Working in Germany for a foreign company

13 posts in this topic

Hi,

 

I am going to be in a situation where i'll be living & working in germany but the company who's gonna hire me is not german based (but its belongs to EU based country). If someone is already in this situation then please share your experience. How about taxes, health insurance etc... I have no idea about these things.

 

Thanks.

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Hi,

I live & work in Germany (work from home) for a uk based company.

I get paid tax free in England and I have to sort my own taxes out and health insurance.

It took a while to setup especially health insurance stuff, as I have to pay the employee & employers part of the health insurance as I am employed & my company don't have any German registered office, but i get the employer part back from my company anyway. you will need to get a betrreibsnummer for sorting out the health insurance stuff

tax wise you are sort of classed as self employed so get to claim for all sorts of things to help reduce it

I didn't actually registyer with the tax office until i submitted my first tax return and now just have to pay tax quarterly based on tghe last tax return.

hope that helps a bit

Simon

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thanks Simon for a quick reply.

 

hmmm my company has two options, mostly they will prefer to hire me on freelance basis (as you are working) but i was insisting them to hire me properly in germany so they are also thinking in that way(to open a small setup for me). but what you'll advise me? to go as freelancer or to be employed?

 

Thanks

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whether you'd rather go as an employee or freelancer will depend on a number of parameters you need to consider. Basically, if you are an employee, you (and your employer) will have to pay a number of social fees where you won't see much of a benefit from: public pension ( you would only get a pension claim after 5 years of paying in, on the other hand getting the money back if you leave before 5 years are gone is limited to those countries with which Gemany does not have mutual or bilateral agreements about recognizing social contributions), unemployment insurance and your choices of health insurance may be more limited depending on how much your current yearly gross salary will be and how high it has been in in- our outside Germany for the preceeding three years... and so on and so forth.

 

Basically, if you intend to stay only for a short while in Germany (say < 3 years or so) I would recommend you going the freelance road. If on the other hand intend to stay in Germany for much longer or for ever, the social benefits/security from being an employee according to German law and rules could be worth going for.

 

On top of that it would depend if you come single or bring family (spouse and children) etc. AS a freelancer you could only become a voluntary member of public health insurance (and thus have your whole family insured with you for free if the spouse is not also working in Germany) if you have been pre-insured in any of the European Union memberstates for either the last 12 month or at least for 24 month out of the last 5 years. As an employee and if your salary is below the relevant threshold (read the WIKI here on Toytown about health insurance to lear more about this, 2007 up-date version) or was below it in the preceeding three years you would get into the public health insurance and could save some serious dough by that.

 

So, it will depend on knowing much more about you before anyone can give you a good advice...

 

Cheerio

I am a professional independent insurance broker, financial adviser, and authorised advertiser. Contact me.
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you would only get a pension claim after 5 years of paying in, on the other hand getting the money back if you leave before 5 years are gone is limited to those countries with which Gemany does not have mutual or bilateral agreements about recognizing social contributions),

That's not true for the US, at least. There is a bilateral agreement between Germany and the US, but refunds may still be claimed.

 

 

As an American citizen who has lived and worked in Germany for a while you might want to get your contributions refunded when returning to the USA. This is possible if certain preconditions are fulfi lled. Americans can get their contributions refunded according to the German-American Social Security Agreement if

> the contributions were paid for less than 60 months,

> an insurance obligation with the German pension insurance fund no longer exists and

> the place of residence has been moved to outside the European Union, e.g. to the USA.

Furthermore, at least 24 months must have passed since the liability for insurance has expired.

Compulsory contributions will be refunded to the amount you paid in. Voluntary contributions will be refunded to half the amount you paid in. The contribution share paid by your employer cannot be refunded to you.

(From the guide available from: http://www.deutsche-rentenversicherung.de/...rmany__usa.html

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Hi Starshollow,

whether you'd rather go as an employee or freelancer will depend on a number of parameters you need to consider. Basically, if you are an employee, you (and your employer) will have to pay a number of social fees where you won't see much of a benefit from: public pension ( you would only get a pension claim after 5 years of paying in, on the other hand getting the money back if you leave before 5 years are gone is limited to those countries with which Gemany does not have mutual or bilateral agreements about recognizing social contributions), unemployment insurance and your choices of health insurance may be more limited depending on how much your current yearly gross salary will be and how high it has been in in- our outside Germany for the preceeding three years... and so on and so forth.

