IT freelancing in Germany

[AlexInGermany]

if anyone has done please share your thoughts

this are my observations:

I have freelanced a few times, but only after securing a contract first. Transitioning to freelancing before finding a client is quite risky—especially if you aren’t fluent in German, as most projects require it.

There are also significant regulatory hurdles regarding social insurance. Because of these rules, many projects require an ANÜ (labor leasing) contract. Under an ANÜ, deductions are extremely high—often 60–70% of your earnings—which is even more than what a full-time employee pays. To qualify as a "true" freelancer under German law, you generally need to work for multiple clients simultaneously or throughout the year. However, most companies want a freelancer who works for them full-time. Since this conflicts with the legal definition of freelancing, companies use ANÜ contracts to mitigate risk.

Personally, I wouldn't choose this path voluntarily; Germany is a country built for full-time employees, not this type of flexible work. On the other hand, I have seen highly successful IT freelancers who earn significantly more than regular employees. They were having multiple clients simultaneously and even getting more project request which they could not do personally. These individuals are usually deep technical experts in specific software and are native German speakers. For a standard IT professional with average IT - German skills, I wouldn't recommend it.

[booksnthings]

I'm not in IT, so I can't speak to every issue you've raised, but I am a longterm freelancer. As far as multiple clients are concerned, I always thought you just needed to have multiple clients, period, and the best way to prove this would be with invoices to different clients within a tax year. So for example, you could freelance essentially full-time on a project, then move on to the next one with a different client. What you can't just do is get a single client from whom you earn enough, and call it a day. As for the social insurances, are you sure you can't just pay out the set percentage yourself? It's still high, since you're basically paying out your half and the half that would normally be paid out by an employer or an organization like the KSK, but it's not 60-70%.

I'm not familiar at all with the ANÜ structure you mentioned, but it does sound like the worst of both worlds: you're not doing real freelancing, but you're also not getting the benefits of being a normal employee. Why would anyone go that route, just curious?

[AlexInGermany]

I'm not in IT, so I can't speak to every issue you've raised, but I am a longterm freelancer. As far as multiple clients are concerned, I always thought you just needed to have multiple clients, period, and the best way to prove this would be with invoices to different clients within a tax year. So for example, you could freelance essentially full-time on a project, then move on to the next one with a different client. What you can't just do is get a single client from whom you earn enough, and call it a day. As for the social insurances, are you sure you can't just pay out the set percentage yourself? It's still high, since you're basically paying out your half and the half that would normally be paid out by an employer or an organization like the KSK, but it's not 60-70%.

I'm not familiar at all with the ANÜ structure you mentioned, but it does sound like the worst of both worlds: you're not doing real freelancing, but you're also not getting the benefits of being a normal employee. Why would anyone go that route, just curious?

this is how I came up with 60% -70%
as a regular employee you pay around 20% tax and 20% social insurances, it is bit different but for sake of simplicity we can take this number so total is 40% deduction, another 20% of employer part of social insurances your employer pays which does not affect you as a full time employee.

but for freelancers employer part also matters as freelancer does not have employer
most of the companies want ANÜ contract , due to compliance what they actually do is that there is middle man payroll company, so let say end client pays you XYZ euro per day and that XZY daily rate multiples by worked days . per months around 20 days.
then ANÜ payroll company has to deduct like regular employee 20% tax, and 20% social insurances, but as soon as payroll ANU company is not your real employer someone has to pay the employer part of social insurances right? so the other 20% the also deduct from end client pay. this is how you end up with 60%
and as no employee employer relationship is there , for vacation and sick leaves have to be considered, they they take out 10% more, but if a contractor freelancer will be sick even longer they will deduct of course more from client pay as someone has to pay and in case of ANÜ it is always freelancer.
this is how people end up with 70% deductions and almost no freelancer want this ANÜ contracts, this is why I am saying system in Germany is not really good for IT freelancers, why would someone want to do it and have 70% deducted and no job security as freelance can be terminated any time without reason.
only makes sense if you are real freelancer and pay only tax and private healthcare, but if someone does that for a long time for same client the social insurance penalizes such freelancers with scheinselbstenditkeit regulation

not sure when such 70% deduction makes sense, I guess only if freelancer earns very high daily/hourly rate

[AlexInGermany]

I'm not familiar at all with the ANÜ structure you mentioned, but it does sound like the worst of both worlds: you're not doing real freelancing, but you're also not getting the benefits of being a normal employee. Why would anyone go that route, just curious?

so I guess you are lucky if you have no deal with ANÜ, most of the projects I worked as freelance were forcing me to become permanent or ANU after some time
ANÜ is the biggest nonsense ever, highest deductions and no job security