Liberal professionals (Freiberufler): who qualifies and what applies to you

What is a liberal professional?

A liberal professional is a self-employed person who practises a liberal profession. No statute defines the term itself. Tax law is decisive: Sec. 18 (1) no. 1 EStG lists what counts as a liberal profession. Anyone who falls under it earns income from self-employed work, not from a commercial business.

A second description is found in the Partnership Company Act (Partnerschaftsgesellschaftsgesetz, PartGG). According to it, the liberal professions "in general, on the basis of special professional qualifications or creative talent, have as their content the personal, autonomous and professionally independent provision of higher-level services" (Sec. 1 (2) sentence 1 PartGG). This definition applies to the partnership company. Whether you are a liberal professional for tax purposes is decided by Sec. 18 EStG.

It follows that:

• Liberal professional is not a legal form. If you work alone, you are a sole proprietor. Several liberal professionals can form a GbR or a partnership company, and a GmbH is also possible (see below).
• Liberal professionals do not carry on a trade. That is why they are not merchants within the meaning of the HGB, because only someone who carries on a commercial business is a merchant (Sec. 1 HGB). Registration as a registered merchant (e.K.) is not provided for a purely liberal activity, and liberal professionals cannot grant Prokura. More on this in the guides Registered merchant and Prokura.
• The activity must be self-employed. An employed doctor or an employed engineer is an employee, not a liberal professional.

You can also find a short definition in the glossary under liberal professions.

Which professions are liberal professions?

Sec. 18 (1) no. 1 EStG knows three routes into the liberal professions: the expressly named listed professions, the activity-based professions (Tätigkeitsberufe) and the professions similar to the listed professions.

Listed professions under Sec. 18 EStG

The table reproduces the list in the EStG in full; on the right are professions that are additionally named only in the PartGG (Sec. 1 (2) sentence 2 PartGG).

Group	Listed professions under Sec. 18 (1) no. 1 EStG	Additionally only in Sec. 1 (2) PartGG
Healthcare professions	doctors, dentists, vets, alternative practitioners (Heilpraktiker), dental practitioners (Dentisten), physiotherapists (Krankengymnasten)	midwives, medical masseurs, psychologists with a diploma (Diplom-Psychologen)
Legal, tax and business advice	lawyers, notaries, patent attorneys, public auditors (Wirtschaftsprüfer), tax advisers, consulting economists and business economists, sworn accountants (vereidigte Buchprüfer), tax agents (Steuerbevollmächtigte)	none
Engineering and natural sciences	surveying engineers, engineers, architects, commercial chemists	full-time experts (Sachverständige)
Media and language	journalists, photojournalists, interpreters, translators	none
Other	maritime pilots	none

For tax purposes, the list in the EStG is what counts. Professions that only appear in the PartGG, such as midwives, have to be classified for tax purposes via the "similar professions" or the activity-based professions.

Activity-based professions: what you do, not what you are called

A scientific, artistic, literary, teaching or educational activity carried on independently is also a liberal profession (Sec. 18 (1) no. 1 sentence 2 EStG). What matters here is not a qualification or a professional title, but the kind of work:

• scientific: research and expert opinions using scientific methods,
• artistic: original creative work, for example as a painter, musician or illustrator,
• literary: your own texts for the public, for example books or specialist articles,
• teaching: passing on knowledge, for example private tutoring, music lessons, lecturing,
• educational: for example childminding (Kindertagespflege).

Similar professions

The list ends with the words "and similar professions". According to case law, a profession is only similar if it resembles a specific listed profession in the essential points, i.e. in training and in the actual activity. A qualification alone is not enough, and conversely a self-taught person can also prove the knowledge in other ways.

Liberal profession or trade: how to tell the difference

The law starts from the trade. An independent, sustained activity with the intention of making a profit that participates in general commercial dealings is a commercial business if it is neither agriculture and forestry nor a liberal profession nor other self-employed work (Sec. 15 (2) sentence 1 EStG). Being a liberal professional is therefore the exception, which you have to justify.

Check in this order:

1. Is your profession in the list in Sec. 18 (1) no. 1 EStG, and do you actually practise it?
2. If not: is your work scientific, artistic, literary, teaching or educational?
3. If not: does your profession resemble a listed profession in training and activity?
4. If the answer is no every time: you carry on a trade.

Typical borderline cases

The table shows what matters in common cases. It does not replace an examination of the individual case.

