What is this?
Sales tax is the same as value-added tax (VAT) in Germany. The rate is currently at 19%. There is also a reduced rate of 7%, which applies to taxi rides, newspapers and books, overnight hospitality services, etc. The normal rate of 19% applies to sexual services. Every service that you provide automatically includes 19% sales tax, which is taken by the finance bureau. You may apply to pay pre-taxes instead, but we recommend consulting a tax advisor about this.
Does everyone have to pay sales tax?
No, only if you make more than 17,500€ per year.
*The revenue is not to be confused with the profit, in this case. Your revenue is the money you receive from your clients. After spending a portion of this on work-related necessities and giving part of this to your agency or manager (if you work in a venue), the amount left over is the profit, which is taxable. This is sometimes also referred to as the „profit before taxes.“
What is the small business rule?
Everyone who makes less than 17,500€ per year is considered a „small business operator.“ As soon as you make more than this amount you will be required to start paying sales tax in the following year.
In the first year of self-employment, the sales taxes are spread out across the whole year. In order not to pay taxes, you need to be making less than 1,458€ per month, even if you begin working in the middle of the year.
*In general, at the start of self-employment, you will not be required to pay taxes for the first two years if you do not make more than 17,500€ in the first year and no more than 50,000€ in the second year.