Ask HN: Germans, how to work legally remote? | Hacker News Reader

Ask HN: Germans, how to work legally remote?

109 pointsthrowaway9283i120 comments

Hey there,

being a freelancer in Germany is possible and well-known if you have multiple clients throughout the year and follow some rules.

However, being a remote worker and employee of a US corp/startup seems to be a grey zone to me because German law requires to work maximum 80% of your time for one client only.

How do you solve that problem? Is there even a legal way to do that?

I also thought about incorporating a GmbH which then creates invoices to the US company. Nevertheless, this would introduce additional costs and probably risks (e. g. when you are no longer an employee of the US corp).

I asked some tax consultants. Nobody of them really understood what I want to do and additionally, the bigger problem seems to be the German Rentenversicherung and not only the Finanzamt.

More info: I want to stay in Germany and am a German citizen. I want to be for a significant time at the company (3y+).

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I did this for a few years. Here are your options:

Employment by the US company:

They're allowed to employ you and have you "stationed" in Germany. You pay no US tax, and DE tax on 100% of this income. For Sozialversicherung, Rentenversicherung etc it's just as if you were selbständig. Since you're allowed to give up all sorts of rights in DE conteact Law, the US based contract is probably fine.

Contractor for the US company: this is OK too. Since the company does not have a DE presence they can't run afoul of the Scheinselbständigkeit rules. You really should register as a Gewerbebetrieb, GmbH or English Limited company though, as that solves a lot of tax questions for you. In any case as a selbständiger in Germany You should expect to get audited in the first few years... And this makes it less likely they'll find things you have to pay.

I am not a Steuerberater... But I've been in a two selbständig household in Germany for 7 years. My income was from international tech contracts, just like yours. And I went through a Steuerprüfung, where they decided that since I dont have a degree in CS, I can't be selbständig in that field. Didn't matter that I have a long resume of big organizations, and a letter of reference from the CTO of one of the biggest companies in Germany. I had to form a Gewerbebetrieb and pay back taxes for it. It sucked.

Also, good luck on finding a Steuerberater who will help you optimize at all. Technically tax optimization is illegal, so most are very cautious even talking about it. 99% are just form fillers.

Just a small clarification: You are still "selbständig" (self-employed) if you do a "Gewerbe". The thing you don't get easily is a so called "Freiberuf", particularly if you don't have an engineering degree (though I managed to get it).

Tax wise it is actually almost easier to do non-EU business than doing business in Europe, because there are no VAT issues involved (and there are no tariffs on those things). You just invoice the net value.

The difference between "Gewerbe" and "Freiberufler" ist quite grey. I'm the software field I have often seen the distinction between creating software on your own (creative/artistic work - freier Beruf) vs. implementing other's requirements (production - Gewerbe) but in each case it depends on the tax officer looking at the files.

Yes, unfortunately. With a degree in CS you might get away with Katalogberuf: no Gewerbe, no Gewerbesteuer

You don’t need a degree anymore. Experience comparable to a degree, documented with proper work contracts and references gets you there too. Source: myself, not German citizen, living and working in Germany as Freiberufler (alongside other things).

Can you go more into detail regarding the tax stuff? Who pays the VAT then?

In countries that have a tax agreement with Germany (e.g. Canada), the Reverse Charge procedure is used; you signalise that on your invoice. In that case, the customer is obligated to pay the VAT in their country and you bill the net amount. However, that depends on the service/product sold. If you re-sell development services, for example, you still have to pay VAT in Germany on a part of the amount billed while the rest is covered by Reverse Charge.

In addition, as the US has no VAT (sales tax is different from VAT), reverse charge then leads to no VAT being charged at all.

Puh, I'm not a tax consultant, ask yours how and why that is. But you don't put VAT on off-EU invoices (not even within different EU countries I think). It's just net.

I think the reasoning is that a VAT - value _added tax_ - requires that the other party also pays VAT (you only pay the difference, the "value add"). Which simply doesn't happen if you are outside your own country. In "regular" cases this is compensated by tariffs, but there are none for consulting/dev AFAIK.

But again: ask you tax consultant :-)

In my understanding, if you have a client outside of EU, you can invoice them without VAT. It's the client's responsibility to pay VAT in their own country.

