. . Germany - the taxman cometh

[BlasterBates]

Hi,

I've just started a contract in Germany and, having read this thread, it would appear I have got to go through a management company, and that I should declare all income.

Correct?

If so, could anyone recommend a good one please?

Thanks.

Most managment co´s use this illegal splitting rule.

The best way is to become a freelancer (freiberufler) and use a local German tax consultant.

Whatever you do don´t use a UK based management company. It will cost a lot and they haven´t a clue.

When you get to Germany ask some contractors who are registered as Freiberufler.

On a general note never never rely on a management company, your first port of call should always be a reputable accountant/tax advisor.

If you use a legal solution to become an employee this will be far more expensive than being a freiberufler, becauase you´ll pay a huge amount in Sozialversicherung. As a Freiberufler you only pay income tax.

There is a danger after several years that you may get a demand to pay "Sozialversicherung". This is not a tax and so there would be no interest to pay, and it would be a max of EUR 22000 over 4 years. The Finanzamt may also challenge your "Freiberufler" status, and say you are a "Manufacturer" and so charge a "Manufacturing tax".

All this however is best dealt with by a reputable German tax accountant.

There is no simple managment solution. You must take responsibility for running your own business, or pay huge amounts of Sozialversicherung as an employee.

[LegendsWear7]

I will update when there is movement. Nothing to report at the moment.

[LonelyRider]

I do not have any news either. The matter seems to take somewhat longer to sort out than I expected.

I think many contributors are now silent because they trying to figure out what to do, maybe with the help of lawyers/accountants and are not willing to discuss details about their matters in a public forum and/or do not need the advise of this forum anymore.

[CodeKid]

From several reports from other expats here in GE (in different locations), there certainly seems to be some kind of nationwide crackdown going on, or at least a worrying trend for requests from the Finanzamt for papers, etc, even asking for details of "overseas paperwork" (can they get access to that?).

I also hear of a variation on the theme, where the UK co splits part of the payment openly back to the UK, claiming that it covers "legit" expenses - has anybody heard of that? Seems unusual.

Unfortunately / glibly / naively (or however else you want to put it) many of us accept these unconventional payment routes recommended by agents.
The consequences after several years can indeed be dire.

NB: As in any tax-related forum, I would beware of masqueraders - some of the "english" is not quite natural to me. (but I suppose that goes without saying - probably thats why its gone a bit quiet !!!)

[LegendsWear7]

1) Yesterday I received a legal looking letter from the national German tax office: not from the state I worked in. Being busy I haven't found a person I can fully trust to translate yet but I think it is not an invitation to MySpace.

2) This morning I've received a contact from the accountant. Emphasising the urgency and pointing out he has been raided and files taken.

3) Why haven't I dealt with this yet ? Kind of in denial. Don't want to start the pain. But ok... today ... now I start.

[SalsaFever]

Today I also received an info message from Mr.H's office. He confirmed his office raided and files are confiscated by Munich Tax Office.

For those not registered in Munich, their files will be forwarded to relevant tax offices of their city of residence.

Also in message, he is suggesting everyone to do tax correction and pay + %6 fine, tax men told him they will drop the case for those do the correction.

[BlasterBates]

1) Yesterday I received a legal looking letter from the national German tax office: not from the state I worked in. Being busy I haven't found a person I can fully trust to translate yet but I think it is not an invitation to MySpace.

2) This morning I've received a contact from the accountant. Emphasising the urgency and pointing out he has been raided and files taken.

3) Why haven't I dealt with this yet ? Kind of in denial. Don't want to start the pain. But ok... today ... now I start.

You need to report your tax pronto, as soon as the official appears at your door it is too late, and then you're in for fines etc. You save a lot of money by reporting yourself to the authorities.

If you PM me I'll translate it for you no probs.

[SalsaFever]

Does any body talked to the management companies involving this and see what's their take on this?

I shot emails to my management company and no reply so far..

[LegendsWear7]

Does any body talked to the management companies involving this and see what's their take on this?

I shot emails to my management company and no reply so far..

Would be interested in any additional feedback.

The template xls that H has sent to me for reporting indicates Luxembourg as the other location.

[darmstadt]

[quote=BlasterBates;763805]You need to report your tax pronto, as soon as the official appears at your door it is too late, and then you're in for fines etc. You save a lot of money by reporting yourself to the authorities.
[quote]

WHS. Make sure you have every single bit of paper relating to your work here such as receipts, invoices, contracts, etc. The tax authorities here have far and wide reaching powers, in some cases greater than the police, and will turn up on your doorstep at any time of day or night. You have to let them in and they will search your living abode and take anything away which resembels anything financial. They will also do this with your bank account so its better to play safe.