Working in Germany for UK Ltd with >1 shareholder

12 posts in this topic

Hi, firstly thank you to everyone to contributes to this invaluable resource  (especially PandaMunich, Yorkshire Lad6 and Johnny English).  I have spent time reading through the related threads and it has helped me focus on the questions I have.

 

I would be grateful for any input from someone who is, or has been in a similar situation.

 

I will be moving to Germany in November.  

 

  • I work for a UK limited which has 2 shareholders
  • I am the minority shareholder and a Director
  • I plan to continue to work for the company when I come to Germany
  • The majority shareholder will remain resident in the UK.  She also drafts and signs contracts.  The registered office is also in the UK for what that is worth.  Company meetings would be held there quarterly or so.
  • All clients are in the UK and will continue to be so (the business is in UK financial service regulation).  Again, I am not sure that is relevant but just in case

 

I know that I will be liable to German tax from day 1.  I have no interest or desire in doing anything other than paying what I need to, but having spoken to 3 Steuerberater (each presented with identical information) and got a different answer from each, I am concerned I may end up doing (or being advised to do) the wrong thing.  I ended up asking 3 because the first gave me information that seemed to good to be true (based on what I had read here) and the second gave the impression of not having as much experience in this area as claimed...and I'm also neurotic.

 

  • I believe the Ltd would remain subject to Corporate tax in the UK - as on balance management and control resides there, but do tell me if I am wrong in that assumption
  • Does the company need to do German payroll or can I just pay the taxes/social security myself?  Only 1 Steuerberater mentioned this but didn't seem very sure
  • Do I need to pay pension/social security (I will be covered on my wife's employer's health insurance I believe)? I have received 3 completely different answers on this!  One 'no', one 'yes', one I can continue paying NI in the UK

 

If anyone has any firsthand experience of this situation, or could recommend a reliable adviser with experience, I would be very grateful.

0

Share this post


Link to post
Share on other sites

For what it's worth, HMRC will have taxing rights over the separate legal person that is the company.  This is because for UK tax purposes a company is tax resident in the UK if it is: incorporated in the UK; or centrally managed and controlled in the UK.  The latter is of course a question of fact.

 

I'll leave others to comment on the German tax etc consequences for you as an employee of that legal person but as far as I am aware you can continue paying voluntary NIC in the UK to protect your state pension.  Assuming that that is Class 3 NIC it currently costs about £850 per year and you need to draw your pension for about 3 1/4 years to recoup the investment.   

1

Share this post


Link to post
Share on other sites

I am no expert on German-UK tax and social security relationships but I can say with confidence that Brexit is likely to have some serious disruptive effects on the current status quo.

 

Some things to be mindful of:

 

1.  After Brexit, the Germany-UK tax treaty will likely become highly relevant.  In particular, the character and scope of your activities in Germany on behalf of your UK Ltd may give rise to what is defined in most bilateral tax treaties as a "permanent establishment" of the UK Ltd in Germany the allocable share of whose profits may become taxable in Germany.

 

For the current history of this treaty see:   https://www.bundesfinanzministerium.de/Content/DE/Standardartikel/Themen/Steuern/Internationales_Steuerrecht/Staatenbezogene_Informationen/Laender_A_Z/Grossbritannien/1966-06-11-Grossbritannien-Abkommen-DBA.html

 

2.  The future of Social Security (retirement, health, unemployment, etc.) contribution liability and rights appears to be highly uncertain at this point.  Here is what I think is a brief useful summary of the possibilities:

 

https://dsv-europa.de/en/news/2019/01/brexit-auswirkungen-auf-die-sozialversicherung.html

 

 

1

Share this post


Link to post
Share on other sites
20 hours ago, GaryC said:

For what it's worth, HMRC will have taxing rights over the separate legal person that is the company.  This is because for UK tax purposes a company is tax resident in the UK if it is: incorporated in the UK; or centrally managed and controlled in the UK.  The latter is of course a question of fact.

 

I'll leave others to comment on the German tax etc consequences for you as an employee of that legal person but as far as I am aware you can continue paying voluntary NIC in the UK to protect your state pension.  Assuming that that is Class 3 NIC it currently costs about £850 per year and you need to draw your pension for about 3 1/4 years to recoup the investment.   

 

6 hours ago, Straightpoop said:

I am no expert on German-UK tax and social security relationships but I can say with confidence that Brexit is likely to have some serious disruptive effects on the current status quo.

