'Self-employment in Germany: how to start an Einzelunternehmen,

In Germany, self-employment is most often set up as an Einzelunternehmen. For Russian-speaking entrepreneurs, the main difficulty is usually not the registration itself, but choosing the right status, checking work authorization, completing the tax questionnaire, arranging health insurance, and handling reporting.

This guide explains the general process. In tax, immigration, and insurance matters, details depend on the federal state, city, profession, visa status, and family situation, so before submitting documents you should check the conditions with the Finanzamt, Ausländerbehörde, IHK/HWK, and a tax adviser.

What to check before registration

Before you start, gather basic information in five areas:

whether your visa or residence permit allows self-employed activity;
whether your activity qualifies as Freiberufler or Gewerbe;
which taxes and advance payments the Finanzamt may assess;
how your health insurance will be arranged;
which documents, permits, and memberships are required specifically for your profession.

If you are moving to Germany specifically for a business or freelance activity, you will usually need a residence permit in Germany as an entrepreneur, a business plan, financial proof, and confirmation of economic interest. You should not apply these requirements to yourself based on someone else’s example: the Ausländerbehörde assesses each specific case.

If you are already employed and want to run a business as a business alongside your main job, check your employment contract. Your employer may require notification or approval, especially if the activity competes with your main work, affects working hours, or involves sick leave and vacation.

Freiberufler or Gewerbe: what is the difference

In German practice, self-employed activity is usually divided into two groups:

Status	How it is registered	What matters
Freiberufler	directly through the Finanzamt	no Gewerbeanmeldung, usually no Gewerbesteuer, status depends on the profession
Gewerbetreibende	through the Gewerbeamt, then the Finanzamt	Gewerbeanmeldung is required, IHK/HWK and Gewerbesteuer may apply, as well as special permits

Freiberufler are not just any freelancer in the everyday sense. Liberal professions usually include, for example, doctors, lawyers, architects, engineers, tax advisers, journalists, artists, teachers, and similar professions, if the qualification and type of work meet the requirements.

The decision on status is made by the Finanzamt. If your activity is on the border between a liberal profession and Gewerbe, it is better to describe it in writing in advance and discuss it with a tax adviser. A mistake can lead to backdated Gewerbesteuer or the need to register a Gewerbe late.

Main laws and authorities

Several levels of regulation are important for an Einzelunternehmer:

Steuerrecht: tax law covering Einkommensteuer, Umsatzsteuer, Gewerbesteuer, tax returns, and accounting;
Handelsgesetzbuch (HGB): commercial law, especially if the business requires entry in the commercial register;
Gewerbeordnung and local rules: Gewerbe registration and permits for certain types of activity;
immigration rules: if the entrepreneur is not a citizen of Germany or the EU.

In day-to-day registration, the most common authorities are the Finanzamt, Gewerbeamt, Ausländerbehörde, IHK, HWK, Berufsgenossenschaft/DGUV, and, if you hire employees, the Agentur für Arbeit.

Step-by-step registration

1. Check your right to self-employed activity

Foreign nationals need to make sure that their Aufenthaltserlaubnis allows self-employment or entrepreneurial activity. If the document says that business activity is prohibited or not expressly permitted, you first need to contact the Ausländerbehörde.

2. Determine the type of activity

Freiberufler usually report the start of their activity directly to the Finanzamt through the Fragebogen zur steuerlichen Erfassung. Gewerbetreibende first register a Gewerbe at the local Gewerbeamt.

3. Register a Gewerbe if you are not a Freiberufler

For a Gewerbe, the procedure is called Gewerbeanmeldung. You can look for the responsible authority via the Behördenwegweiser or on your city’s website. After registration, the entrepreneur receives a Gewerbeschein or confirmation of the Gewerbe-Anmeldung.

The fee for Gewerbeanmeldung depends on the city. In some professions, additional permits may be required, for example for food service, transport, security work, skilled trades, or professions associated with special risks.

4. Submit the Fragebogen zur steuerlichen Erfassung

According to ELSTER, the Fragebogen zur steuerlichen Erfassung must be submitted electronically to the Finanzamt through ELSTER within one month after the activity begins. The questionnaire states the type of activity, expected revenue and profit, bank details, the Umsatzsteuer regime, and other information.

For the questionnaire, you usually need a German tax identification number, Steueridentifikationsnummer. After processing, the Finanzamt assigns a Steuernummer for the self-employed activity.

It is advisable to open a separate Girokonto or a separate business account in advance. The law does not always require a dedicated business account for an Einzelunternehmer, but separating personal and business payments makes accounting much easier.

Taxes for an Einzelunternehmer

A sole proprietor in Germany may deal with three main taxes:

Einkommensteuer: income tax on profit;
Gewerbesteuer: trade tax for a Gewerbe if there is an obligation to pay it;
Umsatzsteuer: VAT, if the entrepreneur does not use the Kleinunternehmerregelung or is not exempt because of the nature of the services.

