Contracting in Germany

[AlfredJPruffock]

Afraid I was being a might sarcastic Swift was a poet known for subtlety, I believe a rapier is a type of sword. The actual quote comes from Red Dwarf

Red Dwarf - now that was a cracking show Lisa - eh ?

[BlasterBates]

A quick bump and a quick question to you guys...

I am about to begin a contract as a consultant. I will be resident in the UK and registered here (as it is my long term objective to do most of my business here) however my first project will be with a German company. This means I will be commuting to Germany 4 days a week, excluding any time off or remote working arrangements.

My only question is, is there anything I need to watch out for in terms of falling under German tax jurisdiction...apparently they can be a nightmare. For example, the number of days a year present in Germany may put me under their jurisdiction, or that I am exporting a service to The Fatherland. I am not too sure.

Can anyone help? Please help!

See a German Steuerberater and follow his advice. Don't do anything else other than that.

Many contractors go to Germany work through their Ltd and then end up with a huge tax bill and face prosecution for tax evasion.

It is very tempting just to keep to your comfortable way of working through your own Ltd, but the consequences are horrendous when it goes wrong.

If someone says on the forum, you can just work through your Ltd for up to 6 months, get it double checked by a "Steuerberater". They can handle your tax affairs for you. Just because someone did it and had no problems doesn't mean it's alright to do it.

It isn't just a matter of personal tax residency (6 months), you are doing business in Germany. The requirements for taxing companies is quite different.

Contractors will always set everything up with a UK accountant when they do business in the UK and then trust a mate's piece of advice or the agent when they go to a foreign country.

Ignore at your peril.

[RolandRB]

Here you can find some background information about the offshore account-cases:
IT Consultants Tax Investigations | Dr. Tobias Rudolph - Rechtsanwalt Nürnberg proceedings for tax fraud against foreign IT specialists

<mod> link removed </mod>

The above is the most useful article I have read on the subject and those working in Germany or intending to do so should give it careful consideration.

I see many companies boasting 80% retention rates for contractors working in Germany if you work through them. I just wonder how on Earth they think they can get away with this. Why aren't the authorities somewhere closing them down or stopping this? I work through TCP and my retention rate is more like 50%. Not good but not much worse than IR35 in the UK but better if the pay rates are higher in Germany.

[stayaway]

Nazi tax office

The tax office in Germany only seem interested in the little people - mostly victims of the big management companies. We are easy pickings - and can't afford a fight or a fair trial.
The real villains here are left to carry on ripping new contractors off with schemes that are illegal - why the authorities do this I do not know - but from my own experience and that of many others I advise anybody reading this NOT to work in Germany!

The above is the most useful article I have read on the subject and those working in Germany or intending to do so should give it careful consideration.

I see many companies boasting 80% retention rates for contractors working in Germany if you work through them. I just wonder how on Earth they think they can get away with this. Why aren't the authorities somewhere closing them down or stopping this? I work through TCP and my retention rate is more like 50%. Not good but not much worse than IR35 in the UK but better if the pay rates are higher in Germany.

[TooMuchStress]

Anyone else experiencing illegal tactics by the German Finanzamt?

Has anyone else out there tried fighting the finanzamt? I keep hearing so many stories of the illegal tactics they are using (mostly into scaring people into paying) and not even giving a clear "list" of what they are paying. A different amount each time you hear from them (and we are talking tens of thousands different each time).

Has anyone filed a complaint with the EU on this?

[stayaway]

You can't fight them alone

Has anyone else out there tried fighting the finanzamt? I keep hearing so many stories of the illegal tactics they are using (mostly into scaring people into paying) and not even giving a clear "list" of what they are paying. A different amount each time you hear from them (and we are talking tens of thousands different each time).

Has anyone filed a complaint with the EU on this?

... But maybe if we could get a list of all the impacted people it may help those trying to fight in the future. I feel I have been absolutely taken to the cleaners by a bunch of nazis (funny that you can get an anagram of nazi from finanzamt ) I feel alone you get nowhere but as a group - as there must be thousands of us by now- we would have a chanc.

[SalsaFever]

any updates?

cross posting from a similar thread since it's relevant:

Hi,

Would someone update me about the fate of H's clients who got caught back in 2008/2009 time frame?

I was one of the H's clients, however I haven't received anything so far in UK. I left Germany by 2009 when this thread was pretty active. Then it gradually became inactive. Does it mean that taxman is off our tails or what?

The story is that I am thinking about going back to Germany and would be delighted if anyone share the latest situation in the field.

I am reaching out to my network to catch up: There are three types of people among H's clients: 1) those who lucky;meaning never received anything so far. 2) those who raided/investigated and left Germany 3) those raided/investigated but settled the scored with the taxman.

As I am being in Group 1, I wonder what's the situate of limitations in Germany?

Edit:
Somebody pointed out me this link, it's pretty new and summarize latest situation:
http://www.rudolph-recht.de/en/news/...anies_psb.html

[zerosum]

Hmmm...

I did a short gig back some years ago for about 6 weeks directly through my LTD company, was paid by int transfer...earned under 10k which I then paid tax on as per normal in the UK.

Is this the kind of thing which could raise a stink with the taxman, especially in the case of contracting again (umm properly) back in Germany?

[BlasterBates]

Hmmm...

I did a short gig back some years ago for about 6 weeks directly through my LTD company, was paid by int transfer...earned under 10k which I then paid tax on as per normal in the UK.

Is this the kind of thing which could raise a stink with the taxman, especially in the case of contracting again (umm properly) back in Germany?

yes

6 weeks isn´t long but even so generally you should be taxing work done in a country there.

You have nothing to lose by doing that just go through a reputable German accountant. With a 6 week contract there would be little tax to pay anyway. The problem is if the taxman audits the client and finds several contractors doing the same thing you may just end up being caught, and what you´re doing is tax evasion. Better to declare earnings and let the tax authorities decide whether and how much is taxable. In Germany it´s simple anyway. If you wanted just hand in a tax form with your earnings minus the expenses and a sheet with the P&L. For 6 weeks earnings no-one is going to question it.

[Boo]

6 weeks isn´t long but even so generally you should be taxing work done in a country there.

That's complete nonsense. Any EU company has the right to send any of its employees to work in another EU company for up to 183 days without that employee being liable to be taxed there. This is a treaty right and overrules any national law.

Why do you persist in presenting this misinformation BB ?

Boo