Freelancers and state pension contributions

105 posts in this topic

On 2/25/2017, 4:14:28, PandaMunich said:

No, Anlage EÜR is for your business expenses, contributing to a pension for your old age is a private expense.

Contributions to public pension contributions are tax deductible, but only in part, 84% of what you will pay to DRV in 2017 will lower your taxable income.

You declare 100% of  your public pension contributions in Anlage Vorsorgeaufwand, in line 4 (ignore the words Lohnsteuerbescheinigung and Arbeitnehmer).

On 2/25/2017, 4:14:28, PandaMunich said:
On 2/25/2017, 4:14:28, PandaMunich said:

 

@PandaMunich So to clarify, voluntarily contributing to the public  DRV pension as a freelancer is still a private expense and not included as a business expense in the Anlage EUR?  I started voluntarily. contributing monthly minimum amounts of 84.15 to the DRV in 2017 and am trying to figure out if considered a business expense to arrive at net business profit OR is it excluded and reported on the Anlage Vorsorgeaufwand as you originally recommended.   I believe the original OP is a freelance teacher, so I wasnt sure your response is applicable to non-teaching freelancers.

 

The other question I have is: can the DRV impose to have me pay more into the pension system beyond my minimum contributions if I report a higher business income on my German tax return?  The purpose of my volunteered contributions was only to fulfill that meet the 60 month requirement for applying for permanent residency in a few years time.  

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21 minutes ago, Alvcpa said:

reported on the Anlage Vorsorgeaufwand as you originally recommended

 

Public pension contributions that you pay for yourself are never a business expense and are reported in Anlage Vorsorgeaufwand.

 

If you had employees, the employer's part of their public pension contributions that you have to pay for them would have been a business expense in your Anlage EÜR.

 

23 minutes ago, Alvcpa said:

The other question I have is: can the DRV impose to have me pay more into the pension system beyond my minimum contributions if I report a higher business income on my German tax return? 

 

No, don't worry.

How much you pay in is decided only by you, you contribute voluntarily.

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I have a meeting with the state pension office later this week to settle last year's payments and get set up to make future contributions. Is there anything I should know beforehand that isn't entirely obvious? I can't find tons of information on their website about payment plans, so I'm not really sure what to expect. 

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Can I give this topic a quick prod?

 

I am a freelancer, specifically Englisch Lehrerin/Erzieherin. Now, I am a good girl so I notified the DRV and back paid what I owed early on, and have made about 3 years of contributions. Now, I am HOPING my next visa will be an 'open' one, as in it won't specify I can only teach or do childcare but that I can freelance as anything (last year the caseworker said it was possible, who knows what this year's caseworker will decide). I have not even been teaching for the past year and I would love to get out of paying 20% of my precious income to the DRV because it feels akin to just throwing away my money. I don't have faith in the public pension system, and with the cost of rent and German private health insurance I am finding it depressingly difficult to save any money.

 

So my question is...can I stop paying rentenversicherung if I am no longer considered a teacher? Can I just volunteer a small amount? But what if I do still teach on the side with occasional freelance jobs, would I only have to pay the 20% on that and can I leave my other income out of it?


Thanks!

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On 15/08/2018, 14:00:55, kimochiwarui said:

But what if I do still teach on the side with occasional freelance jobs, would I only have to pay the 20% on that and can I leave my other income out of it?

Also interested to know this.

I'm a musician but also an audio engineer.

As a musician I will have to pay DRV, but as an audio engineer I wont.
But also not sure if at the end of the month/year if the DRV looks at income earned only with DRV liable jobs, or all income together.

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Hi Everyone,

I'm a Brit who has just started teaching English as a freelancer in Germany.

If I continue paying National Insurance contributions in the UK, will that mean I won't have to pay into the German public pension fund?

Any help on how I can become exempt from paying into the German public pension fund (or reduce my payments) would be appreciated. This is my first post!

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1. hire someone who receives a salary from you in excess of 451 EUR per month (Sozialversicherungspflichtiges Beschäftigungsverhältnis). Do that and you are home free, no requirement to contribute to public pension

2. you could also claim a deferral of the requirement for the first three years of being self-employed in Germany. However, that means you are on radar and they will get to you definitely after 3 years.

 

Staying in NI does not help you, because legally with what you wrote in the other thread, you are fully main resident of Germany and German rules and regulations apply to you.

