Adjusting Advance Payments

Social Insurance

With statutory health insurance, a reassessment of your health insurance contribution is possible from a 25% drop in profit (the exact process varies by insurer!)

1. Prepare a current profit calculation or Einnahmen-Überschuss-Rechnung (EÜR — simplified profit calculation)
2. Notify the change in income in writing or via form
3. Attach supporting documents – many insurers require an updated income tax advance payment notice (see below for adjusting income tax advance payments), alternatively EÜR or Betriebswirtschaftliche Auswertung (BWA — management accounts)
4. The insurer reviews and notifies you of your updated contribution

→ Minimum contributions are around 200–250 €/month (depending on insurer) – you can't go below that even with an application!

The Artists' Social Fund (KSK) provides online forms ^[1] and templates ^[2] for change notifications for many situations.

1. Notify the change in your estimated annual working income (assessment basis) in writing or via online form
2. Attach a credible justification and, if possible, supporting documents (e.g. EÜR)
3. Review by KSK and adjustment of contributions from the following month

→ You can adjust your estimated annual working income at any time during the year!

With mandatory statutory pension insurance, you can apply ^[3] to switch between a flat-rate standard contribution (2025: €696.57) and an income-based contribution (switching is not retroactive).

In the first three years of your self-employment, there is the option to pay only half the standard contribution (2025: €348.29) – this is how founders are supported.

An exemption from statutory pension insurance is also possible on application, e.g. if you are insured via the KSK.

How to proceed

1. Notify your DRV regional office (depending on your residence, ^[4]) of the change in your income or preferred contribution type via the V-application form
2. Attach supporting documents if applicable (e.g. EÜR, current income receipts, etc.)
3. The DRV reviews your application; changes typically take effect from the following month

Voluntarily insured pension contributors choose the number and amount of monthly contributions themselves, paying between €103.42 and €1,497.30 (2025) monthly or retroactively by March 31 of the following year at their discretion (contributions cannot be changed retroactively).

→ More information here ^[5]

Contributions to private health insurance (PKV) can be reduced in consultation with the insurer through tariff changes, reduced benefits, deductibles, or contribution deferral.

Tax Prepayments

Adjustments to income tax advance payments are generally possible from a 25% (expected) change in income via an application for reduction at the tax office:

1. Submit the application informally or via ELSTER (form "Adjustment of Advance Payments") or through your tax advisor to your tax office. The application must include: the reason for reduced income and your expected profit/income for the current year.
2. Attach supporting documents, e.g. income overview for the current year, Betriebswirtschaftliche Auswertung (BWA — management accounts), explanation of the business situation (e.g. fewer orders, training, illness), or comparative figures from the previous year.
3. Review by the tax office and issuance of an updated income tax advance payment notice – typically takes effect from the next advance payment, but you can also request retroactive adjustments.

→ You can submit this application at any time during the year!

Your trade tax advance payments go to the municipality, but changes are possible, as with income tax, via an application for reduction at the tax office. Your steps are the same as for adjusting income tax advance payments, except that the tax office issues a trade tax assessment notice, which then goes to your municipality to set your new trade tax advance payment.

Additional Tips

1. As a young founder, you may only pay income and trade tax advance payments from the 2nd year, since the tax office often uses your first tax assessment as the basis. For the first year, you pay these taxes only after submitting your tax return – watch out for these costs and set aside reserves!
2. If you make losses in the 1st or 2nd year of self-employment, you can offset them against income from another year via loss carryback or carryforward, effectively saving taxes.
3. Trade tax is credited against income tax up to factor 3.8 of your municipality's assessment rate → you only pay extra trade tax from a municipal assessment rate above 380%!

The frequency of VAT advance returns is only determined by the tax liability.