. . Germany - the taxman cometh

[BlightyBoy]

Yeah, whatever...
But this thread is about a Split payment that was sent out of the Country we were Resident in for Tax purposes to hide it, which was common practice and well know by the host nation.

I can't imagine Britain would've treated "Guest Foreign Workers" in the same way.

Are you completely dim?

Have you spent too much time at altitude?

Everyone knows that people smuggle drugs.
Everyone knows that austrian fathers imprison and rape their daughters (sorry, no generalisation required - stick with me)
Everyone knows that most people do not observe speed limits

Still doesn't make it right.

You don't honestly expect readers to believe that you honestly thought that any part, large or small, of your income would not be subject to taxation somewhere on god's green earth. Do you?

As has been mentioned many times before, the split is not illegal. What is illegal is not declaring whatever portion of income is split for taxation.

I am aware that ITECS had/have a deal whereby some income is paid in the UK, and the rest in the host nation. Essentially a split except the UK earnings are declared for taxation with the HMRC (I guess there's a benefit there in exploiting your UK tax-allowances). Wherever part of your income was paid, be it 5% or 50%, it is still subject to taxation otherwise that's tax evasion.

[BlightyBoy]

Just add there are plenty of non-British foreigners working as contractors in Germany but most go through the German system. British contractors get put onto management co's by their agencies. Whereas other foreigners such as Americans tend to set up as a freelancer.

Referring to my post on this subject, and it's a fair point Mr. Bates, this is most likely due to the Dual-tax-Treaty between UK and Germany that allows this sort of practice (i.e. UK based companies supplying German based companies) that is neither feasible or profitable for non EU based companies.

And the fact that there is a significantly higher proportion of British Leihkräfter which makes it equitable for the UK management cos.

[BlasterBates]

Are you completely dim?

Have you spent too much time at altitude?

Everyone knows that people smuggle drugs.
Everyone knows that austrian fathers imprison and rape their daughters (sorry, no generalisation required - stick with me)
Everyone knows that most people do not observe speed limits

Still doesn't make it right.

You don't honestly expect readers to believe that you honestly thought that any part, large or small, of your income would not be subject to taxation somewhere on god's green earth. Do you?

As has been mentioned many times before, the split is not illegal. What is illegal is not declaring whatever portion of income is split for taxation.

I am aware that ITECS had/have a deal whereby some income is paid in the UK, and the rest in the host nation. Essentially a split except the UK earnings are declared for taxation with the HMRC (I guess there's a benefit there in exploiting your UK tax-allowances). Wherever part of your income was paid, be it 5% or 50%, it is still subject to taxation otherwise that's tax evasion.

It isn't a deal, it is bonafide, part of the DTA and applicable thruoughout the EU, if you present a document from HMRC showing tax paid it probably won't be questioned. It basically enables you to pay UK social insurance. Strictly speaking you must show you did do work in the UK, but I doubt they'd question it, the authorities will just communicate with one another, which is quite normal these days. This income has to be declared on your tax form and there is a box for it.

This form of splitting is explicitly outlined in the DTA, as opposed to hiding it, for which a box on your tax form doesn't exist.

[Northerner]

The Local finanzamt office alone is currently dealing with more than 50 cases at this time with more being discovered every week;

Which local Finanzamt office? And how do you know it is more than 50? I would not think the Finanzamt would be at liberty to discuss such details if the cases are pending, especially to someone who has already been caught.

under British law 'Assisting tax evasion' is not a crime whereas it is is Germany (and probably also is in many other European countries)

I thought tax evasion/fraud/money laundering is a criminal offense in the EU. Only Switzerland consider it a civil matter which is why it is on the OECD's 'grey' list.

[BlasterBates]

actually in Switzerland tax evasion (simply keeping quiet about income) is not a criminal offence although subject to punitive fines just as bad if not worse than in a country where it is criminal. However tax fraud is. The difference between tax fraud and evasion is very subtle indeed, one could argue by declaring you have no income from somewhere is falsifying the tax declaration and hence tax fraud.

By the way Switzerland clamps down just as hard on tax offenders as anyone else and I wouldn't even dare to think about crossing them.

