Freelancing in Europe offers a wealth of opportunities, but before you dive into client work, it’s crucial to choose the right business structure. Your decision will impact taxation, liability, administration, and even how clients perceive your business.
If navigating these choices feels overwhelming, Freeberry is here to help. Freeberry offers a hassle-free solution for freelancers who need to issue invoices with or without VAT—without the need for full business registration. Whether you’re just starting out or scaling your freelance business, Freeberry simplifies invoicing and compliance, so you can focus on your work.
This guide will help you explore the different business structures, their pros and cons, and how to make informed decisions as a freelancer in 2025.
1. Understanding the Importance of Business Structure
The business structure you choose affects:
✅ Taxes – How much you pay and how you file
✅ Liability – Your personal responsibility for debts and legal issues
✅ Administration – The complexity of bookkeeping and reporting
✅ Growth Potential – Whether you can scale or hire employees
The best structure depends on your income level, risk tolerance, and long-term goals.
2. Common Business Structures for Freelancers in Europe
Each European country has its own legal and tax system, but the most common structures for freelancers include:
A. Sole Proprietorship (Self-Employment / Freelancer Status)
Best for: Solo freelancers, consultants, creative professionals
Common names in Europe:
- Germany: Einzelunternehmen
- France: Micro-entreprise (auto-entrepreneur)
- Spain: Autónomo
- Italy: Partita IVA
- Netherlands: Eenmanszaak
- Sweden: Enskild firma
✅ Advantages:
✔️ Simple and quick to set up
✔️ Low administrative burden
✔️ Lower taxes for low-income earners
✔️ Full control over your business
❌ Disadvantages:
❌ Unlimited personal liability (you are personally responsible for debts)
❌ Higher tax rates as income grows
❌ Harder to separate personal and business finances
How Freeberry Can Help:
For freelancers unsure about VAT registration or just starting out, Freeberry allows you to invoice with or without VAT—no need for complicated company registration. You can test the waters without long-term commitments, ensuring your invoices meet legal standards while keeping your options open.
B. Limited Liability Company (LLC / SARL / GmbH / BV, etc.)
Best for: Freelancers with higher income, liability concerns, or plans to expand
Common names in Europe:
- Germany: GmbH (Gesellschaft mit beschränkter Haftung)
- France: EURL / SARL (Société à responsabilité limitée)
- Spain: SL (Sociedad Limitada)
- Italy: SRL (Società a Responsabilità Limitata)
- Netherlands: BV (Besloten Vennootschap)
- UK: Ltd (Limited Company)
✅ Advantages:
✔️ Limited liability (your personal assets are protected)
✔️ More tax-efficient for higher earnings
✔️ Easier to work with international clients
✔️ More professional image
❌ Disadvantages:
❌ More complex and costly to set up
❌ Stricter bookkeeping and reporting requirements
❌ Potential for higher taxes on lower earnings
Best for: Freelancers earning over €50,000 per year, those working with corporate clients, or those who want better legal protection.
Freeberry’s Solution for You:
If you’re considering moving to a VAT-registered structure but aren’t ready for the administrative burden, Freeberry simplifies the process. Our service allows you to invoice clients seamlessly while you evaluate whether LLC or VAT registration is right for your business growth.
C. Partnership (If Working with Others)
Best for: Two or more freelancers collaborating regularly
Common types:
- General Partnership (OHG, SNC, VOF) – Partners share liability
- Limited Partnership (KG, SCS, CV) – Some partners have limited liability
✅ Advantages:
✔️ Easier than forming a company
✔️ Shared responsibilities and costs
❌ Disadvantages:
❌ Liability risks (except for limited partnerships)
❌ Potential for disputes
Best for: Freelancers teaming up for long-term projects but not ready for a full company structure.
3. Key Considerations When Choosing Your Structure
📌 Taxes & Social Contributions
Sole proprietors pay personal income tax + social security contributions.
LLCs usually pay corporate tax + dividends tax.
Tax rates vary by country—check local thresholds and deductions.
📌 VAT Registration
Mandatory if you exceed the VAT threshold (varies by country, typically €20,000 – €85,000).
Can be beneficial if working with VAT-registered businesses.
📌 Administrative Burden
Sole proprietors have simpler bookkeeping.
LLCs require annual reports and professional accounting.
📌 Liability & Risk
LLCs protect personal assets; sole proprietors are personally liable.
📌 Client & Market Perception
Some clients prefer working with registered companies over sole traders.
4. Steps to Register Your Freelance Business in Europe (2025)
1️⃣ Choose the Right Structure (based on income, risk, and growth plans).
2️⃣ Register with Local Authorities (e.g., tax office, chamber of commerce).
3️⃣ Obtain a VAT Number (if required).
4️⃣ Set Up a Business Bank Account (separate personal & business finances).
5️⃣ Register for Social Security & Insurance (health, pension, liability insurance).
6️⃣ Understand Local Tax Obligations (hire an accountant if needed).
Consider Estonia and Freeberry for remote company registration and control. Learn how to open a company quickly and cost-effectively.
Read an article on why Estonia is the best country for freelancers, digital nomads and self-employed.
5. Special Considerations for Digital Nomads & Remote Freelancers
If living in one country but working remotely, check where you need to pay taxes.
Some countries offer freelancer-friendly tax regimes (e.g., Portugal’s NHR, Estonia’s e-Residency).
Consider digital nomad visas if moving frequently.
6. Conclusion: Which Structure is Right for You?
| Criteria | Sole Proprietor | LLC / Ltd | Partnership |
| Liability Protection | ❌ No | ✅ Yes | ⚠️ Sometimes |
| Tax Efficiency (High Earnings) | ❌ Less | ✅ More | ⚠️ Varies |
| Admin & Compliance | ✅ Simple | ❌ Complex | ⚠️ Medium |
| Business Growth | ❌ Limited | ✅ Scalable | ✅ Scalable |
| Client Trust & Credibility | ⚠️ Lower | ✅ Higher | ✅ Higher |
Why not let Freeberry make this easier for you?
With Freeberry, you can focus on growing your freelance business while we handle the complexities of invoicing, whether VAT-registered or not.
Final Tips:
✔️ If you’re just starting, go with a sole proprietorship.
✔️ If you earn over €50,000/year or want liability protection, consider an LLC.
✔️ If working with partners, set up a partnership or LLC.
Take the stress out of invoicing and explore how Freeberry can help you invoice with confidence. Whether you’re testing the waters or scaling up, Freeberry is your partner in simplifying freelancing in Europe.
Happy freelancing in 2025! 🚀