So that's what I do, and on my "Umsatzsteuererklärung" form, there is a field for income that is VAT-free, where I put basically everything.

thanks for catching my mistake! I'm blaming auto-correct. :)

Employment by US company: Did that for five years working remotely from Germany for a US Incorporated. I'm German, had a German contract with all the standard provisions for Germany (mandatory vacation, termination protections etc, employer contributions to health-care etc). Worked without a hitch, like being employed by a DE entity. The only gotcha is that my monthly pay would have social contributions and health-care contributions already deducted, but would not have income tax deducted. So you'd have to save up enough money to pay income tax yourself at the end of the year (or quarterly, depending on how competent your local tax office is). After five years the US parent incorporated a German subsidiary, and since then the taxes were obviously deducted as well.

Personal take on tax accountants or anyone in that profession: They're more than useless. As parent poster said, 99% are form fillers, so if you tell them that you're working for a US entity that is not paying income tax on your behalf some of them will flat out say "but that's not even possible" (yes, someone told me that). My tip is just to read up on some topics, band together with co-workers in a similar situation and then just do the taxes yourself using one of the popular services.

Which are the "popular services" you are referring to? Can you elaborate?

In my current specific situation there are no coworkers from Germany.

I didn't even know that a US-based company can give me a German contract. Do you know the specifics how the stuff got deducted automatically (except the taxes)?

For taxes I use the online version of WiSo Steuer for example: https://www.steuer-web.de These services can pull your records on file from the tax office, so all you have to fill in is any additional items (deductible expenses over the year for example).

I don't know any of the details of how the company made the employment work. If you PM me I will give you the name of our German accounting firm which handled everything.

Interesting that you got it working with a US employer. My US employer never could figure it out. All the advice they got from German business lawyers was that they had to establish a presence in Germany. :|

> German business lawyers

It's because most German beurocrats are garbage when it comes to laws related to outside Germany.

> They're more than useless.

Can attest to that. Had similar situation - Being DE tax resident however working for my own company that is not based in DE.

I had just a simple question - when and how do I pay my taxes here from the money I bring from my company that is not German. And they could not help me because they really could not understand that someone might be living in Germany but not working in Germany.

Did you ever find an answer to that question? Facing a similar scenario.

Nope. Best I got was - Send money as salary and do yearly returns as additional income.

I think taking a salary is the only way to do it. I've been reading about the concept of opening a German branch of the foreign entity as a more formal thing. But obviously I will need to seek out a professional who actually has a clue.

Seems like a German citizen could use Stripe Atlas to create a US company, and then hire themselves through that entity. Would be cool if someone creates and shares boilerplate contract language to hire themselves "stationed" in Germany and cover the standard provisions that Germany requires.

My understanding is that in your 2nd scenario (contractor), the tax/social security authorities might at some point decide that this is Scheinselbständigkeit, and therefore it's actually been scenario 1 all along. What I'm unclear about is whether they'll try to collect from the worker in DE or the company in the US.

Probably from me. It wouldn't even be a problem for me. I even would pay all of this upfront so there is no hassle five years later.

AFAIK Scheinselbständigkeit is a threat for the company, not the worker... and it's not a threat if the company is not based in DE.

But then, I always maintained one or two other contracts on the side. They made up less than 5% of my income, but their names were in my list of invoices. My tax advisor thought this was a good idea.

> since I dont have a degree in CS, I can't be selbständig in that field

Wtf? Is there a rationale for this rule or is it just German's super weird "degrees are everything" culture turned to law?

(I'm Dutch, were basically Germans who talk funny, but I'm very happy we don't have rules like these)

Well, he mixed up "selbstständig" (self employed) and "Freiberuf" (a specific tax setup for specific kinds of occupations). Unlike in many other professions he _can_ be "selbstständig" in the CS field without a degree, and he can create a GmbH w/o any special qualification. Which is pretty unusual in Germany :-)

It is very different in many other professions. So yes, you actually have to be an electrician with extra qualifications to be able (allowed) to setup an electrician shop (called a "Meister" ("master") but it is entirely different to the university master degree). This is even true for seemingly low profile stuff like haircutters, or painting shops!

And the rational should be obvious: You don't want to allow people to run a business which don't know how to write a basic invoice and you don't want an electrician who doesn't know how to properly install electric lines.

Thanks for catching my mistake - I did indeed mean Freiberuflich.

> Unlike in many other professions he _can_ be "selbstständig" in the CS field without a degree

I'm not an expert here, I can only tell you that the Finanzamt Köln disagrees with this sentence.

