I. General information on taxes in Germany

This is how the German tax system works if you are self-employed. If you are self-employed, you have to pay income tax. This means that part of the money you earn goes to the state. The exact amount depends on how much you earn.

If you earn more than 22,000 euros a year, you also have to pay VAT. The current rate is 19 percent. You have to add it to the products or services that you sell.

To male sure you're paying the right taxes, you have to declare your income and expenses in a tax return. You’ll usually do this once a year. 

If you earn more than 24,500 euros a year, you also have to pay business tax.

It is important that you keep an accurate record of all your income and expenses, and keep receipts to complete your tax return correctly. If you're not sure about anything, then it's a good idea to ask a tax accountant or your local tax office for help. Then you can be sure that you won’t have any tax problems and will be paying the right taxes.

Here is an example of the documentation “Income - surplus statement”: Einnahmen Ausgaben-Muster_9.pdf

and an Excel spreadsheet: Tabelle zum ausfüllen Einnahmen-Ausgaben_7.ods

It is the law in Germany that everyone who works has to pay taxes. This also applies to you if you are earning money as a prostitute.

Taxes are a part of the money that you earn and have to give to the state, regardless of whether you are employed or self-employed. In Germany, taxes are paid to the tax office.

There are 79 tax offices in Baden-Württemberg. 

As soon as you register as a sex worker, you are required to register with the local tax office.

Which tax office is responsible for you depends on where you live or are registered. If you work in different locations, it may be more complicated to figure out which tax office you come under. It often depends on where you work most and spend most of your time. You can contact the counselling centres in Baden-Württemberg to find out which office to contact.

The amount of tax you have to pay depends on how much you earn.

It also makes a difference if you are married or have children.

• Income tax
• Business tax
• VAT
• Payroll tax

Which taxes you pay depends on whether you are self-employed or employed.

1. Self-employed: Most sex workers are self-employed. In this case, you will have to pay 

• Income tax 
• Possibly VAT (see question II.2)
• Possibly business tax (see question II.3)

2. Employed: If you are employed and working in a brothel, for instance, and have an employment contract, you have to pay payroll tax.

1. Self-employed: If you have the freedom to decide yourself where and when you work, then you are self-employed. If you are the operator of a prostitution facility, you are also self-employed.
2. Employed: You are employed if you have an employment contract with an employer (for instance, a brothel). 

If you are a self-employed sex worker and earn money from it, then there are a few important points regarding income tax that you need to consider.

1.** Tax-free allowance**: If you earn less than 11.784 euros a year, you do not have to pay income tax. Despite the tax-free allowance, you have to file a tax return if you are self-employed. This is because the tax-free allowance must first be determined by the tax office. 

2. **Registering with the tax office**: You must tell the tax office when you started working as a self-employed sex worker, and be given a tax number.

3. **Calculating your profit**: You will only pay income tax on the profit you make. Your profit is calculated by subtracting any VAT (19%) and your expenses (e.g. health insurance, rent, condoms, laundry detergents etc.) from your total income.

Income

- Expenses

-------------------

= Profit

4. **Taxable profit**: If your profit is more than 11.784 euros a year (the tax-free allowance), then you have to pay income tax.

5. **Cash ledger: Documentation and receipts**: You must write down all your income and expenses, for instance in a cash ledger, and keep all your receipts and other supporting documents. This includes rental contracts, work materials such as condoms or lingerie, laundry detergents and other expenses related to your work. These records are important for your tax return. 

The receipts also serve as proof of your actual activity in prostitution.

Here is an example of the documentation “Income - surplus statement”: Einnahmen Ausgaben-Muster_9.pdf

and an Excel spreadsheet: Tabelle zum ausfüllen Einnahmen-Ausgaben_7.ods

6. **Retention period**: Keep all invoices, rental agreements and receipts for at least 10 years.

It is advisable to seek tax advice from a tax accountant to ensure that you declare and pay your taxes correctly.