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I am in this tricky situation now. I have been contracting in Germany for a few years, using one large UK based management company.
I have recently got warning emails and paper letters from my German accountant urging me to refile taxes for the past years and pay taxes for all incomes. According to them it is possible and a sure way to avoid criminal prosecution. The letters have claimed that the authorities are systematically going through the records of all IT contractors.
However, I am very concerned about the situation. The info I am getting from my accountant is not straight forward and clear. I had the feeling that maybe also the management company and the German accountant (who is a partner of that management company) somehow want to secure their own positions in this mess and do not necessarily give advise, which is really the best possible for the contractor. As one poster said, there is no reliable information about the matter available. The scary stories about prosecution, arrest warrants etc. are going around, but I have never heard about any real criminal case and what happened to the contractors either from the news or other sources. So it is impossible to know, how bad the situation really is.
I have not decided, which steps to take now regarding this matter. I am considering refiling, but I would like to do it correctly and be really sure that the matter is then solved.
I agree with the earlier posters that those contractors, who have stayed in Germany for very short times, about 6 months, probably have no need to worry.
At the moment I am just very frustrated, as I should have started with the local freelancer status and done everything correctly, as it is also quite a good deal taxwise in comparison with a normal employee status in Germany. Using management company has just brought troubles.
Feel free to PM me, if you want to discuss this matter.