IIRC they lumped "web development" in under "engineering", and therefore required qualification. The only way around it that I've heard of, is some front-ender friends of mine invoicing as "Web Designer", which counts as an artistic profession.

Anyone can be selbstständig. Anyone can have a GmbH. Question is if you need to pay Gewerbesteuer. If you have a so called Katalogberuf you might be allowed to call yourself Freiberufler. They are exempt from Gewerbesteuer.

In my case, the Finanzamt demand that I show them a degree in CS for my "Freiberuf" as software dev, but I only had a math degree, which was then accepted, too.

Just the super weird "degrees are everything" culture. The foundation is, as helge5 mentions, that there are certain qualified professions where the guild should ~~get paid~~ certify everyone who practices. The stupidity is that "programmer" was counted as an "engineer," at least in my case. I see helge5 thinks you are allowed to practice CS without a qualification - I can only tell you that the Finanzamt Köln/Bonn disagreed.

And as the other commenters noted, I _did_ say "selbständig" when I meant "freiberuflich". Can I get away with blaming autocorrect? :)

You can join any "IT-Genossenschaft" like [0] or [1], which legally saves you from falling into the "Scheinselbstständigkeit" category. One-time cost is about 100-200€.

[0] https://www.4freelance.de/

[1] https://www.it-projekt-eg.de/

That's interesting. Could you expand it a bit or point to some English articles about it? After joining can you work with your own client and not share the client with the rest of the cooperative?

This sounds genius! Never heard of that. Will definitely look into it. Thanks a ton!

That contradicts their own statement in their FAQ:

https://www.it-projekt-eg.de/freiberufler/service/haeufige_f...

Reicht zum Schutz gegen Scheinselbständigkeit der einfache Eintritt in die Genossenschaft?

Nein. Unser Modell schützt Sie dann vor Scheinselbständigkeit, wenn die IT-Projektgenossenschaft eG der Auftragnehmer ist und den Auftrag an Sie übergibt. Die Mitgliedschaft alleine reicht nicht aus.

That basically translates to "A membership does not protect you from Scheinselbstständigkeit. It will only protect you if the Genossenschaft is the contractor and transfers the job to you."

This might not be possible for all cases.

Be aware that if you incorporate, you still will have problems with Scheinselbständigkeit - being a small UG/GmbH does not prevent you from that!

Reg. your tax consultancy; we also do international business with freelancers and other contractors. Write me a mail, we might be able to sort that out.

How so? Is there a problem with having a company with only one employee and one client?

Yes, if you have an incorporation (UG/GmbH/...) where you are the only managing partner (Ein-Personen-GmbH) and you only have one client, you’re handled as if you were a freelancer with only one client. It was an easy way to circumvent several obligations until they “closed” that “loophole”.

Come to think of it, there was a proposed change to taxation in the UK for these cases. Not sure what happened to it, it was not in effect this year.

When did they close that loophole?

It was never a loophole.

„Ist der Auftragnehmer eine rechtsfähige Personengesellschaft (z. B. OHG, KG, GmbH & Co. KG, Partnerschaftsgesellschaft, GbR), schließt dies ein abhängiges Beschäftigungsverhältnis zum Auftraggeber im Regelfall ebenfalls aus. Dies gilt jedoch nicht, wenn im Einzelfall die Merkmale einer abhängigen Beschäftigung mit entsprechender Weisungsgebundenheit gegenüber den Merkmalen einer selbständigen Tätigkeit überwiegen. Nach Auffassung der Spitzenverbände der Sozialversicherung [>>](ISRV:NI:SVBEIEC 2/2004 1) soll dies grundsätzlich auch dann gelten, sofern es sich bei dem Auftragnehmer um eine Ein-Personen-Gesellschaft (z. B. Ein-Personen-GmbH bzw. Ein-Personen-Limited) handelt. Insbesondere bei typischen Beschäftigungsverhältnissen – wie beispielsweise bei den nicht programmgestaltenden Mitarbeitern in der Film- und Fernsehproduktion – kann die Gründung einer Ein-Personen-GmbH oder Ein-Personen-Limited nicht zur Umgehung eines sozialversicherungspflichtigen Beschäftigungsverhältnisses führen. Beurteilt nach den maßgebenden tatsächlichen Verhältnissen sind diese Personen vielmehr weisungsgebunden in die Arbeitsorganisation der Unternehmen eingegliedert. Arbeitnehmer kann – anders als ein Arbeitgeber – ausschließlich eine natürliche Person sein, so dass die Gründung einer Ein-Personen-GmbH oder Ein-Personen-Limited in diesen Fällen sozialversicherungsrechtlich ins Leere geht.“

Could you be more specific what loophole?