Activity	rather a liberal profession if	rather a trade if
IT and software	you develop software or design systems at engineering level	you sell hardware or licences, offer hosting or mainly provide simple installation and support
Design and graphics	the work is original, creative and artistic	commercial graphics are produced to narrow client specifications without artistic design
Coaching and training	you pass on knowledge, i.e. you teach	it is about personal life coaching, motivation or merely instructing people in how to use equipment
Management consultancy	like a consulting business economist, you apply broad business knowledge	you only advise in a narrow sub-area or broker deals
Photography	you work artistically or as a photojournalist for the press	passport photos, product or event photos to the client's wishes are the main focus
Translations	you translate yourself or check the work of your staff in a leading and responsible capacity	you run an agency that translates into languages you do not master yourself
Brokering (estate agents, commercial agents, recruitment)	as a rule, no	as a rule, always
Selling goods	never	always, even as an ancillary service of a liberal professional, for example care products in a practice

Liberal professionals with employees

You may employ staff and still remain a liberal professional. The law allows the "assistance of professionally trained staff" if you act in a leading and responsible capacity on the basis of your own expertise (Sec. 18 (1) no. 1 sentence 3 EStG). Being represented during a temporary absence, for example on holiday or during illness, does no harm (sentence 4). It becomes critical if you only organise and your people do the professional work without you checking it.

Mixed activity and the spill-over effect

Many liberal professionals have a commercial side line. Whether this does harm depends on whether you work alone or in a partnership.

Alone (sole proprietorship): Liberal and commercial activities are assessed separately if they can be separated. Example: a translator translates as a liberal professional. If she also sells other manufacturers' language learning software in an online shop, that is trading and therefore a trade. She registers a trade for the shop, while the translating remains a liberal profession. Separate invoices and separate bookkeeping make the separation provable. If the services cannot be separated, for example in the case of an architect who not only plans but builds turnkey buildings at a fixed price, what decides is what characterises the activity as a whole.

In a partnership (GbR, partnership company): Here the spill-over effect (Abfärbewirkung) applies. If a partnership also carries on a commercial activity, its entire activity is deemed to be a commercial business (Sec. 15 (3) no. 1 EStG). If two physiotherapists in their GbR sell training equipment on the side, their entire profit can become subject to trade tax. Case law disregards very small commercial shares. In practice, larger commercial parts are moved into a separate partnership. How partnerships work in general is explained in the guide Partnerships.

Who decides, and how you get certainty

Whether your income is from a liberal profession or from a trade is assessed by the tax office. Your information in the tax registration questionnaire is the first indication, but it does not bind the tax office. It can change the classification later, for example after a tax audit (Außenprüfung).

Legal certainty before you start is provided by a binding ruling (verbindliche Auskunft, Sec. 89 (2) AO). It is only possible for precisely defined facts that have not yet been realised, i.e. before you get going, and requires a particular interest because of significant tax consequences. The ruling costs a fee based on the value of the matter. If this is below €10,000, no fee is charged (Sec. 89 (3) to (5) AO). If no value can be determined, a time-based fee of €50 per half hour or part thereof is charged, with no fee for a processing time of under two hours (Sec. 89 (6) AO).

Liberal professionals and traders compared

Feature	Liberal professional	Trader
Legal basis	Sec. 18 EStG, income from self-employed work	Sec. 15 EStG, income from a commercial business
Registration	notification to the tax office (Sec. 138 (1) sentence 3 AO)	trade notification to the municipality (Sec. 14 GewO, Sec. 138 (1) sentence 1 AO), which informs the tax office
Trade tax	no (Sec. 2 (1) GewStG)	yes, for natural persons and partnerships with an allowance of €24,500 (Sec. 11 (1) sentence 3 no. 1 GewStG)
IHK	no, except when entered in the commercial register (Sec. 2 (2) IHKG)	yes, if assessed for trade tax (Sec. 2 (1) IHKG); crafts with the chamber of crafts
Professional chamber	mandatory for professions with a chamber, for example doctors, lawyers, tax advisers	no
Merchant, commercial register	no (Sec. 1 HGB)	merchant if the business requires a commercially organised operation (Sec. 1 (2) HGB); otherwise a small business
Bookkeeping	cash-basis accounting allowed, without a turnover limit	cash-basis accounting up to €800,000 turnover or €80,000 profit (Sec. 141 (1) AO), as a merchant a balance sheet, except for small sole merchants (Sec. 241a HGB)
In a GmbH or UG	trade tax is payable (Sec. 2 (2) GewStG)	trade tax is payable

How a small business, a merchant and a liberal professional differ in everyday life is also shown in the guide Small business.

