Many expats dream of becoming self-employed. However, can foreigners work as freelancers in the EU? Which EU country offers the best conditions for foreigners? What are the formalities to work as a freelancer? Below you will find a comparison of 3 EU countries, the Czech Republic, Slovakia, and Germany. Yeye Agency has been supporting many foreigners to be self-employed. Do you want to be one of them?
Being a freelancer self-employed is not only beneficial from a financial point of view it also offers you a great amount of flexibility. As self-employed, you can manage your working days/hours on your own. The main reasons for self-employment are to be able to manage your own time and not and do not report to your boss. You are your own boss. You become an independent contractor or service provider and you make all decisions based on your needs and priorities.
The Czech Republic
The trends in the labor market in the Czech Republic have changed remarkably over the years. Today, the Czech Republic has the lowest unemployment rate in all of Europe according to the ILO estimate. The unemployment of the total labor force in 2019 was estimated at around 2.5 per cent.
Freelancing in the Czech Republic
In a country of many opportunities, people often consider freelancing rather than working for a company. Although there are some downsides to freelancing with the changing market trends, you may find numerous advantages of self-employment in the Czech Republic.
With freelancing in the Czech Republic, you give up sick days, paid holidays, bonuses, company benefits, high social security, maternity, retirement, and other social benefits (amount of benefits depend on the amount you will pay for the social security). To be self-employed means taking full responsibility for your own income. If you would like to become a freelancer in Czechia, you will need to obtain a ́Živnostenské oprávnění ́ which means trade license/business license. It is a frequent choice for jobs like software developers, English teachers, translators, copywriters, designers, musicians and startup owners. We could say it fits for the jobs that are not in a regular 40 hours/week mentality as a regular full/time job.
Social security is at the lowest rate by your self-employment. There are many possible reasons for self-employment and higher monthly income can be one of them due to low taxes. Opposed to having a regular job with a work permit, self-employed individuals do not give %34 of their income to the government and the social administration. They only need to pay for the health and social insurance (approx.5.000CZK / 180 Euro) every month and %15 income tax. The amount of total income tax will be counted from the annual closing.
What are the requirements to become a freelancer in the Czech Republic?
No matter Czech or another citizen, everyone has the right to become self-employed. So how to become self-employed legally in the Czech Republic and start your business in Prague?
The steps needed to be taken to become a freelancer depend on your country of origin and current visa status. It is easier to obtain a business license when you are a Czech or EU citizen. EU citizens may obtain the license in 5-7 business days even without having their temporary residence certificate. You need to register at a Trade Office across the Czech Republic, choose your subject of business, pay a fee of 1.000 CZK and you can immediately start running your business. Your duties start once you register at the Trade Office as well as for Social and Health Insurance.
For people from non-EU countries, it is very important that they already hold a long-term visa or residence permit. It is a simple process if you hold a residence permit already and you would like to obtain a business license too. After collecting the required documents you need to register at the Trade License Office. If everything is okay with the documents you will get the free trade licence (OSVČ) in 3-5 business days, which will be valid for as long as your visa is valid.
If you do not have any valid visa, you better get prepared for the long process. You have to add all documents such as accommodation confirmation, seat location consent, bank report, proof of future projects and others. You have to apply in your country of origin or another country than the Czech Republic and get well prepared for an interview. You may get your free trade licence (OSVČ) even if you do not hold any visa but it won’t be active. In order to activate the license and start freelancing legally, you will need a residence permit.
Slovakia is also one of the rapidly growing in Central and Eastern Europe (CEE). After joining the European Union in 2004, the economic reforms were conducted by the government and the foreign direct investments flowed to the country. As a result, Slovakia has experienced rapid economic growth and a falling rate of unemployment in the 2000s. The unemployment rate was under 5% in 2019.
Freelancing in Slovakia
A self-employed person (SZCO) is a person who is at least 18 years old and has earned income from a business under Slovak law in the year that is decisive for the assessment of compulsory sickness and old-age insurance. A foreign self-employed person in Slovakia, on the other hand, obtains income under the law of the country in which his/her income is being taxed.
A self-employed person in Slovakia:
- is entitled to run his/her own business,
- engages in agricultural production and is registered,
- is a partner of a public limited company or limited partnership company,
- performs sports activities without being employed, operates as a sales representative, or
- is entitled to perform special activities, such as working as an advocate.
- is registered in the Business Register (filed by the district court) or
- carries out business on the basis of a trading licence
There are also some specific conditions applicants need to fulfil, based on the type of a trade licence:
- free trade licence – it is necessary to fulfil the three above-mentioned conditions;
- craft trade licence –applicants are required to have a certificate issued by an education facility stating they are professionally competent in a selected craft;
- fixed trade licence – applicants need to have a confirmation of their professional competence acquired outside of education.