I am in a similar situation, I am full time employed (as a developer) by 1 person GmbH. I work with a tax agency that has not said anything about this.

Thanks.

Unfortunately your tax agency is wrong. Finanzamt does not care much. It is the Rentenversicherung that you should care about. They might end up calling Scheinselbstständig. Better get at least one more client to work with.

Thank you.

The thing is, that just b/c someone at the tax agency said something, doesn't mean that it is right nor respected when they audit you. A lot of things in this area are not clearly defined and thus open to interpretation leading to all kinds of weird decisions.

The following article (German) is a good read on that: http://www.schwerd.info/sozialversicherungsrecht/scheinselbs...

Thank you.

Done, thanks for your help :)

So, if I understand you correctly you'll be working on a contractual basis for a single client, full-time for a prolonged period of time.

This kind of arrangement indeed is quite likely to be classified as "bogus self-employment" by the German state pension system, no matter your legal setup. I wouldn't bother setting up a GmbH (private limited company) because it most likely won't help you anyway.

Unfortunately, there are no clear rules yet on when something is considered "bogus self-employment" and when it is not. However, there are some criteria for a setup to be more likely classified as "bogus self-employment" and other than the remote working part yours sounds more or less like the prototypical case.

The question remains, who would have to pay outstanding social security fees in that case. Usually it would be your employer. However, given that in your case they're in another jurisdiction social security might not be able to enforce that. Still, it might cause some trouble and costs for yourself (apart from the ethical issues that come with avoiding social security costs in such a manner).

The way remote employment (not consulting, which as you've mentioned, involves having multiple clients) could work relatively hassle-free in your case is your US employer setting up a company in Germany (a UG for example, which is a relatively cheap variation of the GmbH) and simply pay you from there, including taxes and social security like any other local employer.

I don't think that my employer would do so only for me (given that I don't even have an employer right now, I'm just speaking generally here). But I agree this would indeed be the best option.

Is there a way that I can pay the social security fees from day one on my own to completely avoid all hassle and possible back-payments after a Prüfung (audit)?

I suppose there are legal constructs that allow you to do this. For example, you could set up the UG mentioned above yourself and be its only employee with all the taxes and social security costs that implies.

However, that will get complicated rather quickly:

You’ll not only be that company’s sole employee you’ll also be its managing director. A managing director who owns a majority in the company usually is considered to be self-employed. A managing director also is responsible for filing annual accounts and tax statements. This is both expensive and time-consuming.

Another point to consider is that you’d effectively cover for employer’s share of the social security costs (unless they will be paying that on top of your salary, at which point they might just as well set up the UG themselves).

Not only is this a dodgy practice but you’ll also have pretty rough deal.

In any case, because this will get complicated you’d have to ask a lawyer who’s well-versed in both corporate law and social security law about the specifics.

It’d be much easier if they either were your client rather than your employer or if you were a co-founder.

As a hint: If you have been employed so far and are quitting your German job now, you have been paying into the "unemployment insurance". You can opt in to continue paying into that, voluntarily, but have to do so explicitly.

I didn't do that, regretted it later and wanted to return to it, but learned that the continuity is lost, that is, my income from the previous 12 months (when I was still employed in Germany) would not count for my unemployment payments.

One way to set this up is using some form of consulting/temporary worker company as an intermediate. I was employed in that form for a while. So legally that company hires you and then invoices the U.S. corporation taking a cut. In my case that was Kelly Services and was hassle free (I got my salary as negotiated in time, only interaction I had with them was signing a contract and terminating it) no idea how hard this is to setup or what the cut is they take.

Someone else will make huge money only because bogus laws in Germany which probably won't be fixed even in the year 2100.

Anyway, I really like the idea and it sounds totally hassle-free. I will contact them and ask. Should I give you as a referral? Maybe you get a check if it works out for me.

About bogus laws: I think the employee protection in the German system is a factor (not the single one) on why German economy did quite well and populists for a long time had limited success. The strong safety gives guarantees so that one has less fears and representation of employees on the board ensures long term perspective over short term gains. (With the downside that employees on the board represent current, not future employees and leads to more conservative operation as change is hard) Anyways, that's a different complex debate.

