Working freelance without a valid permit

21 posts in this topic

Posted

Complicated question. Long question. A question that makes me seem entirely irresponsible and naive. Thanks in advance if anyone can help. And further thanks for resisting urges to rant at me.

 

After months of effort I've finally been given legal permission (I don't have EU citizenship) to be a freelancer from the auslanderbehoerde. I've been to the finanzamt and all is understood with the steps I have to take regarding tax ID, etc. Now the problem...

 

I have already been working with a company. They didn't want to go through the trouble of properly hiring me, but they agreed to pay me and wanted my services. They've known my situation all along. I wanted legal working status, but worked there anyway because, well... a man's gotta eat. Now that I'll be able to legally give them invoices they want me to bill retroactively, including MwST. I haven't made a whole lot of money there, and now that I'm nearing legal status, ironically, they don't need me much longer.

 

It was their tax man that filled out my forms (I haven't submitted them). He made estimates for last year that I didn't reach, and made estimates for this year that I won't reach (now that they're letting me go). He said even though I wasn't legal I could file retroactively because as long as I paid the taxes all would be forgiven.

 

Am I going crazy? Or is this a) some very reckless advice on his part; B) a 19% retroactive pay cut that I don't need to take; and (conspiracy theorist in me emerging now) c) him just looking out for the company he represents? I do find it interesting that after months of pushing them for help with this that the first time they make time for me to meet with their tax guy is the day they tell me they're letting me go. I know step one would probably be to get a good tax person. I'm trying, but I'm in a ridiculously small town and the only person I've been able to sit with specializes in companies (their company).

 

I'm happy to pay taxes and be a legal, upstanding citizen. That's not the problem. I just want to make sure I'm not being misled. Is MwST necessary in my case? Can I file to pay taxes on money I made when I wasn't supposed to be making it? What a mess I've made of this!

 

Thanks for any advice.

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Posted

Your situation is not too bad. Don't fret. I'm assuming they've already paid you for the bulk of your work, so whether you now issue invoices or not is largely up to you – especially as they are letting you go anyway.

 

Legally, in theory you do have to declare the income that you made. If it's your first year working, then you do not need to pay MwSt. Should you choose to register for MwSt. nonetheless, then you must invoice the company for an additional 19% even on the jobs already paid for – do not take that money out of what they have already paid you.

 

Whether or not you can, or should, now declare your income for the period when you were not legally entitled to work is something that you certainly need to get professional advice from. Zitzelberger does everything by phone and email, so it doesn't matter where you live.

 

If it turns out that you should not declare income from the period when you had no work permit, then you just tell the company that you can't issue invoices for that period. They should have known, or did know, this when they hired you, as you did tell them your circumstances.

 

Another factor that a tax adviser will be able to inform you about is the issue that you don't generally qualify as a freelancer if you only work for one company.

 

Get some professional advice and take it from there. Good luck, and keep us posted!

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Posted

Thanks so much for that response, STB.

 

I understand the freelancer stipulation that you can't just work for one company, but since they wouldn't hire me as an official employee I was able to spin it that the work I had done was a project, and there would be other projects with other companies (especially now that this will be the last "project" with them).

 

Thanks again for the advice and the lead. And the reassurance. I'll post back with the result.

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Posted

This is a serious matter and you will need professional advice. Go and find a tax advisor (who isnt working for this company). This link might help. Click on Steuerberater-Suchdienst (on the right side). Look for someone in your area specialised in "Umsatzsteuer" with english language skills.

 

I wonder how this company will explain last years expenses for your services. Sounds like there is some very creative bookkeeping involved... They might also get in trouble because of "Scheinselbständigkeit" or "Schwarzarbeit".

 

On the other hand, isnt there a danger that your visa will get withdrawn if the "Ausländerbehörde" learns, that you broke the law?

 

In the end it might be a good idea if you and this company come to some mutual agreement to avoid bigger problems for both sides...

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Posted

It's much more the company's problem than bohemka's. Without any invoices, there's no real evidence that he worked for them. How the company explains the expense is their problem. What is important is that bohemka only issues invoices for that work (and thus accepts having done it) if he's sure it won't affect his residency/work permit.

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Posted

Yeah, my greatest concern is keeping my visa in good standing. I'm planning on speaking with a number of professionals before I take any more wrong steps.

 

Thanks for the advice, again. As for it being the company's problem, I agree that they are probably looking at a serious fine. But it still comes back to me (or worse, actually, my girlfriend) if someone decides to track bank transfers. Either way I want to clear this up for the sake of my visa, the tax people, and even the company.

 

Well, I'll let you know what happened. Thanks again.

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Posted

Take the advice from STB above and contact Thomas Zitzelsberger who advertises here in Toytown, he'll give you fast advice for fair costs and you'll need someone like him anyway now that you are legal and all and continue to work here. German tax law is the most f---ing complicated and complex in the world (I know that cause I hold a degree in International Taxation) and you can loose a lot of money by making "educated guesses"...

 

Don't let yourself get bullied by the company, they are in a deep mess from where I am standing and you would have a decent chance to press all kind of charges against them. Pretty sure this would not harm your resident status in the end. Definetly do not write out invoices for the past...

 

Cheerio

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Posted

You could be fined for working without a work permit. Of course there would have to be a paper trail for the bureaucracy to catch up with you. Is there a paper trail? If you have Registered (Anmeldung) and been paying tax then eventually the bureaucracy will catch up with you and you will have some explaining to do...

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Posted

I am in somewhat of a similar position in that I have been working freelance (read: on the side) for a company for several months now. I have issued invoices, albeit without my steuernummer. I did this all at the same time as being employed as a permie for a German company.

