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German Contract - Extension/Legal Entity Change

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    German Contract - Extension/Legal Entity Change

    Hi everyone!

    I have done a lot of reseearch into this and, while I've found bits and pieces of information that have helped (especially on these forums), I'm finding it difficult to get definitive advice on these particular circumstances so I appreciate any advice. (Apologies for the length of the post, I'm going to try to be as concise as possible without missing out any detail!)
    1. I am director and sole contractor for a UK Ltd and have contracted in UK for the past 3.5 years.
    2. In May, my Ltd was offered a contract with a German client through a UK agency, working half on site, half remote. They advised me I'd not need to pay German taxes for the on-site work, because of the 183 day rule. I had calls from the agency "legal team" trying to convince me it was fine and that they give this advice to "all their contractors" but its not their responsibility to get it right, its mine. I did a lot of research and, because the German company is solely a German company, the 183 day rule does not apply, regardless of the "middle man" being in the UK. Eventually they agreed their advice was wrong and I got them to change it to a 100% remote contract. The client wasn't happy with them as they continually blamed the delay on me. All this took a while so I have been working this contract since June and it is due to end at end of November. Of course the agent celebrated their victory.
    3. The assignment has gone very well and the client would like to extend me.

    My concerns with this are:
    1. The length of the whole contract term: Although I feel comfortable enough that the 100% remote contract is fine for a short period of < 6 months, I'm concerned I have german tax obligations, even if not working in the country, i.e. do I need a PSC, AuG, etc? I don't know enough about this, despite my research, and whether its achieveable within a few months or cost effective over just getting a UK contract again.
    2. Handcuff fee but flawed contract term: Neither the client nor I like the agency due to the mentioned issues and ongoing other ones but I'm fully aware those aren't grounds to avoid the handcuff clause in the contract. I assume their is also one on the client side too but they must be unaware of it, or they don't have one, because I don't think another 6 months margin savings would outweigh such a fee. While checking the contract between my Ltd and the UK agency, I noticed (not surprisngly) it has an interesting typo in it. The clause states: "[15.9] Should the limited company contractor or contractor staff fail to adhere to clause 15.1 the Limited Company or Contractor/Contractor staff agrees to pay the relevant Transfer Fee". The thing is, there is no 15.1! Only a 15.8 and 15.9... I have no idea whether a facetious argument like that is good grounds to stand on, but I wonder whether it is void because of it?
    3. Different legal entity: The contract between my Ltd and the UK agency is for one legal entity but the client would like the next contract to be directly to their other legal entity. I don't know if they are different companies sharing a brand or come under one company. If it was a different company entirely, is that also grounds to avoid a transfer fee?

    Before really going too far down the path and potentially complicating things with an already difficult agency, I want to understand which options are feasible or even advisable.
    1. Can a new, direct contract be set up without the UK agency involved by:
      - new German PSC/AuG instead of my Ltd
      - new "client" (legal entity)
      - using the transfer fee clause issue (the "15.8 issue" mentioned above)
      - a combination of all of these
    2. Can I create a contract between my UK Ltd for more than a "short period" if still 100% remote, either with a new client legal entity or otherwise. Or would I really need a new German PSC/AuG to engage the client through?

    I really appreciate you sticking with me this long! Thanks for any advice you can give me.

    German Contract - Extension/Legal Entity Change

    Just resign with agent - relax and keep invoicing ffs

    Or do you like being difficult and stressing things out in life and in general ? - if so bin the agent

    Sent from my iPhone using Contractor UK Forum


      If you are working remotely there are no tax implications in Germany. You can extend as long as you like.

      Tax implications only arise if you work on site in Germany. The laws regarding AUG don't apply.
      Last edited by BlasterBates; 28 September 2019, 09:55.
      I'm alright Jack