Net salary in Germany for programmers

Question

I got an offers as a freelancer to work from Germany (the company is not German but I will live in Germany when I'll work for them). Since I'll be a freelancer in need to give them an hourly rate for my work, for that I'd like to estimate the net salary programmers here get. I found this calculatror https://www.brutto-netto-rechner.info/gehalt/gross_net_calculator_germany.php it has few options though that I don't how to fill, all in the insurance section. I'd like to know what is the common case in Germany, do employees usually get a compulsory insurance in all sections (health/ pesnsion/ unemployment) ? Also I'd be happy if people share their percentage of Net income from the gross salary so I can have a rough estimation.

Answer 1

There are a lot of differences between being a regular employee ("Unselbstständig") and being a freelancer ("Selbstständig") in Germany.

With regular employees, the insurances for health, care, pension and unemployment are all compulsory and are shared between employee and employer. They are handled similar to income tax: as percentual deduction from your wage. A rule of thumb is that with an average full-time employee wage, you can usually expect that about 2/3 of the negotiated wage actually arrive in your bank account.

This is not the case with freelancers! As a freelancer you are your own employee, so you need to also pay the part which would usually be paid by the employer all by yourself. But most of these social security insurances are voluntary for freelancers, so you can go without them if you feel that you don't need them. The only insurance which is compulsory is health insurance. You can choose between the "private health insurance" and the "compulsorily insured voluntarily" model, depending on which one has the better cost/benefit ratio for you. Ask a health insurance provider of your choice for what you need to pay in which scenario (they are all very similar).

When it comes to income taxes: Freelancers and employees pay the same tax, but in a different way. Employees get their income tax subtracted directly from their salary. You do your taxes every year, and depending on what you can deduct you usually get a few hundred € back. Freelancers, on the other hand, do not pay any income taxes throughout the year. If you are a freelancer, then you must do your taxes every year, declare your income from freelancing activity ("Einkünfte aus selbstständiger Tätigkeit" and/or "Ausländische Einkünfte und Steuern") and then receive a large tax bill for that income. But on the plus side, there are a lot of things you can deduct when you are a freelancer (ask a licensed tax consultant for details).

Answer 2

Basically as a freelancer, you need to charge a significant percentage over the hourly rate of a regular employee.

If a regular employee doing your kind of work gets paid 120,000 Euro a year. 10,000 Euro a month, you should be charging at least 18,000 a month (as that higher number needs to cover all kinds of "benefits" a normal employer would). Remember, they also need to pay a premium for the freedom to let you go at any moment. And they also need to pay for your down time, as a freelancer needs to find his next job on his own.