I don't know if that company is best. Just gave it as reference, also for finding competitors. I think for most part you'd need a company with a representation in U.S. and here, so that your "practical" employer can do a contract under U.S. terms and you do one under German terms ... and not sure they'd remember me - it's 10 years ago :)

I'm in a similar situation (German citizen living in Germany, working as a freelancer for a company in Asia). As far as I can tell from some research, the only "risk" is that I might have to do some back-payments into the Rentenversicherung.

But if I were to be employed regularly to a company (in the EU?) the same would apply.

In either case, I have to pay for the health insurance, so there's no real "avoiding the cost of social security".

Wrt to social security stuff, one should proactively run a "Statusfeststellungsverfahren" - you fill out some forms and the authorities will tell you how they declare you. That puts you on a safer side.

Also there _is_ an "avoiding the cost of social security". If they consider you properly self employed and independent, you do not pay gov social security stuff, but you need to insure yourself (using private insurance companies). That is why the process mentioned above is important. If you register self-employed but later they declare you as dependently-employed, gov social security has to be paid! Something you should avoid upfront, can be super expensive. So => "Statusfeststellungsverfahren"!

I do not want to save any money in taxes, health insurance, social insurance or pension fund. I am actually happy to pay all this. Nevertheless I heard horror stories even by doing so you are at risk they will f..k you anyway after a Prüfung (audit) within the first five years or so.

I even want to stay in the public health insurance (freiwillig gesetzlich versichert). I actually do not want to benefit from being self employed. I just want to make it legal.

I can feel your pain, but that is really not what this is about. It is all about the rules/laws :-)

Your's is an pretty edgy case. All people I know which have been employed dependently by a foreign company, have been employed by a local subsidiary (and I can understand that your foreign employer won't open one just for you).

Just a wild guess: If you are above the minimum income for dependent-employees allowed to be privately ensured, I assume all should be good. But I would still do the "status feststellungsverfahren", or maybe just call them. I think they have a hotline.

(In general many answers/threads here may not be really relevant for you as they are focused around self-employment. What you really want is to be a "dependently-employee-in-a-foreign-company". I have no idea how that works, maybe just do make an appointment w/ a work-lawyer).

Before I started my current job with a company in Thailand, I met with a tax accountant that specializes in international tax law. She looked up the German-Thai agreement and explained to me that I could be employed there regulary and pay taxes in Germany exclusively.

With that info, I traveled there for the onboarding (and getting a working visa), only to learn that the local tax authorities disagreed. My boss then suggested to just have me invoice him for the time being, until a subsidiary is created in the EU. Still waiting after two years :-\

Thanks for the hint about Statusfeststellungsverfahren, I will research that. I had previously filled the questionaire from Finanzamt and they had accepted my status of "freiberuflich" w.r.t. software dev.

The possibility to use private insurance depends on having some minimum amount of income.

Also, I currently use the option to use public insurance (voluntarily) so that I can easily switch back to it once I become employed again in the future. Apparently, there is some risk of not being accepted by the public insurers after one had quit.

Depending on your health records, staying voluntarily in the public insurance is the best thing you can do.

That is the way more ethical thing, but it is almost never the best thing from either a financial and certainly not from a health perspective _if_ you exceed a certain income (and the barrier here is pretty low unless you have many kids, which depending on your income distribution you may have to privately insure separately).

If you are self-employed, the public insurance is really nothing more but another (rather unattractive) insurance company you can choose from.

A lot of people in IT knowing how to negotiate well will probably cross the border. I would, at least.

I agree it doesn't make sense from a financial perspective generally but it does depending on your health records/situation. I, for example, have a chronic disease which implicates monthly medication which is crazy expensive. I could enter a private insurance (because I have a Anwartschaft, thank god I kept this from since forever) but the monthly rate will drive to insane amounts when I'm getting older and/or adding the fact of kids (Familienversicherung).

Going back to public insurance after being in private insurance is highly problematic and probably even impossible without playing grey-zone games if you don't want to lower your salary dramatically below the income border for multiple years.

Disclaimer: my knowledge is based on internet research, I am not an expert on this and might be wrong.

@throwaway9283i - I think you are indeed wrong.

AFAIK if you are self-employed the gov insurance doesn't have to take you either! Yet both have to take you using that "base tariff" (600? Euro or sth) since a few years (before a self-employed could end up w/ no insurance at all, not possible anymore).

