Guides / Tracking income, VAT and set-aside money as a freelancer in Germany

Tracking income, VAT and set-aside money as a freelancer in Germany

General information on what freelancers in Germany keep track of: income, expenses, VAT on their own entries and money set aside. Stand: October 2026.

Published 2026-10-08; sources checked 2026-10-08

This page is general information for English-speaking freelancers and sole traders who work in Germany. It describes what people commonly keep track of and where the primary sources are. It does not assess anyone's own case. Stand: October 2026. Rules change, so read the current text of each source before you rely on it.

What people keep track of

Most freelancers in Germany end up keeping the same few lists, whatever tool they use:

• Income: the invoice date, the date the money arrived, the client, the net amount, the VAT rate on the invoice and the VAT amount.
• Expenses: the date paid, the supplier, the amount paid and the VAT shown on the receipt.
• A monthly view: income and expenses grouped by month, so that gaps show up early.
• Money set aside: a record of what you moved into a separate savings account and when.

Many freelancers use a spreadsheet for these lists.

Payment dates matter

A profit calculation that taxpayers who do not keep books can use for their annual return is the simple income and expense statement, the Einnahmen-Überschuss-Rechnung (EÜR). It is described in § 4(3) EStG (Income Tax Act). In plain terms it follows the cash principle (see also § 11 EStG): income and expenses are generally counted when they are received and paid, not when the invoice is written. So a tracker needs two dates for each income line, the invoice date and the date paid, and an unpaid invoice is something to follow up, not a booked amount. Whether and how this applies to you is a question for the tax office or an adviser.

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VAT: where the rules are

German VAT (Umsatzsteuer) is governed by the Umsatzsteuergesetz (UStG). Two paragraphs come up most often for small businesses. § 12 UStG sets the VAT rates. § 19 UStG is the small-business rule (Kleinunternehmer): it sets conditions under which VAT is not charged. We do not state the turnover limits here, because they have been changed in the past and a number on a web page can be out of date. Read § 19 UStG itself, and ask the Finanzamt whether it applies to you.

If you do charge VAT, you generally collect it from clients and may be able to deduct VAT you paid on business purchases. The difference is reported in advance returns (Umsatzsteuer-Voranmeldung) on the schedule that applies to you (monthly or quarterly; ask the Finanzamt). A spreadsheet can add up the VAT figures you typed in, but it cannot tell you which rate applies, whether a purchase qualifies, or what is due. For VAT, the period an amount belongs to can differ from the date paid: ask the Finanzamt or a Steuerberater.

Setting money aside

Income tax and VAT payments often fall due after the money has come in, and health insurance contributions are usually due every month, so many freelancers move part of each payment into a separate account. How much is a personal decision that depends on your whole situation: your other income, your insurance, your prior payments and your tax assessment. We do not suggest a percentage. A planner can multiply your own percentage by your own profit figure. That is arithmetic, not an estimate of tax.

Questions this page cannot answer

Whether your work counts as freelance (Freiberufler) or as a trade (Gewerbe), whether you are a Kleinunternehmer, how to treat clients abroad, which costs are deductible, and what your residence status allows are all individual questions. If you are unsure about anything, ask the Finanzamt or a Steuerberater.

The tracker we made

Template House sells an English spreadsheet for this: income, expenses, a monthly summary, a VAT summary of your entries (not the amount due), a set-aside planner that uses your own percentage, and a year summary grouped by your own categories. It works with the numbers and rates you enter. It does not cover reverse charge (§ 13b UStG), EU and non-EU clients, depreciation, deductibility of any expense, or income tax. It ships without entries. There is no free sample file and no sign-up. A second build is meant for import into Google Sheets. We tested the files in LibreOffice only, not in Microsoft Excel or Google Sheets, so some features and the look may differ.

Sources

Primary sources, accessed 2026-10-08:

• ELSTER, the tax administration's online portal: elster.de. The home page loaded on 2026-10-08.
• Statutes (§ 12 and § 19 UStG, § 4(3) EStG) are published on gesetze-im-internet.de. That site could not be reached from our systems on 2026-10-08, so we have not checked the current text and give no link here. Look up the paragraphs yourself.
• Federal Ministry of Finance, bundesfinanzministerium.de: the site returned a server error (HTTP 503) on 2026-10-08, so we have not checked it and give no link here.

This guide is general information, not legal, tax or financial advice. Rules change and your situation may differ; check with the authority or a qualified adviser.

AI disclosure: Created with AI assistance under our creative direction and reviewed by us.