. . Germany - the taxman cometh
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    Default . . Germany - the taxman cometh

    Anyone done any contracting in the last few years while registered in Germany and perhaps hasn't declared the entire whack of gross income ? Used a management company maybe?

    You may be about to get busted. I know a few people who are on the wrong end of this right now.

    The Finanzamt is actively pursuing contractors who take/took the split income method.

    It is shattering news but there it is. I haven't decided how to respond yet but the gist of the message is rather unpleasant (European arrest warrant, criminal record, etc) Being outside German borders doesn't really matter.

    As a minimum I understand they want full confession, all details, bank accounts, contracts, 6% interest per year, tax lawyer fees, tax adviser fees (90/hour).

    5% of gross to management company is not reclaimable obviously.

    I am interested to hear from anyone who has been through this already. Very hard to get any reliable information on this delicate topic.

    PM me if you want to discuss.

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    Contractor Among Contractors


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    Quote Originally Posted by LegendsWear7 View Post
    Very hard to get any reliable information on this delicate topic.
    This is all I ever seem to read when it comes to tax in Germany. A lot of articles even say that local German accountants haven't got a clue how it all works.

    I'm contracting with a German client at the moment, but spending as much time as possible in the UK and keeping a log of time spent in Germany. I don't intend to work over the six months, though it might actually go to 7 months now I come to think about it. I've not registered with any authorities in Germany. I did have a flat for a short time but have dumped that now as I'm not there enough to make it worthwhile.

    Probably still get caught by some law or other though, knowing my luck.

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    Last edited by Olly; 16th January 2013 at 19:13.

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    The Germans are not interested (ATM) in people who go there for six months via their limited company and over stay by a few days.

    They are interested in people who go there for years (I know someone who has been there nine), become locally tax compliant (to use the words of one of the management companies) by declaring (and paying tax on) 30,000 Euro as a salary and then squirrel away the rest, gross, in an offshore account.

    There are comments that the claims by some, that the Finanzamt are cracking down on this are a fiction just designed to frighten. Personally, I'm not so sure, this scam that has been run my foriegn contractors for (IME) over 20 years always looked dodgy and it surprises me that most believe the claims of the Management companies that it isn't.

    And the sad thing is, if you can work as a registered freelance worker, you can be 100% legit for about 5% more deductions.

    tim

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    Quote Originally Posted by tim123 View Post
    .... declaring (and paying tax on) 30,000 Euro as a salary and then squirrel away the rest, gross, in an offshore account.

    And the sad thing is, if you can work as a registered freelance worker, you can be 100% legit for about 5% more deductions.

    tim
    Tim, I agree with your general comments but not at all on your figure of 5%. If someone works 240 days at EUR600 then the gross is EUR 144,000. The difference in tax on 30,000 and 144K is massive. Single males suffer less than 50% retention of the larger figure.

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    Quote Originally Posted by LegendsWear7 View Post
    Tim, I agree with your general comments but not at all on your figure of 5%. If someone works 240 days at EUR600 then the gross is EUR 144,000. The difference in tax on 30,000 and 144K is massive. Single males suffer less than 50% retention of the larger figure.
    Wel my friend makes nothing like 600 pd, more like 400. And you don't get to pay tax on all the difference, you can still get around 15K deductions in "second home expenses". And by being legit, you save the 6K that the management company take. [and finally I did a bit of rounding in my favour :-)]

    He tells me that he gets to keep about 72%, against the 80% that the management companies quote

    tim

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    Last edited by Olly; 16th January 2013 at 19:15.

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    I think i might be in the same boat, I have also received a very interesting letter from my accountant in Germany and I left last year.

    I have some thoughts on how to proceed which I can go into later, but I'm interested tgo see if there are any other ex german contractors in the same position.

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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.

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    Quote Originally Posted by LonelyRider View Post

    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.

    Sounds all too similar. I understand the Mgmt Co.s used a small handful of accountants. Maybe the surname of yours begins with H.

    When I first saw the letter from accountant to me I really suspected blackmail. Pay us premium consulting fees and massive amount to Finanzamt plus penalties or ... it will be more severe.

    I don't know what to do either. It is something like a nightmare. I would lose all my savings and have absolutely nothing to show for a number of years solid work. I'm reluctant to refile as this isn't just about some euros (albeit a very large number) ... this is about life units. Years lost and it gives me great pain to even think about it.

    PM in the post.

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