German freelance tax in 2026: how much to set aside, when you pay, and how to invoice international clients

Who this guide is for

This guide is written for Freiberufler: self-employed professionals such as developers, designers, consultants, writers, translators and teachers who work on their own account under § 18 EStG. Freiberufler do not register a trade (Gewerbe), so they pay no trade tax (Gewerbesteuer) and usually keep simple cash-basis accounts (Einnahmenüberschussrechnung, EÜR).

If your activity counts as a trade, you run a GmbH or UG, or you are assessed jointly with a spouse, parts of this guide still help with VAT and cash planning, but the income-tax numbers will differ. Your Steuerberater or the Finanzamt decides the classification; the Fragebogen zur steuerlichen Erfassung you submit when you start is where it is first recorded.

Einkommensteuer-Vorauszahlung: quarterly income-tax advances

Germany does not withhold tax from freelance invoices. Instead, the Finanzamt sets advance payments (Vorauszahlungen) that are due on 10 March, 10 June, 10 September and 10 December. The amount is printed on your tax assessment (Steuerbescheid) or a separate Vorauszahlungsbescheid.

• First year: the advances are based on the profit you estimated when you registered. A low estimate means low advances now and a larger bill later.
• After your first assessment: the Finanzamt usually raises the advances to match the profit it has just assessed. You may pay a back-payment (Nachzahlung) for the previous year and higher advances for the current year in the same period. Many freelancers call this the "double hit".
• If your income changes: you can apply to reduce or increase the advances (Antrag auf Anpassung der Vorauszahlungen) with an updated profit forecast.

Solidarity surcharge (Solidaritätszuschlag) and, if you are a church member, church tax are collected with the advances. Solidarity surcharge only applies above an income-tax threshold and is phased in above it.

Umsatzsteuer-Voranmeldung: VAT returns and 2026 thresholds

Unless you use the small-business scheme, you charge VAT (Umsatzsteuer), usually 19%, and file advance VAT returns (Umsatzsteuer-Voranmeldung) electronically through ELSTER. Each return and payment is due on the 10th day after the period ends. How often you file depends on the previous year's VAT liability:

New businesses founded between 2021 and 2026 are not automatically put on monthly filing; the frequency follows the VAT you expect to owe. A Dauerfristverlängerung (permanent extension) moves every deadline back by one month; monthly filers pay a special advance of 1/11 of the previous year's VAT for it.

Kleinunternehmerregelung (§ 19 UStG)

If your turnover was no more than €25,000 in the previous year and stays below €100,000 in the current year, you can use the small-business scheme and invoice without VAT. You cannot then reclaim VAT on your costs, and crossing €100,000 during the year ends the scheme immediately. Freelancers with mainly business clients often choose to charge VAT anyway, because their clients can reclaim it.

Cross-border invoicing: billing EU, US, UK & Swiss clients from Germany

Many German software engineers, designers, and consultants earn a large share of their income from clients in the United States, the United Kingdom, Switzerland, or other EU member states. Under the German VAT Act (UStG), cross-border B2B services are split into two distinct reporting tracks in ELSTER:

1. Intra-EU B2B Clients (§ 13b UStG & Article 196 VAT Directive)

When you supply consulting, software development, design, or marketing services to a VAT-registered business in another EU country (for example in France, Ireland, the Netherlands, or Spain), the place of supply shifts to the buyer's country under § 3a Abs. 2 UStG, and tax liability transfers to the recipient under Article 196 of the EU VAT Directive (§ 13b UStG):

• Mandatory VIES / BZSt validation: Before invoicing at 0% VAT, verify the client's EU VAT ID in the EU VIES portal or via the German Federal Central Tax Office (Bundeszentralamt für Steuern - BZSt) and archive the timestamped confirmation. Both your own DE USt-IdNr. and the client's EU VAT ID must be printed on the invoice.
• Mandatory invoice wording (§ 14a Abs. 1 UStG): Include "Steuerschuldnerschaft des Leistungsempfängers (Reverse Charge gemäß Art. 196 MwStSystRL)".
• ELSTER USt-VA & ZM filing: Report the net invoice amount in Kennziffer 21 (Nicht steuerbare sonstige Leistungen gem. § 18b Satz 1 Nr. 2 UStG) of your USt-VA, and declare the client's VAT ID and net sum in your Zusammenfassende Meldung (ZM) by the 25th day after the reporting period.