It is true that the private insurance increases significantly over the years, but it is still WAY less than the gov insurance. The costs for the gov insurance is about 25% of your salary (remember, it's split between employer and employee, but as a self-employed you have to pay both sides). Assuming an income of just 5k per month, that would be 1.25k! per month, or more than twice the base tariff.

It often becomes problematic for self-employed low-wage workers when they enter pension. Which they often don't setup, and hence can't even pay their health insurance :-/ (and then move into social security, which again provides everything)

That it is difficult to get back to the public insurance is just non-sense unless you exceed a certain age. In fact you have to, whether you want or not, by law.

> It is true that the private insurance increases significantly over the years, but it is still WAY less than the gov insurance. The costs for the gov insurance is about 25% of your salary (remember, it's split between employer and employee, but as a self-employed you have to pay both sides). Assuming an income of just 5k per month, that would be 1.25k! per month, or more than twice the base tariff.

It's actually about 15% in total. The maximum amount currently is around €750 for both employer and employee.

That's not necessarily true. It depends on how many kids you'd want to insure (they're free on public insurance but cost on private), if you have any risk factors (even common allergies can drive up the price of private insurance a lot), your income later in life and health inflation. Over your lifetime it's not unrealistic that you're worse off with private insurance. So unless you're keen on that higher level of care (or luxuries as it's mostly about waiting times rather than getting care at all), staying in public insurance can be smart even if you pay the maximum amount.

"Statusfeststellungsverfahren" is an (gov) insurance thing (the process is run by the "Rentenversicherung" (the pension fund)), it has (I think, not a lawyer) nothing to do with the Finanzamt (German IRS). That is an entirely different thing.

> The possibility to use private insurance depends on having some minimum amount of income.

This is incorrect. If you are self-employed you are off the state records. You can yourself choose to insure yourself using the gov insurances ("Freiwilligenversicherung"). But that is _usually_ an awfully bad deal (though ethically the right thing to do and I personally hope they eventually do the "Bürgerversicherung", which will level the terms for everyone).

The minimum income thing is only for dependent(regular)-employees. They are forced to be in the gov-insurance unless they exceed a certain income. If they do, they can choose (which often makes sense because private insurance has way better benefits and is way cheaper if you (consistently) have a high income (I don't know the current rate, 14% for the employee and 12% for the employer [and both if you are self-employed?])).

> Also, I currently use the option to use public insurance (voluntarily) so that I can easily switch back to it once I become employed again in the future.

They have to take you back unless you are 50+ I think (google the details). If you are dependently employed you _have to_ be in the gov insurance unless you exceed the minimum income. Buckle up, it's the law! Because of that many privately insured people therefore often seek to get back into regular employment if they get closer to 50, to properly exploit the system.

> Apparently, there is some risk of not being accepted by the public insurers after one had quit.

This is age specific. Generally at least the "AOK" (kinda the fallback gov insurance company) has to always take you. In fact I think even private insurances _have to_ take you since quite a few years now - it's awfully expensive, but you are never supposed to be uninsured in Germany.

I might be wrong, but they only have to take one if you are below a certain age _and_ below the border income (Beitragsbemessungsgrenze). Always be careful w.r.t. these kinds of decisions because they could cost you an awful amount of money later.

If you are above the border income, the private version is less expensive (I might also be wrong, checkout https://www.finanztip.de/pkv/pkv-basistarif/). It only really affects people below that income (way too many!). It is the reverse, staying in the gov insurance costs you an awful lot of money upfront. It's the ethical but financially stupid thing.

True, the private insurance is typicall less expensive now (when I researched, it was 50%-60% of what I pay), but you have no guarantee that it will stay that way. They could just increase the fees for everybody, in the future, or just increase it with your age, as the health risks go up.

What you say about voluntary public insurance is true: I currently pay the full amount (both parts, for employer and employee).

It's based on an estimate for my yearly gross income based on last year's tax report. The insurance (TK) assured me that I would get refunded what I overpaid each year. This is relevant, since I work much reduced hours due to family obligations. But I still have to pay forward the higher estimates for tax and insurance now...

Feel free to reach out to me. We have seen this case couple of hundred times already and I’m sure I can provide some direction. Certainly a Trade Office registration or own limited company is the way to go. Can talk you through the costs as well. My email is ck at firma dot de.

Done, thanks for your help :)

In Italy there is a similar law for freelancers, but it's only valid if the client is another italian company, so if I work only for a US company for example there should be no issues.

