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Under no circumstances should you just assume that the tax office will remind you individually later or that you can somehow pay the taxes "on the side" afterwards. That's guaranteed to cause trouble and in the worst case, penalty interest. Yes, as a freelancer you have to set aside reserves for taxes - and that should be your top priority as soon as money comes in.
The problem is that your net income isn't the same as what you can actually take home. From your gross income you have to pay income tax (and solidarity surcharge, if applicable), church tax (if applicable) and health and long-term care insurance. With freelancers, there's no one automatically deducting that from your salary like with employees. Most people set up a separate account where they set aside a fixed percentage or a specific amount right after every invoice. Exactly how much depends on your income, your state and whether you're liable for church tax - but budget 30-40% of your profit overall to be on the safe side. Some people get by with less if they calculate precisely, but better too much than too little.
On top of that, you should keep books so you're not surprised when you get your next tax assessment. If you're going self-employed or just started out, getting advice from a tax consultant or the chamber of trades isn't a bad idea either - they can tell you exactly how much you should set aside in your situation. It costs money, but it saves you real headaches later.
I've been working as a freelancer for over ten years now, and I can tell you: yes, building up reserves is absolutely essential. For me, it was totally underestimated at first because I thought my income was visible and regular - silly me. Income tax, trade tax (if applicable), and social security contributions all fall due in the same year you earn the income, not the following year. The tax office doesn't wait around and politely remind you - you just pay extra, and then it can get unpleasant with penalty interest and all that comes with it.
What personally helped me, and what a lot of people forget: don't just set aside a flat percentage, but calculate realistically for your situation. Depending on where you live and what your income looks like, you might need 35-45% in reserves overall - not just for the taxes themselves, but also for social security. My trick is that I settle accounts quarterly, not just once a year. That way I can see directly where I stand, and it doesn't feel like such a shock in December. A lot of freelancers work with their tax advisor or use a program like Elster to at least have a rough estimate - it costs a bit, but saves you real headaches.
The simplest solution is to set aside a fixed percentage of your revenue each month - that works best for me because then you don't have to constantly do the math and you're less likely to panic when the tax bill comes.
I get that the whole "pay it later on the side" thing is really naive, but honestly a lot of people also underestimate how much buffer you need when your income fluctuates - some months are just lean and then you're glad you've saved something.
In my experience, 25-30% of your net income is a good ballpark figure, but of course it depends on your tax bracket and your profit, so better to sort that out with a tax advisor.
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