Taxes and freelancing in Germany

Question

This question is a follow up and more precise version of Tax law and freelancing as a side-job in Germany.

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As explained in the linked question, working as a freelancer in Germany could turn out to be quite complicated taxes-wise.

Here is a more precise scenario: suppose a PhD student/research assistant working at a German university (who gets paid according to 75% of the TV-L 13 wage) has a side gig on an online platform (like UpWork) as a proofreader. Suppose that this side gig ammounts to about 1000-2000 EUR per year (or less).

Would this be considered gewerblich or freiberuflich? What would the tax responsibilities be in this case?

Answer 1

• A couple of 1000 € should leave you fine wrt. social insurance: that would be covered by the university job. Not much further burocracy here than notifying your health insurance.

• It will also leave you far below the Kleinunternehmer threshold, meaning you'll want to sign up for VAT exemption (IIRC, in the Fragebogen zur steuerlichen Erfassung).
  You can ask your tax office, either by phone or in person at their service center (at least "my" tax offices are very professional and friendly nowadays in telling you how to fill in their forms)

• And it is sufficiently small that you can do EÜR (Einnahme-Überschuss-Rechnung) even if you are gewerblich.

• gewerblich vs. freiberuflich depends entirely on what you do, not on how much you do. The definition is in income tax law §18 (1) 1. As authors, journalists and translators are mentioned, I think you have decent chances to be considered Freiberufler with your proofreading.
  Probably best speak to a founder coach (Gründerberatung) before filling in the form and talking to the tax office.

• If the tax office decides you are Gewerbe, you need to sign up as such with your municipality (at the Gewerbeamt, town hall/Bürgerbüro, costs maybe 35 €).

• You'll have to file a Gewerbesteuererklärung in addition to your income tax declaration, but again a few 1000 € are below the tax exemption limit, so that declaration will be very easy and mostly consist of zeros.

• (If you have to pay Gewerbesteuer, that is mostly or all subtracted from your income tax, so Freiberufler vs. Gewerbe doesn't make much of a difference in terms of the amount of taxes you pay, but it differs in to whom you pay taxes and the declarations are different.

• Whether you are Freiberufler or Gewerbe, you'll have to file income tax declaration. Deadline is the 31st of June of the following year (or 28.02. of the 2nd next year with tax advisor).

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Answer 2

It is unlikely that proofreading as a side job will be classified as freiberuflich.

The classic example would a that of a software engineer. This court ruling for instance mentions professional independence, public interest and the necessity of having a university degree for performing the activity as criteria for Freiberuflichkeit.

If you were, however, a lawyer proofreading legal contracts only, you would count as freiberuflich.

Freiberuflichkeit is an elite club in Germany. The PhD in your question tells me that you might be part of it one day. Probably not with proofreading on UpWork though.

Answer 3

From my point of view, it is not entirely unlikely that the activity could be categorized as "freiberuflich". If the work involves advanced linguistic skills and intellectual effort (e.g., reviewing content for consistency, grammar, style, or expression), it clearly aligns with a "freiberuflich" activity as defined under § 18 EStG. Similarly, the work of a proofreader can be closely connected to writing or journalistic activities and could therefore be classified as "freiberuflich".