 

Some things to be mindful of:

 

1.  After Brexit, the Germany-UK tax treaty will likely become highly relevant.  In particular, the character and scope of your activities in Germany on behalf of your UK Ltd may give rise to what is defined in most bilateral tax treaties as a "permanent establishment" of the UK Ltd in Germany the allocable share of whose profits may become taxable in Germany.

 

For the current history of this treaty see:   https://www.bundesfinanzministerium.de/Content/DE/Standardartikel/Themen/Steuern/Internationales_Steuerrecht/Staatenbezogene_Informationen/Laender_A_Z/Grossbritannien/1966-06-11-Grossbritannien-Abkommen-DBA.html

 

2.  The future of Social Security (retirement, health, unemployment, etc.) contribution liability and rights appears to be highly uncertain at this point.  Here is what I think is a brief useful summary of the possibilities:

 

https://dsv-europa.de/en/news/2019/01/brexit-auswirkungen-auf-die-sozialversicherung.html

 

 

Thank you both.  GaryC, my understanding on both those points is the same.

Straightp - yes, Brexit is a big fly in the ointment.  I'll have a look at those and many thanks for sharing.

0

Share this post


Link to post
Share on other sites

 

23 hours ago, Euripides said:
  • Do I need to pay pension/social security (I will be covered on my wife's employer's health insurance I believe)?

 

Why do you assume that? How much will you be earning? 

 

 

2

Share this post


Link to post
Share on other sites
1 hour ago, engelchen said:

 

 

Why do you assume that? How much will you be earning? 

 

 

I don't assume that, it's a question.  I ask it because one tax adviser said I would need to and one said I wouldn't.

 

Earnings probably €70-€100K. It differs year to year.

0

Share this post


Link to post
Share on other sites

 

16 minutes ago, Euripides said:

I don't assume that, it's a question.  I ask it because one tax adviser said I would need to and one said I wouldn't.

 

Earnings probably €70-€100K. It differs year to year.

 

You need your own health insurance. Family insurance at no extra cost is only for low earners. Regardless whether you earn 70k or 100k, you need your own insurance. 

 

You need a good Steuerberaterin. I recommend @PandaMunich.

2

Share this post


Link to post
Share on other sites
On 13/07/2020, 21:35:01, engelchen said:

 

 

You need your own health insurance. Family insurance at no extra cost is only for low earners. Regardless whether you earn 70k or 100k, you need your own insurance. 

 

You need a good Steuerberaterin. I recommend @PandaMunich.

Thank you for the reply @engelchen is there a reason being include on my wife's employer's plan is a bad idea?  As far as I can see the cover is very good but I am probably missing something.

 

Thanks also for the recommendation, which I will follow up. I have read her very detailed posts which have helped a great deal.

0

Share this post


Link to post
Share on other sites
1 hour ago, Euripides said:

Thank you for the reply @engelchen is there a reason being include on my wife's employer's plan is a bad idea?  As far as I can see the cover is very good but I am probably missing something.

 

What type of "employer plan" does your wife have? German private health insurance does not usually include spouses (or at least not without additional costs).

 

Your income is too high to be included on your wife's public health insurance.

2

Share this post


Link to post
Share on other sites
10 hours ago, engelchen said:

 

What type of "employer plan" does your wife have? German private health insurance does not usually include spouses (or at least not without additional costs).

 

Your income is too high to be included on your wife's public health insurance.

Okay, thanks.  They confirmed my eligibility but I will re-check as perhaps they made a mistake.  She will be working for an intra-governmental institute and will not be subject to German taxes.  I have no idea if that makes any difference.  Thanks for the heads up though, I will double check.

0

Share this post


Link to post
Share on other sites
On 15/07/2020, 20:26:55, Euripides said:

They confirmed my eligibility but I will re-check as perhaps they made a mistake.  She will be working for an intra-governmental institute and will not be subject to German taxes.  I have no idea if that makes any difference. 

 

Garbage in, garbage out.

 

It is no wonder that you keep getting contradicting information if you don't provide all the necessary details. <_<

0

Share this post


Link to post
Share on other sites
On 7/17/2020, 5:46:49, engelchen said:

 

Garbage in, garbage out.

 

It is no wonder that you keep getting contradicting information if you don't provide all the necessary details. 

Passive aggressive tastic! I have provided full details of where my wife is working to all the advisors. I didn't mention here as it was relevant to health insurance and they had confirmed my eligibility. My questions were on other matters to which it is not relevant. Therefore entirely logical.

 

I have contacted @pandamunich and she will be helping me with this.

 

Thanks again for your recommendation and point re the health insurance, which I've checked.

0

Share this post


Link to post
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!


Register a new account

Sign in

Already have an account? Sign in here.


Sign In Now