Before you start

Steuer-ID, issued automatically after your Anmeldung
A tax number from the Finanzamt, if you are self-employed
Records of foreign income, foreign accounts and relocation costs
An ELSTER account, which the self-employed effectively must have

Step-by-step

1
Give payroll your Steuer-ID as soon as it arrives
Until the employer has it, wage tax is withheld under the least favourable class and a large amount comes off your pay. It is reconciled later, but a cash-flow squeeze during a move is worth avoiding by chasing the number.
Via employerWho: YouAs soon as issued
2
Register a self-employed activity with the Finanzamt within a month
Starting freelance work means submitting the Fragebogen zur steuerlichen Erfassung through ELSTER. The answers on that single form set your VAT position and your prepayment schedule for the year, so do not fill it in casually.
OnlineWho: YouWithin a month of starting
3
Decide the VAT question deliberately
Below a turnover threshold you may use the Kleinunternehmerregelung and charge no VAT, which simplifies invoicing but means you cannot reclaim input VAT on equipment. If you sell mainly to businesses, waiving it and charging VAT normally is often better. The choice binds you for several years.
OnlineWho: You
4
Work out whether you are freiberuflich or gewerblich
Genuine liberal professions — writers, artists, designers, journalists, engineers, doctors, lawyers — file simple cash-basis accounts and pay no trade tax. A trade (Gewerbe) requires a business registration and, above an allowance, municipal Gewerbesteuer. The boundary is not obvious for design, consulting or software work and is worth an hour with a Steuerberater.
In personWho: You
5
Verify the church tax line on your first payslip or assessment
Declaring a recognised religion at registration triggers Kirchensteuer at 9% of your income tax in Saxony. Check rather than assume. Leaving the church is a formal act at the registry with a fee, effective from the following month only.
In personWho: You
6
File for the relocation year even if you are not obliged to
Removal costs, flat-viewing trips, double rent during the transition, German lessons, work equipment and the commuting allowance are all deductible. New arrivals assume filing is only for the self-employed and leave a substantial refund with the Finanzamt. You have up to four years to correct that.
OnlineWho: YouBy 31 July of the following year for mandatory filers

Documents you’ll need

Steuer-ID and, if self-employed, your Steuernummer
Lohnsteuerbescheinigung — the annual employer certificate
Invoices, receipts and a simple income-expenditure record, for freelancers
Receipts for relocation costs, equipment and training
Records of foreign income and foreign accounts

Things most newcomers don’t know

The freelancer's second year is the expensive one, because prepayments and the first assessment arrive together.

In year one you invoice, spend and pay nothing. Then the first assessment lands with the whole year's tax due at once, and the Finanzamt simultaneously sets quarterly prepayments for the current year based on that figure. People who spent their gross income face two bills in the same quarter. Set aside roughly a third of every invoice from your first month and do not touch it.

Source: Bundesministerium der Finanzen

Whether you are freiberuflich or gewerblich decides whether you pay trade tax at all.

Liberal professions — writing, art, design, journalism, engineering, medicine, law — keep simple cash-basis accounts and are exempt from municipal trade tax. Anything classified as a trade needs a business registration and pays Gewerbesteuer above an allowance. Design, consulting and software work sit on the boundary and the classification is decided by what you actually do rather than what you call yourself. It is worth one paid hour of advice.

Source: Bundesministerium der Finanzen

The Kleinunternehmerregelung simplifies invoicing and can cost you money.

Staying under the small-business VAT threshold means you charge no VAT and file no VAT returns, which is a real administrative saving. But you also cannot reclaim the VAT on a camera, a laptop or studio rent, and business clients do not care whether your invoice carries VAT because they reclaim it anyway. If you sell to businesses and buy equipment, waiving the exemption is usually better — and the choice binds you for several years.

Source: Bundesministerium der Finanzen

Saxony charges 9% church tax, and the relocation-year return is the one worth filing.

Church tax is 9% of your income tax liability here, elected on your registration form and deducted without further notice. Separately, the year you move is the return most likely to refund — removal costs, viewing trips, double rent, German courses and equipment are all deductible, and most newcomers never file it because nobody told them it was optional-but-profitable. You have four years to go back and claim.

Source: Sächsisches Staatsministerium der Finanzen

Common mistakes to avoid

Spending gross freelance income and meeting the first assessment and the first prepayment in the same quarter.
Choosing the small-business VAT exemption while buying expensive equipment and selling to businesses.
Assuming a design, consulting or software activity is automatically freiberuflich.
Declaring church membership at registration without realising Saxony charges 9% of your income tax.
Skipping the relocation-year return and leaving a likely refund unclaimed.

Some of this may be out of date. Spotted something inaccurate? Help us keep it right for the next newcomer.