[photonpoet]

Consider the newbs...

Are you completely dim?

Have you spent too much time at altitude? [snip...]

It's very easy to judge in the full light of understanding but many contractors caught out by MSC 'solutions' have never worked abroad before. It may even be their first experience as a contractor anywhere.

Recruitment agencies tell first-timers that they should/must use an MSC for their assignment abroad, usually providing a list of them to contact. The first-timer calls one of them and is presented with a 'tax-efficient solution' or information about 'tax loopholes' which they don't question, since they probably know next-to-nothing about working abroad and probably don't speak a word of the language, so can't research it themselves.
Even if there is an smell of 'too good to be true' about what they're told and direct questions are asked, they are reassured that "everybody works this way in [insert country name here]" or even that "it's not illegal". This would be enough for many first-timers to happily sign on the dotted lines of the many contracts and counter-contracts that absolve everyone except the contractor of their liabilities.

It's easy to say 'ignorance is no excuse' when you're not the victim of that ignorance. I think it's only fair to say that 'knowledge is no excuse, either' - MSCs are still operating and taking advantage of many first-timers who are probably oblivious to the issues being raised in this thread.

[Edelweiss]

Are you completely dim?

Have you spent too much time at altitude?

Everyone knows that people smuggle drugs.
Everyone knows that austrian fathers imprison and rape their daughters (sorry, no generalisation required - stick with me)
Everyone knows that most people do not observe speed limits

Still doesn't make it right.

You don't honestly expect readers to believe that you honestly thought that any part, large or small, of your income would not be subject to taxation somewhere on god's green earth. Do you?

As has been mentioned many times before, the split is not illegal. What is illegal is not declaring whatever portion of income is split for taxation.

I am aware that ITECS had/have a deal whereby some income is paid in the UK, and the rest in the host nation. Essentially a split except the UK earnings are declared for taxation with the HMRC (I guess there's a benefit there in exploiting your UK tax-allowances). Wherever part of your income was paid, be it 5% or 50%, it is still subject to taxation otherwise that's tax evasion.

You're not paying attention. I was fully aware the Split payment was evaision, as was the German Agent and the German Client Co. I worked for.

The "Ltd. Co. Split System" is also considered evaision by Germany unless the UK part is put on your German tax return. Which in most cases is not being done.

So if all of your income has to be declared in Germany you may as well be an Hourly paid Employee of a German Agent, which is exactly what has happened in my arena.

It's just a matter of time... So spin it how you want.

[Northerner]

The Germany tax authorities informed me that this is largely a British problem
....

5) Contact English speaking Steurberaters and Lawyers to make them aware of the problem so that they may be in a better position to properly advise their clients in this respect. The Steurberaters and Lawyers are largely unaware of the activities of their clients in this respect, preventing them from being able to properly inform them in a timely manner, and the clients don't think they have anything to discuss in this matter with their Steurberater or Lawyer.

Tax evasion is almost a national sport amongst Germans so cannot see why it is largely a British problem:
http://www.bloomberg.com/apps/news?p...d=aLxEctWZ4YKc

And with the contractors I have spoken with they believe these English speaking Steurberaters are in bed with these companies. So should also be targeted. Why do you think they are innocent?

Although I would also advise contacting a lawyer who understands German and especially EU tax laws.

[ASB]

It isn't a deal, it is bonafide, part of the DTA and applicable thruoughout the EU, if you present a document from HMRC showing tax paid it probably won't be questioned. It basically enables you to pay UK social insurance.

Generally you can (in theory at least) continue paying UK NI instead of foreign SS for (I think) 5 years. Though I'm told by those I know woh've tried it that it doesn't seem that easy in practice.

[Edelweiss]

And with the contractors I have spoken with they believe these English speaking Steurberaters are in bed with these companies. So should also be targeted.

That's exactly right, they are complicit.

I know Contractors that have spoken to them "Off the record" and they know everything. That's why there is a conspiricy of silence amongst all the Germans involed. I was also told by my German Agent that the Client Co. knew what the deal was as well - it's all a racket and the buck is passed to you if your number gets called. Don't trust anyone invloved in the money trail, they will sell you out as soon as the heat is on them.