NI-contributions do not free you of your Germany-based requirements and regulations.

 

Cheerio

 

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Sorry to disagree, but the 3 year exemption @Starshollow alludes to is only possible for "Selbständige mit einem Auftraggeber" (= self-employed with only one client) which is the description of people who fall under §2 Nr. 9 SGB VI: https://www.gesetze-im-internet.de/sgb_6/__2.html

These are people who don't fall under no. 1 to 8 and who have at least 5/6 of their turnover from one client: 

You, on the other hand, are a teacher and therefore fall under §2 Nr. 1 SGB VI: https://www.gesetze-im-internet.de/sgb_6/__2.html

There is no way out for you, sorry, except hiring an employee of your own (who needs to help you in your teaching activity, mind you! A cleaner or nanny won't count) at over 450€ gross a month, for whom you would then have to pay social security contributions in turn.

 

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Btw, beyond paying into the German system, it's probably in your own interest to keep paying the UK NI contributions. Many people do that after they move out of the UK.

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9 hours ago, PandaMunich said:

Sorry to disagree, but the 3 year exemption @Starshollow alludes to is only possible for "Selbständige mit einem Auftraggeber" (= self-employed with only one client) which is the description of people who fall under §2 Nr. 9 SGB VI: https://www.gesetze-im-internet.de/sgb_6/__2.html

These are people who don't fall under no. 1 to 8 and who have at least 5/6 of their turnover from one client: 

You, on the other hand, are a teacher and therefore fall under §2 Nr. 1 SGB VI: https://www.gesetze-im-internet.de/sgb_6/__2.html

There is no way out for you, sorry, except hiring an employee of your own (who needs to help you in your teaching activity, mind you! A cleaner or nanny won't count) at over 450€ gross a month, for whom you would then have to pay social security contributions in turn.

 


I stand corrected, dear PandaMunich. You are right... sorry for that mistake.

 

Cheerio

 

I am a professional independent insurance broker, financial adviser, and authorised advertiser. Contact me.
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Apology accepted, Starshollow. Thank you for clarifying the situation, PandaMunich.

Now I know I cannot get around the public pension contributions, I am keen to slash the amount of money I spend on compulsory health insurance. At the moment my monthly bill will be around 300 euros. Any ideas? 

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On 9/8/2020, 12:20:57, PandaMunich said:

Sorry to disagree, but the 3 year exemption @Starshollow alludes to is only possible for "Selbständige mit einem Auftraggeber" (= self-employed with only one client) which is the description of people who fall under §2 Nr. 9 SGB VI: https://www.gesetze-im-internet.de/sgb_6/__2.html

These are people who don't fall under no. 1 to 8 and who have at least 5/6 of their turnover from one client: 

You, on the other hand, are a teacher and therefore fall under §2 Nr. 1 SGB VI: https://www.gesetze-im-internet.de/sgb_6/__2.html

There is no way out for you, sorry, except hiring an employee of your own (who needs to help you in your teaching activity, mind you! A cleaner or nanny won't count) at over 450€ gross a month, for whom you would then have to pay social security contributions in turn.

 

Hi Panda! Ok, 30 years ago.. but when I came to Germany as a freelance teacher ( mostly Airbus but also Shell in Hamburg and a couple of other companies which are not household names ), I had no idea of this stuff ( didn‘t even have health insurance at the beginning/ didn‘t know etc ) but a local told me „ I can help with your tax returns „ and he did and I never paid any public pension contributions. He told me I was exempt for three years.)

 

Long time ago...

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21 minutes ago, Classroom Christina said:

Apology accepted, Starshollow. Thank you for clarifying the situation, PandaMunich.

Now I know I cannot get around the public pension contributions, I am keen to slash the amount of money I spend on compulsory health insurance. At the moment my monthly bill will be around 300 euros. Any ideas? 

What you are asking is can you get a „ cheaper „ deal with private German insurance?“

I doubt it. First of all, whatever your age is right now, even a 25-30 year old will find it difficult to get a private contract under that price. And there are other issues : eg family situation/ foreseeable or unforeseeable plans re children etc, planned or unplanned length of stay in Germany, health issues.

 

The system is massively complex in Germany..

Just don‘t accept the words of the friendly  guy/ gal in the pub who says „ hey, I can beat that price. I have a friend..“


Saying that as someone who works in the insurance business. 
 

