Germany is proud of its national efficiency stereotype. We get stuff done. But efficiency comes with complicated procedures and systems. Like our tax system, for example. It’s like the authorities are making fun of us by inventing unpronounceable words like “Umsatzsteuervoranmeldung”, “Lohnsteuervorauszahlung” or “Steueridentifikationsnummer”, and, to make it even more fun and confusing, “Steuernummer”, which is two different things. But confusion must be avoided, especially regarding the last two unpronounceable words, as they are very important for the (expat) freelancer!
Once you have successfully registered in Germany, you have no other choice but to set off on the German tax adventure. To kick off your freelancing career, you’ll need at least two personal tax numbers: a Steueridentifikationsnummer or Steuer ID (Tax Identification Number) and Steuernummer (Tax Number). What are the differences and why do you need them?
The Steuer ID is your personal identification number. In the system of the German tax authority (Finanzamt) you are this number. The Steuer ID is unique to every person living in Germany, assigned to you at birth or at the moment you register in Germany. It stays your personal tax ID number for the rest of your life. Parents receive letters with their baby’s Steuer ID a few weeks after it’s born, while as an expat you should receive your letter within 3 weeks of registering in Germany. That’s one way of making one feel young, isn’t it?
The Steuer ID is created randomly, so it doesn’t give away any personal information about the number holder. It must be mentioned on all letters to the Finanzamt, and is used to process everything regarding Einkommensteuer (Income Tax).
Obtaining the Steuer ID is simple, just wait until you get it in the post. If you lose it, you can request for it to be sent to you again. Unfortunately, this can take a while. For security reasons you can only receive your Steuer ID via post.
However, as a freelancer, the Steuer ID is not the only German tax number you need. To register as a freelancer in the first place, you need a Steuernummer.
Now, there are some similarities between Steuer ID and Steuernummer. Steuernummer is part of the old tax system, while Steuer ID was introduced to the German public in 2007. In the future, Steuer ID is supposed to replace the Steuernummer completely (because we like efficiency), but for now, you need both numbers to register and to do your taxes as a freelancer or entrepreneur.
The biggest difference is that the Steuernummer is not forever but can change based on where you live and which regional Finanzamt is responsible for you. When you move, your Steuernummer changes.
To start your career as a freelancer, a Steuernummer is crucial, and you need to apply for it at your local Finanzamt! You cannot do your taxes without it, and you cannot invoice your clients without it.
It doesn’t stop there, of course. Depending on whether you’re a lone wolf freelancer or an entrepreneur, operating in Germany or across borders, you might need to provide the Finanzamt various documents. It’s best to just ask what is needed in your case, before you make your way to the Finanzamt.
The world of German taxes is a broad and complicated one. We hope that this post could answer some of your questions regarding your start in Germany.
If you have further questions, please leave them in the comments, or visit our bookkeeping workshop at betahaus Berlin on December 8th. Get your free ticket now!
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