Liberal professional, freelancer, freelance contributor: the terms

• Liberal professional (Freiberufler) is a term of tax law and describes the nature of your activity (Sec. 18 EStG).
• Freelancer is not a statutory term. It describes a way of working: self-employed, project-based, for changing clients. A freelancer can be a liberal professional, for example a freelance journalist, or a trader, for example a recruiter who works as a freelancer but for tax purposes carries on a trade.
• Freelance contributor (freier Mitarbeiter) usually means a self-employed person who works for a business on the basis of a service contract or a contract for work, without being integrated into its organisation. They too can be a liberal professional or a trader.
• Self-employed is the umbrella term. Self-employed people are liberal professionals, traders or farmers and foresters.

Warning, false self-employment: Tax law and social insurance law examine this separately. Even someone treated as a liberal professional for tax purposes can be in dependent employment for social insurance purposes if, like an employee, they are bound by instructions and integrated into the client's organisation (Sec. 7 (1) SGB IV). Clarity is provided by a status determination procedure (Statusfeststellungsverfahren) with the German Pension Insurance Federation (Deutsche Rentenversicherung Bund) (Sec. 7a (1) SGB IV). On application, it is possible even before the activity starts (Sec. 7a (4a) SGB IV); under Sec. 7a (7) SGB IV, this rule applies until the end of 30 June 2027.

Registering as a liberal professional: step by step

Registration is leaner than for a trade because the trade office is not involved: the notification obligation under Sec. 14 GewO only concerns a trade. The Trade Regulation Act (Gewerbeordnung) even expressly does not apply to the activities of lawyers, notaries, tax advisers, public auditors or to education (Sec. 6 (1) GewO).

1. Clarify licensing and chamber. Many healthcare and advisory professions need a licence or permit and membership of a professional chamber before starting, for example the licence to practise medicine (Approbation) for doctors (Sec. 2 (1) BÄO) or admission to the bar for lawyers (Sec. 12, 60 (2) BRAO). For authors, artists or translators, there is usually no such requirement.
2. Inform the tax office. Anyone who takes up a liberal profession must notify the competent tax office (Sec. 138 (1) sentence 3 AO), within one month (Sec. 138 (4) AO).
3. Submit the tax registration questionnaire. The further information on your activity, your expected profit and VAT is sent electronically to the tax office in the officially prescribed data format, in practice via ELSTER (Sec. 138 (1b) AO). Only to avoid undue hardship can the tax office allow paper on application. Describe your activity precisely there, because the classification is based on it.
4. Wait for your tax number. The tax office notifies you of your tax number, which you state on invoices if you do not give a VAT identification number there (Sec. 14 (4) no. 2 UStG).
5. Sort out insurance (health insurance, pension, professional liability, see below) and register any commercial side line separately as a trade.

An overall checklist for all legal forms can be found in the guide Starting a business: checklist.

Which legal form suits liberal professionals?

Legal form	For whom	Liability	Trade tax	At Recht 24/7
Sole proprietorship	anyone starting alone	unlimited, including with private assets	no	Set up a sole proprietorship: €259 net plus VAT and the trade registration fee
GbR	several liberal professionals, including from different professions	partners personally and without limit (Sec. 721 BGB)	no, as long as all are active in liberal professions and no commercial share spills over	Form a GbR: from €259 net plus VAT, IHK and the trade registration fee, for the eGbR plus notary and register costs
Partnership company (PartG)	only members of the liberal professions, only natural persons	partners jointly and severally, for professional errors only the partners involved (Sec. 8 (1), (2) PartGG)	no, as long as no commercial share spills over (Sec. 15 (3) no. 1 EStG)	advice via Lawyer online, €169 fixed price incl. VAT
UG (haftungsbeschränkt)	anyone who wants to limit liability, with little start-up capital	company assets	yes (Sec. 2 (2) GewStG)	Form a UG: €259 net plus VAT, notary and court fees, IHK and the trade registration fee
GmbH	anyone who wants to limit liability	company assets	yes (Sec. 2 (2) GewStG)	Form a GmbH: €319 net plus VAT, notary and court fees, IHK and the trade registration fee

Sole proprietorship and GbR: If you are alone, you are automatically a sole proprietor, without a notary and without a register (more in the guide What is a sole proprietorship?); the trade registration fee mentioned in the price note does not apply to liberal professionals. The GbR is the usual form for joint practices and offices. Watch out for the spill-over effect there as soon as a partner does not work in a liberal profession or the partnership sells something. The basics are in the guide What is a GbR?.

