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I believe it is the case (please correct me if this is wrong) that if someone earns money in Germany on a self-employed basis, then they are supposed to register as self-employed with the local finance office, even if the actual income from this work is very low.

What would happen in the case where someone had been working for about a year as self-employed but earning an extremely low income from this (far below the threshold to pay tax) and hence did not realise they needed to register? Upon realising that they should register, would they be subject to a fine or other penalty for not having registered in a timely manner?

Edit: the work in question is conducted online, and does not involve any element of physical risk.

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  • I think the answer will depend on the kind of business. It is not just a tax matter, it also concerns health and safety inspections. – o.m. Feb 15 at 17:16
  • I see, thanks. What if the work is something which is done on a computer at home and does not involve any physical risk? – twestley Feb 15 at 18:00
  • Still a varying level of regulation. If you are seriously worried, talk to a tax lawyer to get advice on how to handle this. – o.m. Feb 15 at 19:22
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When starting self-employed work, there are a number of consequences.

  • If the activity is gewerblich but not freiberuflich, it is necessary to register with the Gewerbeamt (~ trade office). This obligation is specificed in §14 GewO. Per §146 GewO, failure to perform a registration is a misdemeanour that can be fined with up to €1000. This assumes that the business has to be registered but not authorized.

  • For any self-employed work, it is necessary to fill out the Fragebogen zur steuerlichen Erfassung with your tax office. This is specified in §138 AO. I can't find information about a concrete fine, but misdemeanours are generally fined with between €5 to €1000, in proportion with the severity.

  • As a self-employed person, you are required to file taxes. Delayed tax filings are penalized (see §152 AO) with 0.25% interest per month on the due tax (at least €10 or €25 per month), but is capped at €25000. However, the surcharge can be dropped if no tax is owed. Note that without any tax filings, the tax office is required to estimate your earnings – and is allowed to assume the “worst case” of maximal reasonable earnings (§162 AO).

  • You are required to inform your health insurance about any changes to your employment, including taking up self-employment. If you are insured through statutory health insurance, they will recalculate your past insurance premium. The good news that premiums depend on your income, so low additional income will lead to moderate additional payments.

  • If you draw any kind of public benefits or social security payments (including Bafög or Arbeitslosengeld I/II), you must notify the respective office. You may be required to repay part of these benefits (with penalties). However, this will depend a lot on how much you earned.

Given that we're talking about low sums, there might be some exceptions from having to register as self-employed. If your activity were revenue-neutral or -negative, there might be an argument that it's not a business but Liebhaberei, i.e. a hobby (but it depends on the details). Services as part-time tutor, artist, or caregiver might be tax-free for up to €3000/year (but it depends on the details).

That the self-employed work was carried out through a computer makes absolutely no difference.

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