 

 

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Hi all,

 

I hope this question makes sense in this thread, I didn't want to open a brand new one.

 

From what I understand, if a person is a freelancer and is involved in intellectual activities (writing and travel photography), they must register with KSK. Is that so or can you choose not to do so?

 

I ask this because I know that KSK pays 50% of pension and health insurance contributions, so in theory it is wiser to register. But imagine that the earnings of this freelancer are very varied from month to month, it is possible that for one month the earnings are 0, another month 800 euros, then zero for two months and then 1200 euros. Of course it is hoped that over time he will be able to make his business more lucrative but for the moment the situation is this ;) So for him every year is different from the previous one and sometimes the earnings are practically wiped out by his work expenses and therefore at the end of the year he finds himself with earnings below zero.

 

The freelancer is married, so if he did not work, he would be registered under his spouse's insurance. In this situation is it still mandatory to register with KSK or can the freelancer pay voluntary pension contributions while remaining under the family health insurance? How does it work with health insurance, however, since the earnings are there, even if they are occasional, but the income at the end of the year is zero or just above?

 

Many thanks :)

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1 hour ago, Jean Genie said:

But imagine that the earnings of this freelancer are very varied from month to month, it is possible that for one month the earnings are 0, another month 800 euros, then zero for two months and then 1200 euros. Of course it is hoped that over time he will be able to make his business more lucrative but for the moment the situation is this ;) So for him every year is different from the previous one and sometimes the earnings are practically wiped out by his work expenses and therefore at the end of the year he finds himself with earnings below zero.

 

The freelancer is married, so if he did not work, he would be registered under his spouse's insurance. In this situation is it still mandatory to register with KSK or can the freelancer pay voluntary pension contributions while remaining under the family health insurance? How does it work with health insurance, however, since the earnings are there, even if they are occasional, but the income at the end of the year is zero or just above?

 

Under these circumstances it is probably better to give up freelancing.

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25 minutes ago, Jean Genie said:

Thank you Engelchen, but this doesn't really answer my questions :)

 

To elaborate a bit on @engelchen's concise but perfect answer:

 

You need to earn at least 3900 euros a year on your travel writing and photography for the KSK to consider taking you on. You are technically required to be a member if you are an artist (of sorts) but no one checks if you apply or not so in practice it's your choice.

 

Running a business implies aiming at making some kind of profit, at least in the long term. If your objective and expectation are to make zero, close to zero, or a negative profit you are not running a business; you just have a hobby. The tax authorities also see it that way and it'd be only a matter of time for them to shoot down your operation, especially if you are using your "business expenses" to reduce to tax burden (or your spouse's, if you are filing together).

 

So, if you are not aiming at making any significant income from these activities, just get a minijob instead. You can stay health insured under your spouse and you don't have to worry about tax declarations, bookkeeping, etc. You can earn up to 5,400 a year that way, which is a lot better than zero.

 

 

 

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3 hours ago, Smaug said:

 

To elaborate a bit on @engelchen's concise but perfect answer:

 

You need to earn at least 3900 euros a year on your travel writing and photography for the KSK to consider taking you on. You are technically required to be a member if you are an artist (of sorts) but no one checks if you apply or not so in practice it's your choice.

 

Running a business implies aiming at making some kind of profit, at least in the long term. If your objective and expectation are to make zero, close to zero, or a negative profit you are not running a business; you just have a hobby. The tax authorities also see it that way and it'd be only a matter of time for them to shoot down your operation, especially if you are using your "business expenses" to reduce to tax burden (or your spouse's, if you are filing together).

 

So, if you are not aiming at making any significant income from these activities, just get a minijob instead. You can stay health insured under your spouse and you don't have to worry about tax declarations, bookkeeping, etc. You can earn up to 5,400 a year that way, which is a lot better than zero.

 

 

 

Thank you Smaug for the information, I wasn't aware of the 3900 euros per year threshold.

 

To be honest, I found it a bit annoying that you and other people have decided that my "objectives and expectations are to make zero, close to zero, or a negative profit", first of all because I wasn't asking on my behalf, and secondly because in my post I have explicitly said that the freelancer has the objective of increasing his earnings over time, but of course it might take a while for things to pick up. I hope you agree with me that it is even harder in this time and age but I am confident he'll be able to fulfill his expectations.

 

Anyway, thank you and John G. for your answers :)

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