What tax aspects do I need to consider as a freelancer?
September 3, 2023 | 40,00 EUR | answered by Zofia Schulz
Dear tax consultant,
I am Hilde Höhne and have been working as a freelancer in the areas of writing and graphic design for some time now. So far, I have managed and taxed my income myself, but now I am concerned that I may have overlooked some tax aspects.
My income varies monthly and I work from home. I do not have a fixed employment and am not employed by a company. I have also not calculated or paid any sales tax so far, as my annual turnover is below the small business threshold.
I am worried that I may not have complied with tax regulations and now want to ensure that I do everything correctly. What tax aspects do I need to consider as a freelancer? Do I need to calculate and pay sales tax even if I am below the small business threshold? Are there any specific regulations for freelancers working from home?
I would be very grateful if you could give me an overview of the most important tax aspects for freelancers and show me possible solutions to ensure that I handle everything correctly. Thank you in advance for your help.
Sincerely,
Hilde Höhne
Dear Ms. Höhne,
Thank you for your inquiry and for trusting in my expertise as a tax advisor. As a freelancer in the fields of writing and graphic design, there are indeed some tax aspects you should consider to ensure that you handle everything correctly. I can gladly provide you with an overview of the key points and suggest possible solutions.
First and foremost, it is important to know that as a freelancer, you are self-employed and therefore responsible for your income and expenses. As a freelancer, you are not in a fixed employment relationship and typically work from home. This means that you must manage and tax your income yourself.
Regarding value added tax (VAT), it generally applies that as a freelancer, you fall below the small business threshold of 22,000 euros in annual turnover (from 2020 onwards) and are therefore exempt from VAT. This means that you do not have to charge or pay VAT. However, you also have the option to voluntarily waive the small business scheme and show VAT. This can be beneficial in some cases, for example, if you have business customers who can deduct VAT as input tax.
It is important to note that as a freelancer, you also have to pay income tax on your earnings. You should carefully document your income and expenses to be able to submit a correct tax return at the end of the year. Deductible expenses include work-related items such as computers and software, office supplies, as well as travel and phone expenses incurred for work.
Working as a freelancer from home also has tax implications. Under certain conditions, you can claim a portion of your rent, electricity costs, or depreciation for your home office as business expenses. It is important that your home office is the center of your professional activity and used exclusively for work purposes.
In summary, as a freelancer, you should carefully document your income and expenses to be able to submit a correct tax return. Even if you fall below the small business threshold, you should consider the option of waiving the small business scheme to potentially benefit from input tax deduction. Additionally, you should discuss all tax aspects with a tax advisor to ensure that you handle everything correctly.
I hope these information are helpful for you and I am available for any further questions you may have. Thank you for your inquiry and best of luck in your self-employed work as a freelancer.
Best regards,
Zofia Schulz
