Self-employed as a foreigner in Germany: residence, registration and taxes

Can I become self-employed in Germany? Overview by residence status

Whether you may start a business without a German passport depends solely on your right of residence. Since the reform of the Residence Act (Aufenthaltsgesetz), holders of a residence title may in principle work unless a law prohibits or restricts it (§ 4a AufenthG). However, many titles are limited to employment. Every title must show whether and which kind of work is allowed – if it says “Erwerbstätigkeit erlaubt” (gainful activity permitted), you may also work self-employed; if it only mentions employment, you need an additional permit.

Residence permit for self-employment under § 21 AufenthG

For commercial start-ups a residence permit can be granted if there is an economic interest or a regional need, the activity is expected to have a positive effect on the economy and financing is secured by equity or a loan commitment (§ 21 Abs. 1 AufenthG). Among other things, the authorities check the viability of the business idea, your entrepreneurial experience, the capital invested, jobs and training places, and innovation. The immigration office involves expert bodies such as the IHK (Chamber of Commerce) or the Handwerkskammer (Chamber of Crafts).

If you are older than 45, the permit should only be granted if you prove adequate retirement provision (§ 21 Abs. 3). The first permit is valid for at most three years. If you have successfully implemented your plan and your livelihood is secured, a settlement permit (Niederlassungserlaubnis) can follow (§ 21 Abs. 4). Graduates of German universities as well as researchers and holders of certain titles usually get the permit even without these requirements if the business is related to their education or research (§ 21 Abs. 2a).

• Business plan with business idea, market, competition and marketing.
• Financing and profitability plan for the first three years, proof of equity or a loan commitment.
• CV, certificates, proof of professional experience and – for regulated professions – the professional licence.
• Letters of intent or contracts with first clients, if available.
• Proof of adequate health insurance and – if over 45 – of retirement provision.
• Rental contract or proof of accommodation and passport; trade registration only after the permit has been granted, if applicable.

Freelancers from non-EU countries: § 21 Abs. 5 AufenthG

For freelance activities within the meaning of § 18 EStG – such as software development, design, translation, journalism, art or consulting – there is a separate legal basis: the residence permit can be granted if any required professional licence has been issued or promised (§ 21 Abs. 5). A special economic interest as for traders is not required, but the immigration office may also involve expert bodies. The three-year rule for the settlement permit (§ 21 Abs. 4) expressly does not apply to freelancers; the general requirements of § 9 AufenthG apply to them. In practice you have to show that you can live from the activity: with client commitments, a portfolio, qualifications and a realistic income plan.

Whether your activity is freelance or commercial is decided by tax law – the guide Freiberufler or Gewerbe explains the distinction. Important: if you are approved as a freelancer but also act commercially (e.g. resell software licences), clarify this with the immigration office, because the permit applies to the activity you applied for.

Self-employed alongside a Blue Card, a job or studies

Many people first come as employees, students or with the Chancenkarte and later want to work self-employed on the side or full-time. For this, the immigration office can permit self-employment without your existing purpose of residence lapsing (§ 21 Abs. 6 AufenthG). You submit an informal application describing the activity and its scope and – with a Blue Card or as a skilled worker – a confirmation that your employment continues. Only after the permit may you issue invoices.

Practice differs between immigration offices; expect processing times of several weeks. For taxes and health insurance the same rules apply as for anyone self-employed on the side. If you later want to swap the Blue Card for full self-employment, you need a new title under § 21 – plan the switch before handing in your notice.

Registration step by step: from registered address to tax number

Once your residence is settled, starting a business is no different from German citizens. The order matters because each step needs data from the previous one:

• Register your address at the Bürgeramt – within two weeks of moving in. The Federal Central Tax Office (Bundeszentralamt für Steuern) then automatically sends you your tax identification number (Steuer-ID) by post.
• Check your residence title: does it say “Erwerbstätigkeit erlaubt” or “selbstständige Tätigkeit gestattet”? If not, apply for the permit first.
• Traders: register a trade (Gewerbe) at the trade office (Gewerbeamt); third-country nationals present their residence title. Freelancers skip this step.
• For regulated professions and licensed trades, have your foreign qualification recognised (Anerkennungsverfahren) or clarify the entry in the Handwerksrolle.
• Register with Mein ELSTER (the activation code comes by post, allow one to two weeks) and submit the tax registration form (Fragebogen zur steuerlichen Erfassung) within one month of starting.
• Wait for your tax number (Steuernummer) from the tax office; with clients in other EU countries also apply for the VAT ID (USt-IdNr.).
• Take out or switch health insurance and set up an account for your business transactions.

Health insurance without a German passport

Germany has a general obligation to have health insurance, and the immigration office requires proof for every residence title. The self-employed can take out voluntary statutory insurance if they were previously insured in the statutory system for long enough (Vorversicherungszeit) – for example as employees in Germany. Insurance periods from other EU countries are usually counted.

If you enter directly from a non-EU country as a self-employed person, you usually do not meet the prior insurance period and then need private health insurance with full coverage; travel health insurance is usually not enough for the residence title. If you switch from employment to self-employment, by contrast, you usually stay in voluntary statutory insurance – with a minimum contribution based on €1,318.33 per month (2026). All details in the guide health insurance for the self-employed.

Taxes: the same obligations – with a worked example

With a residence in Germany you are subject to unlimited tax liability, regardless of nationality. Income tax, VAT (Umsatzsteuer) and, where applicable, trade tax (Gewerbesteuer) apply as for everyone, including the small business scheme (Kleinunternehmerregelung) up to €25,000 prior-year turnover. Income from abroad may be tax-free in Germany under a double taxation agreement, but often raises the tax rate on your other income (Progressionsvorbehalt). When you extend your residence title, the immigration office often wants to see proof of your profit – a clean cash-basis income statement (EÜR) and your tax assessment (Steuerbescheid) are then your most important documents.

Example 2026: Maria from Brazil works as a freelance UX designer with a residence permit under § 21 Abs. 5. She charges standard VAT because she expects more than €25,000 in turnover.

Everything in German: official language and the key terms

The official language in tax proceedings is German (§ 87 AO), as it is at the trade office and the immigration office. The tax registration form, advance VAT return, EÜR and assessments are only available in German, and the tax office may have documents in another language translated – at your expense. You may write invoices in any language, but the mandatory details must be complete (writing an invoice). These are the terms you will encounter most often:

Self-employed as a foreigner with Kontelio

Kontelio is made for international self-employed people: the interface is available in nine languages (German, English, Portuguese, Spanish, Italian, Turkish, Arabic, Polish, French), but the official German terms stay visible so you know what is on the form. You write invoices – also in your client’s language – record receipts and send your EÜR and advance VAT return directly to ELSTER (Business/Pro), instead of struggling through German forms. More on bookkeeping in your language.

Frequently asked questions