2. US, UK & Switzerland B2B Clients (§ 3a Abs. 2 UStG · Drittland)

When your business client is established outside the European Union (a Drittland such as the United States, the United Kingdom, or Switzerland), the B2B place of supply is also located where the recipient is established under § 3a Abs. 2 UStG. Consequently, the service is not taxable in Germany (nicht im Inland steuerbar), and you issue your invoice without German VAT. However, the formal rules differ from intra-EU supplies:

• US business clients (EIN & Form W-8BEN): US companies do not have a VAT number. To prove to your Finanzamt that the US client is a business (Unternehmereigenschaft) rather than a private consumer, archive their US EIN (Employer Identification Number), a Secretary of State incorporation excerpt, or a signed commercial contract. Most US clients will also ask you to sign IRS Form W-8BEN (for sole proprietors/Freiberufler, whereas corporations use W-8BEN-E): completing Form W-8BEN with your German Steuer-Identifikationsnummer invokes the Germany-US Double Taxation Treaty (DBA USA) and reduces the 30% US withholding tax to 0%.
• UK business clients: Archive the client's UK VAT registration number (GB...) or their Companies House registration number.
• Swiss business clients (UID & Bezugssteuer): Verify the Swiss client's UID number (CHE-xxx.xxx.xxx MWST) on uid.admin.ch. The Swiss client self-assesses 8.1% Swiss acquisition tax (Bezugssteuer under Art. 45 MWSTG). See our dedicated Switzerland & Non-EU Invoicing Guide.
• ELSTER USt-VA Kennziffer 45 (Never ZM!): Report non-EU B2B revenue in Kennziffer 45 (Übrige nicht steuerbare Umsätze - Leistungsort nicht im Inland) of your USt-Voranmeldung. Never enter US, UK, or Swiss revenue in Kennziffer 21, and never include it in your Zusammenfassende Meldung (ZM).

3. Foreign Currency Invoices (USD, GBP, CHF) in Your EÜR

Under the cash-basis accounting method (Einnahmenüberschussrechnung - EÜR, § 11 EStG) and § 16 Abs. 6 UStG, invoices billed in USD, GBP, or CHF must be converted into EUR using the exchange rate on the date the payment is received in your business account (using the actual EUR credit on your bank statement or the official European Central Bank (ECB) daily reference rate for the payment date). Keep the conversion record with the invoice for your Steuerberater.

Interactive German Invoice Clause & ELSTER Kennziffer Finder

Select your client's region and invoice currency below to generate the exact German + English invoice wording, the correct ELSTER USt-Voranmeldung Kennziffer, and the required audit documentation for your Finanzamt:

Health, care and pension contributions

Most Freiberufler insure themselves voluntarily in the public health system (freiwillig gesetzlich versichert). Contributions are a percentage of your assessable income, up to an annual ceiling, and are billed monthly by your Krankenkasse:

• Health insurance: 14.6% general rate if you choose sick pay (Krankengeld) from the 43rd day, or 14.0% without it, plus your insurer's additional contribution (Zusatzbeitrag).
• Long-term care insurance (Pflegeversicherung): 3.6%, or 4.2% if you are 23 or older and childless.
• Pension: most Freiberufler have no mandatory pension insurance, but some professions do, for example self-employed teachers, or artists and writers insured through the Künstlersozialkasse.

Basic health and care contributions reduce your taxable income (Sonderausgaben), so they lower the income-tax reserve. Because the insurer first uses your last assessment, contributions are corrected once your tax assessment arrives. Plan for that adjustment as well.

Worked example: turning profit into a monthly reserve

The 2026 income-tax tariff (§ 32a EStG) is progressive. It starts above the basic allowance and rises to 42% on the top part of income. Here is the tariff applied to a single person with €100,000 taxable income, after health and care contributions and other deductions:

Two lessons follow. First, the average rate (about 31% here) is well below the 42% top rate, so a flat "keep 42%" rule usually ties up money you could use. Second, a flat rule ignores health contributions, the Vorauszahlung schedule and VAT timing. Reserving monthly from the profit you actually received keeps the reserve accurate as your year changes.

How SoloTreasury handles the German profile

1. Set up once. In the Control Center, choose the Germany (single Freiberufler) profile and enter your profit estimate, health-insurance additional rate, sick-pay option and care rate.
2. Log invoices and expenses. Smart Invoicing records each invoice with its VAT treatment; foreign-currency payments use the ECB reference rate for the payment date.
3. Read your Net Spendable. The dashboard reserves income tax, solidarity surcharge, health and care contributions, VAT and a buffer, and shows what you can safely pay yourself this month.
4. Check the calendar. The payment calendar lists VAT returns on the 10th after each quarter and the four Vorauszahlung dates, with an estimate of each advance. Your Finanzamt's figure always takes priority.
5. Hand over to your Steuerberater. Accountant Export produces a clean transaction report. SoloTreasury is pre-accounting software; it does not file with ELSTER and is not GoBD-certified bookkeeping.

Common mistakes German freelancers make

• Spending the VAT. The 19% on your invoices belongs to the Finanzamt. Keep it apart from day one.
• Trusting first-year advances. Low Vorauszahlungen in year one do not mean low tax. Reserve for the real profit, not the advance.
• Mixing up ELSTER Kennziffer 21 and Kennziffer 45. EU B2B reverse-charge services belong in Kennziffer 21 (plus the ZM); non-EU B2B services (US, UK, Switzerland) belong in Kennziffer 45 and must never be entered in the ZM.
• Missing the Kleinunternehmer limits. Crossing €100,000 in the year ends the scheme at once, and later invoices must include VAT.
• Forgetting the insurance correction. Health contributions are recalculated from your tax assessment and can bring a back-payment.
• Mixing accounts. A separate business account makes both the EÜR and your reserve calculation much easier.

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