Freelancers and state pension contributions

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Dear all,

 

I heard that if you work as a freelancer in Germany you're allowed a pension tax exemption the first two or three years.

 

My question: where do you apply for this? Finanzamt?

Is there a special form I have to fill in for this? If so, where can I find it??

 

Have looked everywhere, but so far without success... :(

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Most freelancers or other self-employed are completely, utterly, 100% exempt from paying pension contributions (not a "tax" of course) if we want to be. That's pretty much a given of bring self-employed. We get to make a personal choice about how we provide for ourselves in old-age.

 

A few professions (notably freelance language teaching) may theoretically be covered by antiquated laws relating to certain specific professions. The usual route there is apparently to get your Steuerberater to apply to Finanzamt. So ask your Steuerberater.

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all teaching professions are liable for pension contributions as free-lancers. All others are not, but are in danger to be considered "Scheinselbstständig" if and when they only have one client. For this case there is a special way to file for an exemption for three years which gives legal certainty for both, the contractor and the contractee. But you should consult a tax advisor for that, namely Thomas Zitzelsberger from Expattax who has worked this out and has helped many of my clients to get out of this trap already. would not advise to try this out yourself...

 

Cheerio

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If a freelancer chooses not to pay for pensions, is he still eligible for permanent residency after three/five years of stay in Germany?

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a teacher-freelancer or a freelancer with no connection to a teaching profession?

 

Cheerio

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A freelancer with no connection to teaching. Sorry for the late reply, was out of town for a while. Thanks.

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as a freelancer outside of teaching professions you are not required to pay into the public pension system. I am not an expert with regards to "unbefristete Niederlassungserlaubnnis" /Permanent residence permit, but I doubt that they can demand from you proof of any pension contributions... Having said that: it would probably depend from you age. If you are already in your mid/late 50s they could want to see if either your pension from abroad or any other capital/pension plan has been set up to prevent you from becoming a HartzIV case when you grow older...

 

Cheerio

I am a professional independent insurance broker, financial adviser, and authorised advertiser. Contact me.
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Thanks for your reply. I will go to the visa office soon to find out, and update you guys.

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I was a freelancer and applied for this three year pension exemption, which I got. (But I had been working as a freelancer for a year by the time the paperwork went through, so I had to back-pay for the pension payments I had missed, and my exemption was only for two years not three. Apparently the exemption is not retroactive.)

 

After my two years of exemption ran out the Rentenversicherung people sent me a letter telling me I had to pay some minimum amount each month for Rentenversicherung. I did it, but as of this year I am now am employee, and so I stopped paying the Rentenversicherung directly. My pension payments are just deducted from my paycheck each month.

 

But I still want to take the occasional freelance job. (My employer is okay with this.) I'm wondering how this works for pension payments. Do I need to contact the Rentenversicherung office and let them know how much I earned each year as a freelancer, so they can send me a bill for extra pension payments? Or do they somehow find out from the tax office? Or is the amount I pay for my pension as an employee sufficient?

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But I still want to take the occasional freelance job. (My employer is okay with this.) I'm wondering how this works for pension payments. Do I need to contact the Rentenversicherung office and let them know how much I earned each year as a freelancer, so they can send me a bill for extra pension payments? Or do they somehow find out from the tax office? Or is the amount I pay for my pension as an employee sufficient?

 

As long as you continue freelancing (even on the side, on top of being an employee) for only one client, you still have to tell the Deutsche Rentenversicherung about that freelance income and pay 19.6% public pension insurance on it.

A case like this was the subject of a court case and was decided by the highest German social court in 2010, for details please see here.

 

If, on the other hand, you don't earn more than 5/6 (= 83.3%) of your freelance income from only one client, you won't have to pay a public pension contribution on your freelance income.

 

*********************

 

If you have public health insurance, you will also have to inform them about your extra freelance income and pay health&nursing insurance contributions on it.

 

If you work more than 18 hours a week freelance on top of being a full-time employee, then you will also get problems with the public health insurance since they will no longer believe that you are only freelancing on the side (= nebenberuflich), for details please see Being both a freelancer and employed.

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As long as you continue freelancing (even on the side, on top of being an employee) for only one client, you still have to tell the Deutsche Rentenversicherung about that freelance income and pay 19.6% public pension insurance on it.

A case like this was the subject of a court case and was decided by the highest German social court in 2010, for details please see here.