Partnership company: It is only open to members of the liberal professions, only natural persons can be partners, and it does not carry on a commercial business (Sec. 1 (1) PartGG). It only becomes effective towards third parties on entry in the register of partnership companies (Partnerschaftsregister) (Sec. 7 (1) PartGG). Its advantage over the GbR: for errors in the practice of the profession, only the partners who handled the matter are liable alongside the partnership (Sec. 8 (2) PartGG). In the PartG mbB (partnership company with limited professional liability), only the partnership is liable for professional errors if it maintains the professional liability insurance prescribed by law (Sec. 8 (4) PartGG). This is only possible for professions whose professional law provides for such insurance. Individual professional laws can exclude the partnership company or make it subject to further conditions (Sec. 1 (3) PartGG). More in the glossary under partnership company.

UG and GmbH: You continue to work in your profession, but the company is always and in full a commercial business (Sec. 2 (2) GewStG). It pays trade tax, and because it is in the commercial register and assessed for trade tax, it is a member of the IHK (Sec. 2 (1) IHKG). For lawyers, tax advisers, doctors and other professions with a chamber, professional law sets its own rules for companies. Whether switching to a corporation is worthwhile is compared in the guide UG or sole proprietorship. An overview of all corporations is given in the guide Corporations.

Liability: what liberal professionals answer for

As a sole proprietor, you are liable for all obligations without limit, including with your private assets, above all for damages for errors in advice or planning. For many professions with a chamber, professional liability insurance is therefore mandatory, for example for lawyers, tax advisers and public auditors (Sec. 51 BRAO, Sec. 67 StBerG, Sec. 54 WPO); for everyone else it is voluntary. Limitations of liability in your contracts are only possible to a limited extent, in standard form contracts for example not for personal injury and gross fault (Sec. 309 no. 7 BGB).

Taxes for liberal professionals: the overview

You clarify tax questions in your individual case with a tax adviser. The basics:

• Income tax: Your profit is part of your income and is taxed at your personal tax rate. The income is also taxable if the activity is only temporary (Sec. 18 (2) EStG).
• No trade tax: It is linked to a commercial business (Sec. 2 (1) GewStG). Traders who are natural persons have an allowance of €24,500 (Sec. 11 (1) sentence 3 no. 1 GewStG) and can credit trade tax in full or in part against their income tax (Sec. 35 (1) EStG). The advantage of being a liberal professional is therefore often smaller than expected.
• VAT: Liberal professionals are also businesses for VAT purposes. Under the small business VAT exemption, your turnover is exempt from VAT if total turnover did not exceed €25,000 in the previous year and does not exceed €100,000 in the current year (Sec. 19 (1) UStG). Details in the glossary under small business VAT exemption. Certain services, for example medical treatment, are exempt from VAT regardless of this (Sec. 4 no. 14 (a) UStG).
• Bookkeeping: Anyone who is not obliged to keep books and does not keep them voluntarily may determine their profit as the surplus of income over expenses (Sec. 4 (3) EStG). The obligation from €800,000 turnover or €80,000 profit only applies to commercial businesses and to farmers and foresters (Sec. 141 (1) AO), and the obligation under commercial law only to merchants (Sec. 238 HGB, Sec. 140 AO). Liberal professionals without a GmbH, UG or a partnership entered in the commercial register (Sec. 107 (1) sentence 2 HGB) may therefore always use cash-basis accounting.

Pension and health insurance: what you need to clarify

As a rule, you make your own provision. However, the following self-employed people, among others, are compulsorily insured in the statutory pension insurance scheme (Sec. 2 sentence 1 SGB VI):

• teachers and educators who, in connection with their activity, do not regularly employ an employee subject to compulsory insurance (no. 1), so also lecturers, trainers and private tutors if they teach,
• carers in nursing, maternity, infant or child care without employees subject to compulsory insurance (no. 2),
• midwives and male midwives (no. 3),
• artists and publicists under the Artists' Social Insurance Act (Künstlersozialversicherungsgesetz) (no. 5), who are insured through the Artists' Social Insurance Fund (Künstlersozialkasse),
• self-employed people without employees subject to compulsory insurance who permanently and essentially work for only one client (no. 9).

Members of professions with a chamber, such as doctors, lawyers or architects, are as a rule compulsory members of a professional pension scheme (berufsständisches Versorgungswerk). For health insurance, you choose between voluntary statutory and private insurance; artists and publicists are insured through the Artists' Social Insurance Fund if they carry on the activity on a commercial basis and not only temporarily (Sec. 1 KSVG).

Liberal profession on the side: what you need to watch out for

You also notify the tax office of a liberal activity on the side; Sec. 138 AO makes no exception for a second occupation. Also check your employment contract: many contracts require you to notify or obtain approval for a side activity, and special limits apply to competing activities. Whether you remain health insured through your main job depends on whether the self-employment remains a sideline (Sec. 5 (5) SGB V). If your side activity is commercial, the guide Side business will help you.