let me be the first one to say that things are a lot easier as a freelancer when working in Canada. But, I’m not in Canada anymore… so it was essential that I buckled down and figured out how it all worked here in Germany before getting started.
If I’ve caught you completely off guard and you’re thinking ‘woah… woah… woah, Jenna! VAT what now?!‘ then you might want to start off by reading our Ultimate Tax Guide for Freelance Expats in Germany first.
What you need to consider before filing VAT taxes
It is also a good idea that before you venture off on your own, you’re fully comfortable with the German tax system. If you’re not, hire a tax advisor to give you some tips, or pay them to help navigate you through filing your taxes online yourself. Things you might need to consider before filing your own VAT taxes could include:
- How do I claim a large expense (like a car) as a business expense?
- How do I claim foreign earnings?
- Do I claim 7% or 19% VAT or 0% VAT?
- What is a 1% ruling?
- How do I calculate the depreciation of my long-term assets?
- What do I need to know before claiming business lunches?
These are all topics that a tax advisor can help you with. Of course, hiring an accountant to submit your monthly VAT tax to the Finanzamt for you is also a great idea, but only if you have the money. I decided to take this route for the first year of business simply because it was a little too overwhelming to figure out on top of all the new apartment bills and relocation paperwork I was still learning how to fill out.
Save your hard-earned Euros and file your VAT yourself!
But, as time went on I realized it was time to fend for myself and go off on my own (and save a bunch of money). Hiring a tax advisor to do it for me had set me back over 1,500 EUR for the year when I could have been spending 1 hour a month doing it myself online. I used to use lexoffice.de for a while but I found the program a bit too complex (it’s run entirely in German). Thankfully today, there are a few options in English, one of the expat favorites including accountable.de.
Here is a list of the ones I would suggest you take a look at:
Accountable
Accountable is a versatile accounting tool and application specifically designed for freelancers in Germany who prefer to work in English. It assists from the outset of one’s freelance career, offering free guidance through the registration process. The platform supports you in managing invoices, monitoring income and expenditures, and handling tax obligations. The app features an invoice creation tool that helps generate legally compliant invoices directly from your phone. With its bank integration capability, it automatically tracks financial transactions and notifies users when payments are received. Expense tracking is simplified as users can import data, manually input it, or scan receipts and documents via their smartphone.
In addition to the free plan, an annual subscription starts at 15,50 Euros per month.
Sorted
Similarly, Sorted.de is a comprehensive accounting platform designed for freelancers and small businesses in Germany. It simplifies the often complex financial and tax-related tasks by offering an intuitive interface and a range of features aimed at making bookkeeping easier. Sorted.de assists users with invoicing, tracking income and expenses, and managing taxes. One of its standout features is the ability to connect directly with your bank account, allowing for seamless integration and real-time tracking of financial transactions. The platform also provides automated tax calculations and reminders to help users stay on top of their tax obligations.
In addition to the free plan, an annual subscription starts at 98 Euros per year.
I would recommend checking them both out and seeing which platform you enjoy best!