In any case I suggest you ask a German lawyer, he know best for sure.

Scheinselbständigkeit also takes into account other properties than "only one customer".

There are plenty of freelancers working only for Daimler, Bosch, etc.

Can you decline projects?

Do you control your work times/place.

Do you have to handle on your own authority etc.

Btw. I work remote for 4 years now and since last year for US companies.

I just solved that problem with multiple customers, so I don't really have your problem, sorry.

Thanks to let me know the additional conditions. As an employee I wouldn't be able to control that.

You can be employed through a third party deployment company (ArbeitnehmerÜberlassungsGesetz) for up to eighteen months. Such companies (known in other countries as Employer of Record / GEO / PEO / Umbrella companies) have an AÜG license. We offer this to our clients in Germany. After eighteen months your company could setup (in order of complexity) a representative office, branch or subsidiary. Or you could pursue one of the self employed models.

I'm in a similar situation, except I'm a British citizen looking to move to Germany. I already have a sole director, UK limited company set up for contracting / freelancing.

I've head rumours of German contractors using UK limited companies instead of the local GmbH/UG entities. How does that work generally? Are people setting themselves up as German employees of the UK entity and collecting a salary? Or is there something I'm missing here?

Without being able to contribute to your question: in hindsight of Brexit (UK will leave the EU) this might not be possible (as easy?) as in the past anymore.

I think the "only" real change is that he will need a work visa, the other aspects should remain the same. A EU citizen can freely choose his workplace in the EU (which is a reason why the British voted exit, they specifically didn't want that).

Thankfully freedom of movement is still in effect until the end of October. So no visa's required just yet. As for residency after the brexit date that's completely in the air but I would rather be already inside germany than outside.

Freedom of movement is still in effect until the end of October, as for after that time the visa/residency question is up in the air but there's an extremely good chance residency of some form will be offered to British citizens who are already established in Germany.

As for the company being incorporated in what will become a third country, from my research I can't see any reason why that will fall afoul of any regulations (as long as everything is properly reported to the authorities).

I _think_ those things are disconnected. If you stay more than 6 month + 1 days in Germany, I think it becomes your primary tax country and you fall into the German social system (for good or bad). But really, just guesswork. Ask someone :-)

If you are contracting for multiple clients, you should probably be cool. The thing which is problematic is if you only work for a single client (the mentioned "Scheinselbstständigkeit" - your claim to be self employed, but you really aren't). In this case Germany really just wants that you are regularly employed by that client company. (the reason is that this was commonly abused to force cheap labour into self employments, so that the employers also don't have to pay gov insurances and work around a whole lot of other laws ...)

Before Germany had the concept of UG we only had GmbH. For a GmbH you need to bank at least 12.500 EUR. Quite a sum if you wanted to start a business. So it was better to create a Limited in the UK and work in Germany. That construct was totally legal, but not really cheap since all the paperwork was for the UK and you ended up paying someone who knew what to do. The German government then created the UG. At grants you liability like the GmbH but you need only 1 EUR to start with.

I avoided the Gewerbeproblem by proving that I am a free Systems Developer, in contrast to Application Developer. A true Freiberufler, even without a CS degree.

Of course the tax office did their "Steuerprüfung", but compared to my Steuerprüfung in Austria it was very simple, and needed just one day in their office.

No Gewerbe tax, 100% (independent, systems) work for big US companies.

I never spoke to a lawyer or tax assistant, I did remote work most of my life.

Either make your own UG or use individual W8 form for US company (reverse charge in DE, no VAT). Still, you need to have at last 20% of your income from another source if you stay a freelancer. Ideally if the US company had two legal entities and you could issue invoices to both. Most people start their own GmbH with all the increased taxes it brings.

Wouldn't that still be a grey zone to just invoice two different legal entities even though they are technically the same?

I don't know, it's best to discuss with a lawyer of course. Still, if they are two different entities with two different TINs, why would that matter to the tax office?

How long do you want to stay for?

I'm by no means an expert, but when I looked at this recently (same scenario - remote worker for a US company), I found the only real option was to apply for a Residence / Long Stay Visa.

I was only looking to stay for ~1 year in theory.

You mean VISA in the US? I want to stay in Germany (I am a German citizen).

I would plan to be there for a significant time, more than three years.

