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What Is a Freelancer? – Definition and ExamplesFreelancers & liberal professions
Freelancers3 min read

What Is a Freelancer? – Definition and Examples

Self-employed, entrepreneur, trader, freelancer — to the layperson, these terms may at first glance all seem to mean the same thing: someone who works on their own account rather than as an employee. Nevertheless, there are some important differences.

ByKarsten Guhr · Managing Director & Tax AdvisorVerified article
#Freelancer#Definition#Examples

The definition of a freelancer (Freiberufler) is relatively narrow — the law determines whether someone is self-employed as a "freelancer".

By definition, freelancers are self-employed persons who engage in scientific, artistic, teaching, educational, or literary activities (§ 18 para. 1 no. 1 EStG).

The legislature further requires, for the exercise of a freelance activity, either creative talent (e.g. an artist) or special professional suitability based on a professional qualification (e.g. a lawyer).

Furthermore, freelance status in the eyes of the legislature frequently implies an academic education. The legislature also attributes a certain "high quality" to the activity in question.

If you wish to register as a freelancer with the tax office, the tax officials will consult the "catalogue of liberal professions" (Katalog der freien Berufe) to verify your freelance status.

According to the catalogue, the following professions are among those that qualify as liberal professions:

  • Solicitors, notaries, tax advisers
  • Architects
  • Engineers
  • Auditors and accountants
  • Doctors, dentists, veterinarians
  • Alternative practitioners (Heilpraktiker), massage therapists, physiotherapists
  • Journalists, authors
  • Designers
  • Photographers, media designers, programmers
  • Translators, copy editors

The tax office also includes so-called "similar professions" in the definition of a freelancer. According to the law, these encompass professions that require state-recognised specialist training, a state-recognised professional qualification, or non-state training combined with many years of professional experience, qualifications, or equivalent accreditation.

Work as an IT consultant, VFX artist, psychologist, game designer, midwife, or management consultant is also generally classified as freelance self-employment.

Whether self-employed work as a freelancer makes sense in your particular case is something you should ideally discuss with your tax adviser before registering with the tax office. Guhr Steuerberatung is happy to support you with all questions relating to freelance work.

Unlike traders (Gewerbetreibende), freelancers neither manufacture nor trade in industrially or craft-produced goods. Consequently, they are not subject to the Commercial Code (HGB).

They also do not pay trade tax (Gewerbesteuer), but only income tax and VAT. Freelancers are also not required to keep double-entry accounts — a cash-basis income statement (Einnahmen-Überschuss-Rechnung, EUER) is sufficient.

Many business start-ups prefer freelance status over being a trader — after all, freelancing brings a number of advantages.

These include, among others:

  • no mandatory membership of the Chamber of Industry and Commerce (IHK) or Chamber of Crafts
  • freelancers do not pay trade tax (Gewerbesteuer)
  • no balance sheet or double-entry bookkeeping is required
  • lower administrative burden
  • through optional membership of the Artists' Social Insurance Fund (Künstlersozialkasse — applicable e.g. to artists, journalists, and authors), social security contributions are lower
  • starting a business is possible even without start-up capital

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How is a freelancer defined?
Pursuant to § 18 para. 1 no. 1 of the Income Tax Act (EStG), freelancers carry on a scientific, artistic, literary, teaching, or educational activity on a self-employed basis. A prerequisite for this is special professional qualification, creative talent, or professional suitability. A self-employed person may also be a freelancer if they carry out their tasks with the support of professionally trained staff — provided they possess the necessary expertise to direct their employees or collaborators.
Is freelance the same as self-employed?
A self-employed person is not necessarily a freelancer. They may also be a trader (Gewerbetreibender). The distinction lies in the field of activity. Traders manufacture or trade in products. The liberal professions are considerably more narrowly defined. The tax office generally consults a relevant catalogue to determine whether a new business owner may be classified as a freelancer.
What falls under the liberal professions?
According to the definition of a freelancer, the "liberal professions" (freie Berufe) primarily encompass scientific, artistic, literary, and educational activities that are not subject to the Trade Regulation Act (Gewerbeordnung). The distinction from commercial activities is not always straightforward. The team at Guhr Steuerberatung supports you in deciding for or against freelance status, and with all tax-related matters.
What are examples of freelancers?
Freelancers can be active in a wide range of industries and professional fields. Journalists, authors, photographers, translators, and copy editors are freelancers, as are expert witnesses, auditors, and tax advisers. Further examples of freelancers include doctors, veterinarians, dentists, physiotherapists, massage therapists, and alternative practitioners. Engineers and architects can also work on a freelance basis. Solicitors and notaries, as well as lecturers and teachers working on a fee basis, are classified as freelancers by the tax office.

About the author

Karsten Guhr · Managing Director & Tax Advisor

Founder of the firm. Advising entrepreneurs and holding structures on tax planning, structuring and succession for 15+ years.

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