Einkommensteuer

Einkommensteuer is calculated not on turnover, but on taxable income. For an entrepreneur, this is usually profit after expenses have been taken into account, adjusted under tax law rules. Income tax in Germany is progressive: the higher the taxable income, the higher the marginal tax rate.

Under section 32a EStG, for 2026 the basic tax-free allowance in the Grundtabelle is EUR 12,348. After that, the rate rises progressively, the 42% bracket begins at EUR 69,879, and the 45% rate applies from EUR 277,826 of taxable income. This does not mean that the entire income is taxed at the top rate: the tariff is calculated by formula.

Taxable income, 2026	Rate guide
up to EUR 12,348	0% under the Grundtabelle
EUR 12,349-17,799	first progressive zone
EUR 17,800-69,878	second progressive zone
EUR 69,879-277,825	42% zone
from EUR 277,826	45% zone

The Finanzamt may set Vorauszahlungen, meaning advance payments of income tax. They depend on the expected profit that the entrepreneur states in the questionnaire and are later adjusted based on the tax return.

Gewerbesteuer

Freiberufler usually do not pay Gewerbesteuer. For Einzelunternehmen and partnerships that operate a Gewerbe, there is an annual allowance of EUR 24,500 of Gewerbeertrag. If the Gewerbeertrag is higher, the tax is calculated using the 3.5% Steuermesszahl and the local Hebesatz.

It is the Hebesatz that makes this tax vary by region. It is set by the municipality, so before registration it is useful to check the rate in the city where the business will be located.

Part of the Gewerbesteuer can be credited against Einkommensteuer, but this is not a universal guarantee of a zero burden. With a high Hebesatz, a particular income structure, or a complex situation, the calculation should be done by a Steuerberater.

Umsatzsteuer and the Kleinunternehmerregelung

The standard Umsatzsteuer rate in Germany is 19%, while certain goods and services are subject to a reduced rate of 7% or an exemption. But small entrepreneurs can use the Kleinunternehmerregelung under section 19 UStG.

Since 2025, the rule works as follows: a Kleinunternehmer does not charge Umsatzsteuer if total turnover in the previous calendar year did not exceed EUR 25,000 and does not exceed EUR 100,000 in the current calendar year. If the current-year limit is exceeded, the rules on switching to standard taxation become important.

If the entrepreneur uses the Kleinunternehmerregelung, they do not show Umsatzsteuer on invoices and cannot claim Vorsteuerabzug on purchases. In invoices, a phrase such as “Gemäß § 19 UStG wird keine Umsatzsteuer berechnet” is usually added.

The Kleinunternehmerregelung is often convenient when working with private clients. If the business buys many goods and services with VAT or works with companies in Germany and abroad, opting out of VAT may be disadvantageous.

USt-ID and invoices for foreign clients

The Umsatzsteuer-Identifikationsnummer (USt-IdNr.) has the format DE plus 9 digits. It is especially important for B2B transactions within the EU and for reverse charge cases.

You should not automatically assume that every sole proprietor needs a USt-ID. If you use the Kleinunternehmerregelung, work with foreign legal entities, or sell digital services, it is better to clarify the procedure with the Finanzamt or a Steuerberater: mistakes with Umsatzsteuer can quickly become expensive.

Health insurance for entrepreneurs

Health insurance is mandatory. An entrepreneur may have several options:

freiwillige gesetzliche Krankenversicherung, if there is a right to remain in the statutory system;
private Krankenversicherung;
special temporary plans for some expats;
Künstler Sozialkasse for certain creative professions if the conditions are met.

If the entrepreneur was already insured in a statutory health fund, they may remain there on a voluntary basis. In a spouse’s family insurance, you can stay only if the income and employment thresholds are met; those thresholds change, so they should be checked with your own Krankenkasse. For details on family coverage, see the article about family insurance.

To Krankenversicherung contributions, Pflegeversicherung is added. In private insurance, a separate contract applies to each person; free family inclusion as in the statutory system usually does not exist. In serious illness cases, a BASIS tariff may be considered.

In some temporary situations, expats use international or special private plans. For example, Care Concept publishes a Russian-language page with plans: Care Concept for expatriates. Before choosing, it is important to check whether such a policy is suitable for a residence permit, status extensions, and plans for permanent residence.

Pension, loans, and liability

An Einzelunternehmer is usually liable for obligations with all personal assets. This is the main difference from a GmbH and other forms with limited liability.

Contributions to the statutory pension insurance are not always mandatory for entrepreneurs, but there are professions and situations where an obligation arises. If there is no mandatory contribution, the entrepreneur decides whether to pay voluntarily, arrange a private pension, or combine options.

Business loans are possible, but the bank will usually look at the business plan, turnover, profit, personal credit history, and collateral. Taking out loans for a business without assessing the risks is dangerous because the debts of an Einzelunternehmen remain the entrepreneur’s personal responsibility.