I'm sorry, I completely missed that you were a German citizen and assumed you were a US citizen who wanted to move to Germany. Nothing I posted is relevant to you.

https://bluemarblepayroll.com/about/ might be able to help? needs your employer to set this up tho

Thanks, will have a look :)

You could stay in Germany for less than 183 days a year and in Austria/Switzerland/etc. for the rest. And have permanent residence somewhere like Georgia.

Nope.

Is it really that expensive to set up a company in Germany ?

It‘s very bureaucratic starting a company here. You will need much time.

Costly too. German tax law is complicated and it will cost quite a lot of money to get all the filings done correctly.

Yes, I think it is at least 2-3k€ per year even for an empty GmbH.

It depends. Incorporating is comparatively expensive and time-consuming. Running as a sole proprietor is simple and cheap on the other hand.

Bulgaria if you want Eurozone incorporation. The benefits are too huge to ignore. (more a comment for anyone browsing and thinking about it)

Yes, corporate tax rate in Bulgaria is attractive. However, how does this help if op wants to stay in Germany. Immediately cross-border tax issues are introduced you have to deal with. Only the tax accountants and lawyer are winning in this case with their billable hour. Also do not discount the language barrier too much.

Incorporation in another country is too risky for me.

The problem is that if you have a single client, the government may claim that you are trying to avoid tax and other obligations --- that you have a fake company.

Wouldn't you actually be paying more taxes as a one person company? Why does it matter if the company has only one client and one employee if everything is paid properly?

Because as managing director you don’t have to pay pension insurance (and others). So if you are employed, the social system will get more contributions.

It's about the public tax fund.

You have to pay into it of you're employed and make below ~4800€ (before taxes) a month.

It's rather much % of your income, so you can save rather much by not paying it.

-tax +pension sorry

Couldn't I just pay all of that stuff by my own to show them I have no intention to do so? I want everything to be legal. I do not want to save any money in taxes, health insurance or social insurance. I am actually happy to pay all this. Nevertheless I heard horror stories even by doing so you are at risk they will f..k you anyway after a Prüfung (audit) within the first five years or so.

Don't take my advice for figuring out a real-life situation.

No, it's not. Well, if you are doing software related stuff. (Almost any other occupation is highly regulated in Germany (be it electrician, painting service or tax consultant, you need specific degrees to be allowed to open a specific business)).

To do (software) business those are relevant options (there are more, but those are more exotic or for larger businesses or startups):

a) "Freiberuf" (often translated as freelance, but it is actually something different). This is originally intended for architects and similar professions. It is hard to get, and even harder if you don't have some kind of engineering degree.

b) "Gewerbe". You just need to register, pay a few minor fees, and you can do business. However, you are personally liable for the business you do (so get proper insurances).

c) GmbH or UG. An LLC. This _used to be_ expensive (GmbH requires at least 12.5k of base capital to be put into the company). This establishes an own legal entity and the liability is restricted to the money you put into it. "UG" is a "new" (>10y old now!) version of a GmbH which only requires 1 Euro to be put into the company (should be more like 2k) ...

Costs

a) and b) are essentially "free". You don't necessarily need a tax consultant and all the filings are not that hard anymore (all online AFAIK, though I do let my tax consultant do that). a) is a little better because the taxes are setup a little different.

c) Setting up a UG is not _expensive_, but not exactly free either :-) Plan ~1k for setup, and then ~1.5-2k yearly for letting the tax consultant do the necessary paperwork. It's very easy too, you just setup the company at a notary, and they will essentially do everything for you.

Notably there are also lots of funding and startup programs in Germany, many of which are actually quite good.

Probably the most important thing is to find a reasonable tax consultant. It's not rocket science, but it's worth the money.

Disclaimer: I have a) for ~15 years, and I've setup two c)'s and an AG (a stock based company).

Just use a Gewerbe and make sure you issue a few invoices to other clients. I have done that for years and never had any problems.

I don't have and I don't want to have any other clients.

You should give the Rentenkasse an call. They are happy to tell you, if this would be Scheinselbständigkeit.

They will also give the reason why/why not on paper. So you should be Fine.

I already know the answer: yes, it will be Scheinselbstständigkeit. The question is how to legally avoid that classification.

Off topic, but why are Ask HN posts displayed in gray like a negatively voted comment? This entry has 35 positive points currently so shouldn't be made so low contrast...

It's to de-emphasize post bodies. It's like that for all post bodies on HN. I believe the rationale was to focus on the title/link and any comments.