Taxes

What are taxes and to whom do I pay them?

• Everyone who works in Germany has to pay taxes. Your income from prostitution/sex work is also taxed. This means that you have to give some of the money you earn to the state, whether you’re employed or self-employed.
• Taxes in Germany are paid to the finance authority.

Which finance authority should I report to?

• There are 17 tax offices in Schleswig-Holstein. Which finance authority is responsible for you usually depends on your place of residence or the place where you are registered.
• If you work in different places, it is not always easy to find out which is your finance authority. Often it depends on where you work and stay most often. You can ask us at cara*SH and we would be happy to try and get this information for you.

How much tax do I have to pay?

• That depends on how much you earn.
• Whether or not you’re married and have kids is also an important factor.

What types of taxes could be important to me?

• Income tax
• Trade tax
• Sales tax
• Wage tax

What kind of taxes will I have to pay?

• That depends on whether you’re self-employed or employed.
• If you are self-employed, i.e. you are free to choose your working hours and place of work, you run a business. In this case you will have to pay income tax and possibly sales tax.
• Trade tax is only paid by those who operate a prostitution establishment and make a profit of more than EUR 24,500 per year.
• If you are employed, for example if you work in a brothel and have an employment contract, you will have to pay income tax.

How do I know whether I am self-employed or employed?

• You are self-employed if you can choose your working hours and place of work freely. If you are an operator of a prostitution establishment, you are also considered self-employed.
• You are employed if you work for an employer (e.g. a brothel) and have an employment contract.

I’m self-employed. How does income tax work in this case?

• Please note: if your income is low, less than EUR 9408 per year, you don’t have to pay income tax. If you are above this so-called “tax exemption” level (which is EUR 9408), then this is how the income tax works:
• You tell the finance authority when you start working independently as a sex worker and you will be given a tax number.
• Income tax is paid only on your profits.
  
  Your profit is what is left over when you deduct any sales tax (19%) if applicable from your annual income and also your costs (for e.g. health insurance, rent, laundry detergent, condoms etc.).
  
  You may have to pay income tax on this profit if it exceeds EUR 9408.
• You write down all your income and expenses and keep all documentation and receipts for the things you need for your work, such as room rent, work supplies such as condoms or laundry detergents. This is what you will need for your tax return.
  
  These supporting documents also serve as proof of your actual work in prostitution.
• You need to keep all invoices, rental agreements and receipts for 10 years.

When do I have to pay VAT as a self-employed person? 

• If you earn more than EUR 22,000 per year, you have to pay sales tax. The sales tax rate is currently 19%. It is also often referred to as value added tax (VAT).
• An example: you earn EUR 23,000 in one year. You will then have to pay 19% VAT to the finance authority. That means you have to pay EUR 4370 sales tax for the whole year.
• If you earned less than EUR 22,000 last year and are not expected to earn more than EUR 50,000 this year, you are running a small business and do not have to pay sales tax. However, you are also not allowed to charge sales tax to others, for example on your own invoices.

As a self-employed person, what do I have to send to the finance authority?

• Every year: an income tax return (by 31 July of the following year) and possibly an annual sales tax return (but only if you are not a small business operator).
  When do I have to pay VAT as a self-employed person?
• Every month: an advance VAT return (but only if you are not a small business operator)

How do I file a tax return?

• Fill out the forms and send them to the finance authority. You can now do this online

Where can I get the forms for my tax return?

• From your finance authority or at
• https://www.elster.de/eportal/formulare-leistungen/alleformulare

What does “deduct from tax” mean?

• The employees at the finance authority will add up all the expenses that you have entered on your tax return. This figure will be deducted from your annual income. You only have to pay taxes on what’s left over. This is called “deducting from tax”.

What happens if I do not submit my tax return?

• The finance authority will then estimate the profit on your turnover.
• They will use averages and projections as a basis. These can be much higher than what you have actually earned.
• This is why it is in your own interest to file a tax return.

I’m employed. How does wage tax work?

• If you are employed (for example in a brothel), your employer must register you with the tax authorities and pay income tax for you.
• Your employer keeps some of your money and uses this to pay the wage tax and your social security contributions (this means health, nursing care, pension and unemployment insurance).
  Social insurance
• When the year is over, your employer will give you an income tax certificate.

I’m employed. How much income tax do I have to pay?

• This depends on your monthly salary.
• Whether or not you’re married and have kids is also an important factor.
• There are six different tax categories. Depending on whether you are married and have children, you will be in one of these tax categories.
• If you need help with tax categories, please contact us at cara*SH. We can get you the necessary information.