. . Germany - the taxman cometh

[MrBinky]

How can I tell if a company is legitimate?

After reading through all of this, I'm worried.

I'm thinking about accepting a contract in Germany. I was told that I need to go through an "Umbrella" company.

Most of these companies seem to be payroll companies, where you basically clear about 55%. I would be their employee.

I found one company which claims to be legit. They said that they would help me register for a "self-employed" work permit (for a price), and then they would handle my invoicing, tax with holding, filing and etc. in exchange for 5%. And that I would not need to pay as much German social security and etc., as I would be self employed. And that I could also declare certain expenses.

So, therefore, I could keep as much as 70% (but still need to pay private health insurance, obviously.) They claim it is entirely legal and above board, and I would still be declaring and paying all German taxes that I am supposed to pay.

Is this legal, or is this an example of a "management company"? How can I tell the difference?

If it's not legal, and I would really need to pay 45% tax and social costs, then it would be better to take one of my other offers someplace else.

[BlasterBates]

After reading through all of this, I'm worried.

I'm thinking about accepting a contract in Germany. I was told that I need to go through an "Umbrella" company.

Most of these companies seem to be payroll companies, where you basically clear about 55%. I would be their employee.

I found one company which claims to be legit. They said that they would help me register for a "self-employed" work permit (for a price), and then they would handle my invoicing, tax with holding, filing and etc. in exchange for 5%. And that I would not need to pay as much German social security and etc., as I would be self employed. And that I could also declare certain expenses.

So, therefore, I could keep as much as 70% (but still need to pay private health insurance, obviously.) They claim it is entirely legal and above board, and I would still be declaring and paying all German taxes that I am supposed to pay.

Is this legal, or is this an example of a "management company"? How can I tell the difference?

If it's not legal, and I would really need to pay 45% tax and social costs, then it would be better to take one of my other offers someplace else.

A legal solution is where you declare all your income to the taxman. They're right that you save a lot of money not paying social security. If you were to work a longtime in the same contract they may check up on you and decide that your employment was disguised, similar to IR35. As a foreigner coming in this is not something you need to be worried about for quite a while, and it isn't a tax, they won't chase this up if you left the country.

I'm a bit puzzled by the "self employed work permit", they may however simply mean they'll defend your status as a freelancer, or are you a non EU citizen?

The way to work is as a freiberufler (freelancer). A quirk of German law is that as a freelancer you don't register anything, you simply just start filliing out VAT returns. It would be almost as easy to go to any tax advisor in Germany and let him sort it out for you. Enquire about English speaking "Steuerberater" and let him handle it.

Don't register as a self employed tradesman. If you went down to the local authorities and said "I want to be self-employed" they register you as a tradesman and you pay an extra tax. As a professional you are a freelancer, and therefore you don't wear out their roads etc etc and so you don't need to pay this business tax.

I would have expected a take home of around 65% actually. But I'm a bit out of date, and it depends on your income. It is actually very simple as a freelancer, there is no regulation about how to declare your profit and loss, you can just scribble it down on a bit of paper.


It does indeed sound as if this management co is legit and they offset expenses. But I think that any tax advisor would offer the same service, and I wouldn't necessarily jump and sign before you go. You have a few weeks before you send the first invoice, to check things out and compare costs.

[MrBinky]

Self-employed work visa for non-EU

Yes, I'm non-EU. That's why they are helping me with the work permit.

If they are legit, I guess that's allright then. I suppose I could always change to an accountant later, if necessary.

[SalsaFever]

any updates?

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

[stevevalo]

Still charging

Hello,

I opened this in a new thread as this one had gone cold:

http://forums.contractoruk.com/accou...-eu-state.html

Seems to me like they are not going to give up. I was there in 2003/04 for around 18months.

[SalsaFever]

I am back to Germany,it's been 3 months so far. This time I registered properly and not using any management company, I am invoicing and handling VAT as well. So far, f-amt hasn't knock my door yet to settle old books.

Some notes from the field:

- MC are still in business,they offering schemes with %70 local split,which they claim should not catch f-amt attention.

- There are still many usual-suspects never visited by f-amt. It's totally hit-and-miss situation,there are many lucky bastards out there.

- Most of those who fled at the peak of f-amt brutality are coming back given that the roaring german economy at the moment.

- Most of those who caught usually paying their debt and move on. f-amt usually offering deal with reasonable terms like demanding only what you own plus interest. I heard numerous examples 25k, 50k and even 80k paid back, no fines, no prosecution, no conviction either, only interest. Some cases I heard f-amt even made installments up to 60 months.

- for those choose to fight,it's a long adventure,there are cases still going on from 2008, thanks to snail speed of german bureaucracy, no convictions so far. Meanwhile tax attorneys esp the one in nuremberg makes boat loads of money. I met a contractor paid 6k so far to the attorney just to keep up the fight,albeit he owns only 50k or so.

Given that the state of german economy and good rates, my take is that come back here, take advantage of the good economy. Make good money and clear up your debt real quick, possible matter of months.

Good Luck!

[yakkers]

Thanks everyone, mixed but useful. Since I have no intention of going back, I'm going to sit tight and wait. Maybe they'll pursue maybe not, at worst I think I might have to find additonal penalties and get back the tax I paid HMRC. Either way, because I feel I was somewhat duped into using Albany (I worked alongside guys who were invisible to F-amt and never paid a penny of tax in Germany), and I have paid tax on every penny, either in UK or Germany, I really don't feel 'guilty' of anything.

Hi, i just a letter form the German Tax Man - how did you get on "sitting tight" ?

[SalsaFever]

Hi, i just a letter form the German Tax Man - how did you get on "sitting tight" ?

what does letter say? how did f-amt get your UK address? I would not open any letters from f-amt,just would return it back

[stayaway]

Get a lawyer

After 50K of legal bills - a huge tax bill, interest bill and long court case I thought I had put this sh*t behind me.
The Germans go for the little man on the street who cant afford to defend himself - hiding behind shaky European laws to extradite, terrorise, imprison and intimidate contractors.
A good lawyer is essential - using the "kangaroo" style justice system here it might not help a lot - but it is the only option you have,
You may want to check out, post to and share my new facebook site - I want some public awareness of how the Finanzamt are acting.
The truth about "Freistaat" Bayern | Facebook

[cojak]

On the other hand we have regulars on here living and working in Germany (one in Munich, in fact) who arrange their tax affairs properly and don't have issues with the German tax authorities.