At the start, programs from KfW, Landesförderbanken, or guarantees from a Bürgschaftsbank may sometimes be available. Applications are usually not submitted directly to KfW, but through the servicing bank.

Support from the Agentur für Arbeit and Jobcenter

Unemployed people who want to start a business can check whether they are eligible for Gründungszuschuss. The decision is made by the Bundesagentur für Arbeit; a business plan, a viability check of the project, and confirmation of professional suitability are usually required.

If you receive ALG or Bürgergeld, you must inform the Agentur für Arbeit or Jobcenter before registering the business. Income from self-employment may reduce the benefit or change the reporting obligations.

Documents for Gewerbeanmeldung

The following may usually be required:

a passport or Personalausweis;
an Aufenthaltstitel with permission for self-employed activity, if you are not a citizen of Germany or the EU;
the business address;
a description of the type of activity;
special permits if the profession is regulated;
if necessary, a Führungszeugnis, an Auszug aus dem Gewerbezentralregister, or proof of qualifications.

If the activity belongs to the trades sector, check the requirements at the HWK chamber of crafts. For Gewerbe, the IHK Finder is also useful because many entrepreneurs automatically become IHK members. Contributions and exemptions depend on the region, profit, legal form, and the rules of the specific chamber.

Business name and address

An Einzelunternehmer may operate under their own name or use a commercial designation if it does not mislead customers and does not violate third-party rights. If the business is entered in the Handelsregister, the requirements for the business name are stricter.

The address may be your home address or separate premises. If you rent your home, it is worth checking the contract and obtaining the landlord’s consent if there will be clients at home, storage, noisy activity, or a noticeable commercial burden. For some types of activity, the city may require separate premises, parking spaces, or permission to use residential property for a non-residential purpose.

Hiring employees

If the entrepreneur hires employees, additional steps are required: a Betriebsnummer from the Agentur für Arbeit, registration with the Berufsgenossenschaft, payroll accounting, social contributions, compliance with labor law, and occupational safety rules. For hiring foreign nationals, see more details here about hiring foreigners in Germany.

Even without employees, letters may arrive from the Berufsgenossenschaft or DGUV. They should not be ignored completely: you need to understand whether there is an obligation to register or pay contributions for your specific activity. For accident insurance, see mandatory accident insurance.

How to issue invoices

An invoice for a B2B client usually must contain:

the entrepreneur’s name, address, and details;
the client’s name and address;
the invoice date;
a unique invoice number;
the period or date the service was provided;
a description of the goods or services;
the Steuernummer or USt-IdNr., if applicable;
the amount, Umsatzsteuer rate, and brutto/netto total, or a reference to section 19 UStG for Kleinunternehmer;
the payment deadline and bank details.

For private clients, an invoice is sometimes not mandatory, but it is often requested for warranty, reimbursement, or bookkeeping. In some sectors, special rules apply, so it is better to check the invoice template before the first sales.

Reporting and document retention

The simplest form of accounting for many Einzelunternehmer is the Einnahmenüberschussrechnung (EÜR): income minus expenses. But the right to use EÜR and the obligation to keep double-entry books depend on turnover, profit, commercial status, and registration.

Usually, the entrepreneur files an annual Einkommensteuererklärung. For Umsatzsteuer, there may also be Umsatzsteuer-Voranmeldungen and an Umsatzsteuererklärung. For Gewerbe, a Gewerbesteuererklärung is required if there is an obligation.

Reporting can be submitted through ELSTER or through a tax adviser. Some notifications from authorities arrive by regular mail, so the business address must have a proper mailbox. Invoices, contracts, certificates, bank documents, and tax confirmations must be kept for the required periods. In practice, for tax-relevant business documents, long-term retention is often the benchmark, so it is better to build a tidy digital archive from the beginning.

How to close a sole proprietorship

For a Gewerbe, closure is handled through Gewerbeabmeldung at the Gewerbeamt. The authority passes the data on, but the entrepreneur should still check separately with the Finanzamt, IHK/HWK, Berufsgenossenschaft, Krankenkasse, and with contracts with clients and suppliers.

Freiberufler report the end of activity to the Finanzamt. If there were employees, VAT, a commercial register entry, special permits, or chamber memberships, closing may require additional steps.

After the business is closed, tax reporting for the period of activity still has to be submitted. If advance payments had been set, you should request a revision so you do not continue paying Vorauszahlungen for an activity that has already ended.

Short checklist

Check your residence permit, employment contract, and right to self-employed work.
Determine whether you are a Freiberufler or Gewerbe.
Find out whether permits, IHK/HWK, or Handelsregister are required.
Submit the Gewerbeanmeldung if the activity is a Gewerbe.
Send the Fragebogen zur steuerlichen Erfassung through ELSTER.
Choose your Umsatzsteuer regime and check the Kleinunternehmerregelung.
Set up insurance, accounting, invoices, and a document archive.
If you hire employees, obtain a Betriebsnummer and check your DGUV/Berufsgenossenschaft obligations.