What are the requirements to become a freelancer in Slovakia?
EU/EEA and Swiss citizens are not required to have a residence permit in Slovakia in order to pursue freelancing jobs. But non-EU/EEA citizens do need to obtain a residence permit (permanent or temporary) first to run their business.
In order to obtain a trade license, applicants must submit all the documents to the respective Trade Licencing Office (either in person or electronically). After the submission of all the documents, the Trade Licencing Office checks the validity of all necessary documents. The office issues a certificate of Trade Authorisation) three days after submitting the request. Also, the applicant has to provide an extract from the criminal record, register in the system of mandatory health insurance (unless the person is not yet registered in the system of mandatory health insurance in another EU Member State), and also provide data required for registration with the tax administrator.
The permanent residents of Slovakia can obtain their criminal records from the General Prosecutor’s Office while the foreigners with temporary permits need to obtain it from their home countries. The documents cannot be older than three months and must be translated into the Slovak language.
Applications can be submitted online at www.slovensko.sk as well. The online applicants need to submit the same data as scanned documents as they would submit it in paper form and sign the documents online using their ID cards. fill in an e-form, which requires the same data as the paper form. Applicants, however, need to sign it via electronic signature, for which they need an ID card with an electronic chip.
The responsibilities of a self-employed person in Slovakia depends on their country of citizenship. The foreigners outside of the EU/EEA, OECD countries and Switzerland, need to register in the Commercial Register. These residents need to have at least a temporary residence permit to be able to register in the Commercial Register. You can start utilizing your trade license right after the day of entry into the Commercial Register. Registration in the Commercial Register is not required if the resident has permanent residence in an EU/EEA/OECD country or Switzerland.
Germany is one of the most popular choices for foreigners from all around the world to find a job and settle. The country offers a wide range of opportunities to ex-pats and freelancing is just one of them.
Freelancing in Germany
Freiberuflich (Freelancer) – only people with the ability to do work from a comprehensive list of a number of professions can be entitled to this kind of self-employment in Germany. The list of such professions includes scientists, scholars, teachers, artists, reporters, doctors, dentists, programmers, translators, consultants, lawyers etc. according to the German law (EStG § 18). Freiberuflich is a relatively easier version of self-employment in Germany since it does not require registration of business.
Gewerbetreibende (businessperson/tradesperson): If you have a commercial profession that is not in the official list of freelancer jobs in Germany, you could qualify for this type of self-employment only. In this case, you will need to register your business at the Business Registration Authority in Germany (Gewerbeamt).
Although both titles prove you are not working for an employer, there are major differences between the two categories. The main difference is that a tradesperson can only perform his business under a brand name, while a freelancer doesn’t need this even if their job is not in the list of liberal professions. Moreover, freelancers pay fewer taxes compared to tradespersons.
According to German law, all foreigners can practice as a freelancer in Germany if they qualify for the legal requirements. Citizens of the EU, Switzerland, Norway, Iceland, and Liechtenstein can work in Germany without a freelancer visa/residence permit. Upon the start of their practice, they need to register at the Foreigner’s Office and also meet other legal requirements to become self-employed. Foreigners from other countries will need to obtain a freelancer visa for Germany and proceed with the next steps to freelance legally.
The criteria for freelancing are:
- Their profession should be listed in the list of liberal professions or it is at least similar to those provided by the Germany Tax office.
- There is a need and economic interest in the services you would like to provide in different regions of Germany.
- The person must have enough financial resources to fully support themselves while residing in Germany.
What are the requirements for becoming self-employed in Germany?
If you do not have a residence permit in Germany already, you will need to submit your application for a freelancer visa for Germany at the German Embassy/Consulate in your country. The process is very similar to regular visa procedures exception of following extra documents:
- Confirmation of professional ability: for example, a license proving your expertise in law.
- Previous work – examples of your previous freelancing experience
- Freelance plan
- Letters from your potential future employer/customers – to prove that they will need your services.
The process and the requirements for obtaining a freelancing license are very similar in these 3 countries. You can read about the business expansion process via this link. Visit our webpage to read more about the Czech Republic, Slovakia, and Germany.
How Yeye Agency can support your freelance career?
YeYe Agency has designed a customized online software system (www.yedesk.com) which enables the freelancers to manage their operation while they are abroad. The system allows the freelancers to track the official process of their company such as invoicing, bookkeeping, taxes and the communication between the local authorities. On top of this, freelancers can get in contact with their account manager from Yeye agency through the ‘Yedesk’ system and solve all their issues while they are home-office.
Your local account manager will solve all your problems and support you in your new adventure. So ‘Dare to go further’