Working as a Coach: Freelancer or Trader?

When determining whether a coach is classified as a freelancer or a trader, the nature of the services offered is decisive. In this article, we explain the finer points. In many cases, however, an individual assessment is necessary — specialist tax advisers provide valuable assistance on this area of tax law!

Are you looking to build a self-employed career as a coach? Do not take the distinction between the liberal professions and a trade lightly! It is best to inform yourself in advance so that you start your self-employed work on a secure footing.

This question cannot be answered in general terms. One difficulty is that coaching is an umbrella term. Self-employed coaches understand it to encompass very different services. Depending on their training and the nature of their offering, the activity may fall under the definition of the liberal professions or of a trade.

A key requirement for freelance status is that the coaching meets the criteria of a teaching activity. § 18 EStG and judgments of the Federal Fiscal Court from 1994 and 1996 set this out in concrete terms.

As a freelance coach, you must satisfy two criteria:

1. You systematically impart knowledge, skills, and competencies in a specific subject area.

2. This imparting takes place in an organised and institutionalised form. Your coaching is characterised by the structure of a teaching programme.

Individual tuition can also satisfy the definition of a teaching activity. The number of participants is irrelevant!

A teaching activity — and therefore freelance status — does not exist, by contrast, if you tailor your coaching to the individual needs of your clients. The typical example is life-coaching offerings. In that case, you are not conveying systematically prepared teaching content; instead, you are consistently addressing the individual problems of each person. A further exclusion criterion applies: in such coaching arrangements, you are not referring to a clearly defined subject area!

For some self-employed individuals, a mixed activity can be identified: as coaches, they provide services that are separately distinguishable and clearly meet the criteria of either freelance or commercial activity. The solution is to register these activities separately: the coach operates as both a freelancer and as a trader. Profit is calculated separately in each of these two segments. Your best course is to ask your tax adviser whether this option is recommended in your case!

Some people may wonder what significance the classification as a freelancer or trader actually has. This distinction is relevant primarily in terms of administrative burden. Freelancers save themselves a considerable amount of work compared with traders:

1. Freelancers register their activity with the tax office. They do not need to apply for a separate trade licence (Gewerbeschein).

2. As a freelancer, you may prepare your profit calculation using a simple cash-basis income statement (EUER). Double-entry bookkeeping and the preparation of a balance sheet are not required, regardless of turnover.

3. You do not need to file a trade tax return or pay trade tax.

Whether you work as a coach on a freelance or commercial basis depends on various factors. Seek advice from tax experts in good time! Your Guhr Steuerberatung supports you actively in Berlin and nationwide. The specialist tax advisers also represent you before the tax office if the officials reach a different assessment for questionable reasons.

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