 

Now that I no longer work for the German company, I would like to apply for a freelance visa. I know that I need to get references together from companies (I can get 3 or 4). The problem is the main reference will come from this woman I have been working for and invoicing on the side. Should she not include any details of how I worked for her previously since it was not legal?

 

Thank you!

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Posted

Just a note about the MwSt. Depending on how much you have earned you may not be liable for MwSt. anyway. There's a limit under which you are not eligible for MwSt. (that means that you don't need to collect it from your customers but the other side of the coin is that you can't claim back the MwSt. on your own costs), if I remember rightly it used to be 17,000€/year a few years back, it may be nearer 20K now - your Steuerberater can clear that up.

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Posted

 

if I remember rightly it used to be 17,000€/year a few years back, it may be nearer 20K now - your Steuerberater can clear that up.

€17,500

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Posted

this isn't berlitz by chance is it? they hire people (i was told this by someone who does work there) and then suggest they skip back home when it might get rough. this is unofficial of course :ph34r:

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Posted

I know this is kind of like a super old thread ... but due to a myriad of complicated issues I've now kind of ended up in a similar situation. Basically what happened was that I've been signed up a freelancer on a project but due to a major delay in my work permit I've completely missed the original start date. Under the presumption that it would be issued fairly soon (perhaps in a few weeks time?) they've asked me to start working on a "see-how-it-goes" basis. At most, I'm thinking I would be working about 3 weeks before I get the permit (I'm an IT consultant so I think there's a good chance that I will get it).

 

Is this a super bad idea to go along with? I've not yet seen my tax adviser (as that is contingent on getting the permit) and hence I don't even have a tax number.

 

Bohemka, if you're still around, what was your outcome? Has anyone else had any experience where they had to do some work whilst their permit was pending approval?

 

Any advice would be greatly appreciated! And thanks in advance!

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Posted

Hi,

Bohemka is no longer in Germany but his TT account is still active so you can try sending him a PM (click on the "Message" button at the bottom of his post) to ask how things turned out back then.

 

HTH.

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Posted

 

I know this is kind of like a super old thread ... but due to a myriad of complicated issues I've now kind of ended up in a similar situation. Basically what happened was that I've been signed up a freelancer on a project but due to a major delay in my work permit I've completely missed the original start date. Under the presumption that it would be issued fairly soon (perhaps in a few weeks time?) they've asked me to start working on a "see-how-it-goes" basis. At most, I'm thinking I would be working about 3 weeks before I get the permit (I'm an IT consultant so I think there's a good chance that I will get it).

 

Is this a super bad idea to go along with? I've not yet seen my tax adviser (as that is contingent on getting the permit) and hence I don't even have a tax number.

 

Bohemka, if you're still around, what was your outcome? Has anyone else had any experience where they had to do some work whilst their permit was pending approval?

 

Any advice would be greatly appreciated! And thanks in advance!

 

Actually, what is the legal definition of "work"? What if I could get them to agree to an arrangement where I worked for "free" during this limbo period then after I get the permit I billed them in such a manner that would recoup my actual wage e.g. via a higher rate, extra hours, weekend hours etc

 

Does anyone here think that will put me back into the confines of the law?

 

Thanks

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Posted

I'm not an expert but I once had a *similar* situation (not about my freelance work permit; but the client company couldn't get their order for my work through, as their purchasing dept. was seemingly comatose during the summer break). I worked for about 6 weeks without any contract to my agency (who in turn was waiting for the contract from the client). The agency knew about the situation but informed me it was my own risk. The risk was, essentially: if the order didn't go through, I never would have been able to bill, and get paid for, the work done in that time. Also, in the event I had had an accident at work, I suspect the insurance wouldn't have paid up.

 

It all worked out in the end, and my first bills for for very large amounts - which was also never queried by the Finanzamt.

 

In the case of a lacking work permit, of course you face further consequences if caught - but certainly the above two I've mentioned as well.

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Posted

Actually, what is the legal definition of "work"?

 

"It depends on what the meaning of the word 'is' is." –Bill Clinton, during his 1998 grand jury testimony on the Monica Lewinsky affair

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Posted

I read in a few other places that without a permit you're not allowed to even do unpaid or voluntary work either. But I guess if I billed them after I get my permit at least I'll be paying taxes, which might make it a little bit easier for me to defend myself should anything happen (touch wood).

 

But thanks for all your responses anyway.. didn't know where else to go with these questions! cheers

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Posted

Doing freelance work without a purchase order or contract, as ruapehu describes, is strictly a commercial decision (assuming one is legally authorized to work freelance). In the worst case, she would have ended up out of pocket for the work she did.

 

Working without a valid work permit, on the other hand, can have far more serious repercussions, including fines, deportation, and a multi-year ban on returning to Europe. I'm not saying that will necessarily be the result; I'm just saying that it's possible.

 

At the very least, by starting work without a valid permit, you leave yourself open to exploitation by the potential employer and have no legal recourse if things go south - as has been discussed in another thread:

 

 

 

 

This very thing happened to my brother in the Netherlands several years back.

 

I agree with the previous posters. The only possible way the "intern" scenario could work is if they didn't pay you - and even that part is iffy - until your work permit was granted. It would be a huge risk for you to take and leave you wide open to potential abuse by your employer. Tell them to get their act together and apply for an expedited work permit. If they claim to have lawyers who to know immigration law, it should be easy for them to fast-track you.

 

And airP is correct: without a work permit, you are not allowed to work, whether paid or not.

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