 

Basically, if you intend to stay only for a short while in Germany (say < 3 years or so) I would recommend you going the freelance road. If on the other hand intend to stay in Germany for much longer or for ever, the social benefits/security from being an employee according to German law and rules could be worth going for.

 

On top of that it would depend if you come single or bring family (spouse and children) etc. AS a freelancer you could only become a voluntary member of public health insurance (and thus have your whole family insured with you for free if the spouse is not also working in Germany) if you have been pre-insured in any of the European Union memberstates for either the last 12 month or at least for 24 month out of the last 5 years. As an employee and if your salary is below the relevant threshold (read the WIKI here on Toytown about health insurance to lear more about this, 2007 up-date version) or was below it in the preceeding three years you would get into the public health insurance and could save some serious dough by that.

 

So, it will depend on knowing much more about you before anyone can give you a good advice...

 

Cheerio

I am working for a british company who has no establishment in Germany. However, I am based in Munich and I have a contract with them which is unlimited. Our tax, heath insurance, retirement pension etc are taken care of by a tax consultant. 

I noticed that after all deductions (they all are made according to standard one as i would be working at a german company), the money i get in my account is significantly lower than someone who would work as angestelt.

So my question is as why do i pay more taxes compared to someone who works as angestellt? event though we have the same gross salary, steuerklasse and even same age!

 

Many thanks

Cheers

 

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simple answer: I have no idea !

 

I would need to see both payslips side by side to check if I can find any obvious difference that you may have overlooked (different tax class perhaps?)

If that would not work, I'd recommend having a tax advisor look over it.

 

On the other side: if you don't do that already, you might want to consider setting up a company pension scheme for yourself. You can shift money from your gross salary directly into your personal private pension plan that way. Saves a lot of taxes and (if your gross salary is below 72.600 EUR p.a. ) also social welfare contributions.

 

Cheerio

 

I am a professional independent insurance broker, financial adviser, and authorised advertiser. Contact me.
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@Starshollow thank you for your answer. well the only difference on payslips is the tax item. we both have the same tax class, same age and gross annual salary is also very close.

I have a meeting with a professional tax adviser and will see what he has to say. 

 

Thank you again!

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Hallo Leute,

I was following this post and I was wondering if it would be better (from a financial point of view) to be employed by a company from a foreign EU country or just work as a freelancer for this company and taking care alone of all the taxes and insurances to be paid in Germany. 

 

Just to be clear, I'm planning to accept a job offer that will require me to be employed by a company in a different country. My family will stay here and I will be traveling from one place to the other. 

 

I would be grateful for any attempt to clarify this for me.

 

Thank you,

Cristian

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11 minutes ago, dj_jay_smith said:

Be aware that being a freelancer in Germany means that you must work for more than one company.  In fact no more than 80% of your income is allowed to come from a single company.

 

See  https://www.projektwerk.com/magazin/allgemein/aktuelle-rechtslage-zur-scheinselbststaendigkeit

 

 

 

 

 

 

yeah, I've been looking into that.

 

Some freelancers advised me the main thing to watch out for is that you advertise your services publically, show that you're open to new clients and not just clutching the apron strings of your (former employer / only?) main client?

 

Or are there any other steps you need to take?

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On 17.1.2020, 10:44:02, sos-the-rope said:

 

yeah, I've been looking into that.

 

Some freelancers advised me the main thing to watch out for is that you advertise your services publically, show that you're open to new clients and not just clutching the apron strings of your (former employer / only?) main client?

 

Or are there any other steps you need to take?

it is much, much more. Main yardsticks is whether you are the boss of your own time management or not, whether you HAVE to work at a given location/office, how your work is controlled by the contract-partner and many things more.
And even if you are not considered "Scheinselbstständig", be aware that you might be considered as a "arbeitnehmerähnlicher Selbstständiger" which would mean that you are liable to pay the full contribution into the public pension system.

Always make sure you have this issue clarified by an expert (usually tax advisors), otherwise you might face some nasty surprises down the road.

 

Cheerio

 

I am a professional independent insurance broker, financial adviser, and authorised advertiser. Contact me.
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To quote from a subsection of the article:

 

" In 2007 it was 21.32 percent of all notices that ended in finding employment, compared to 47.01 percent in 2014. The trend continues to rise significantly. This finding can only be rationally explained by the fact that the Deutsche Rentenversicherung is increasingly declaring self-employed persons to be self-employed. "

 

So to put it another way, the DRV is finding more creative ways to class freelancers as employees and now classifies around half of freelance contracts as bogus.

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