 

If, on the other hand, you don't earn more than 5/6 (= 83.3%) of your freelance income from only one client, you won't have to pay a public pension contribution on your freelance income.

 

Thanks PandaMunich. Does the 83.3% have to be each year or just over a period of time? I imagine I may just have one client this year, but next year I'll presumably have a different one. (I'm offering some one or two-day skills workshops to Universities and research institutions.) To me this is clearly not a case of Scheinselbstständigkeit, so presumably I can skip the public pension contribution on this income? I'll just declare it in my taxes but not send any information to the Rentenversicherung?

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Sorry, but this a hazy area, where many decisions end up being made in court.

 

The law governing this is §2 Satz 1 Nr. 9 SGB VI, is a bit vague, it calls for:

"auf Dauer und im Wesentlichen nur für einen Auftraggeber tätig sind"

i.e. you have to pay public pension contributions as a freelancer if you work "for a longer duration and in the main only for one client"

 

As I understand it:

if during a calendar year you make more than 83.3% of your freelance income from one single source then your are scheinselbständig for that calendar year and have to pay a public pension contribution on your freelance income, as long as there are other indicators for you being scheinselbständig.

 

There is a whole list of other Scheinselbständigkeit-indicators (taken from this IHK article), and I somehow can't see someone offering workshops as being:

"weisungsgebunden und eingliedert in die Arbeitsorganisation des Auftraggebers", i.e. being ordered around by your client and integrated into the work processes and company of your client.

So I would say you're safe.

 

However, there is a simple way to be sure about this, just ask the Deutsche Rentenversicherung for a "Statusklärung" (i.e. for them to look at your special circumstances and to tell you your status, scheinselbständig or not), it is explained in the IHK link above.

That way they can't come along afterward and ask for the pension contributions if they decided at the start that your freelance activity is not scheinselbständig.

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Forgot to say thanks for this last very clear explanation PandaMunich!

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Anyone still around this thread?

What if you're a freelancer with a company...not teaching, but doing consulting for a market research company...and, to have the second required job to make you a freelancer you're also an english teacher? I've been offered both...but the english teaching part of it would only be maybe 100 to 200 euros a month. Plus I get free german lessons which makes it very interesting to me.

In this scenario, do you still have to pay pension contributions?

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With regard to smak's question from 2009, which remains unanswered, I do have a story about an Australian friend of mine. After living in Germany for I think about 7 years, was unable to get permanent residency because she had worked as a freelancer during that time and thus could not show she had made contributions into the Deutsche Rentenversicherung. She had made contributions into a private pension fund, but this wasn't acceptable, and so she was denied permanent residency. I have no idea if this is a case of getting someone nasty on the day, or a legal requirement for permanent residency. Something to keep in mind all the same.

 

Sorry fishyfeet, I have no idea about your pension situation.

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Hi everybody,

 

I am reviving this thread because I am very confused.

 

I've been working as an English Coach/trainer since 2006 (with a 3 month break in the 4th quarter of 2008 and Sept. 2009-10 in Mutterschutz). I am applying to get my citizenship, and one of the requirements is to prove I've paid into Social Security or a private Rentenkasse/Lebensversicherung. I don't want to mess with the BfA because I don't want to have to pay retroactively. I asked my brother-in-law, who works in a bank, and he told me that it is nonsense to pay into the private Rentenkasse and I should go into the gesetzliche Rentenkasse.

 

Admittedly, the insurance offers that I've gotten aren't so great. They could only guarantee me around 275 euros per month after the age of 65. Is anybody in this situation? I have never paid into any Rentenkasse whatsoever.

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I have never paid into any Rentenkasse whatsoever.

 

How are you planning on financing your retirement? :huh:

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Buffy,

 

Check with John G. Besides being a great resource for health insurance/insurance needs, he also can provide information based on private pensions.

 

Kris

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Quite shortsighted of me, I know. I didn't plan on staying so long here in Germany. Life kinda happened, and I'm married to somebody who is so averse to anything government-oriented that I really am on my own in dealing with all kinds of bureaucracy. As you can imagine, my life is filled with unpleasant surprises. On the other hand, my Amtsdeutsch is well practiced :-)

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On the other hand, my Amtsdeutsch is well practiced :-)

 

That is at least good news. I recommend that you read SGB VI §2 and info4alien.

 

Contact John.G or Starshollow for advice on info on private pension plans.

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