Working in Germany

[BlightyBoy]

Yes, but the buck stops with the Tax Payer, that was also confirmed to me by a German Lawyer...

This is correct. In the same vein that an employer cannot be responsible for an employee not declaring income earned from, say, stocks and shares or rental income from a property. However, this additional income was paid to you by the employer, they were not secondary to your primary income (i.e. interest earned on savings or rent from an owned property etc.) so I fail to see how Garner had no culpability - except apparently they did if you say they were fined.

The case didn't come from the Finanzamt, it came from Steuerfahndung MUC, the tax office only asses and collects the right amount of tax...
But you already know that, right?

Yes, but we always refer to the finanzamt as being the entity that makes the charges. In the same way that when we talk about criminal activities in the UK, for example, we refer to the police, when actually it is the CPS. But we all know what we mean..

But I am still not clear about a couple of things. You talk about Garner, and then use the term "agent". I am a little confused...

In my, and other's "arenas" (to coin your phraseology) an agent negotiates a contract with the end client and then places a contractor to perform the work required for the contract. As a freelancer in Germany, I invoice the agent, not the end client, for the hours and work that I have completed, the agent, in turn, invoices the end client adding some percentage for their "overheads". I am neither an employee of the agent, nor of the end client.

You talk about "agents" and "employee", however this simply does not match the general agency/client/contractor model that the rest of us are used to.

From what you have written, Garner appears to have been your employer and not your agent. So were the split payments coming from Garner or the "agency"?. Were you with an agency contracting for Garner, or do you refer to Garner as the "agent"? And what exactly was your relationship with Garner? Were you actually an employee, or a contractor? Did you have a Lohnsteuerkarte or P60 from them??

[Edelweiss]

Yes, but...

I was always an "Employee" of GmbH's (I consider them 'Agents' but I guess in the the way you mean they weren't).

As for the other "World Wide Income" argument, what they really mean is any un-declared income, including anything sourced in Germany.

Some people had Lawyers which just lead to more debt, buck passing has no ground here.

I'm sure all parties involved were in trouble except those that made a deal to sell us out in exchange for immunity.

All the facts point to this, but it's near impossible to proove... This fact was also hidden from German Authorities obviously on a "Need to know" basis.

Lesson learned:
If the Heat comes down, EVERYONE will sell you out! (Including your "Friends", nevermind your Agent or the CC).

[BlightyBoy]

I was always an "Employee" of GmbH's (I consider them 'Agents' but I guess in the the way you mean they weren't).

You would only have been an employee if you were given a Lohnsteuerkarte from any of the companies where you worked. If you have no Lohnsteuerkarte, then you're not an employee. I trust you have/had your own tax reference number?? Were you not advised to register as a Freiberüfler?

As for the other "World Wide Income" argument, what they really mean is any un-declared income, including anything sourced in Germany.

As mentioned in my previous posts, this would be income earned secondary to your primary income (salary) such as dividends paid on stocks and shares, interest earned on savings and the like. This would also include, for example, income generated from letting out a property. This may not require any additional tax to be paid in Germany, however, you do need to demonstrate that such income has been subject to taxation in the country where it was earned. For example, if you have a UK based savings account and you pay tax, at source, on the interest earned, you will (should) get a tax statement from the bank indicating how much tax has been deducted. This statement is normally sufficient. Of course, you can complete a UK tax return and have the money returned to you (assuming you are below the earnings threshold). This is unlike the situation in the UK where you are generally only required to declare your UK based earnings.

Some people had Lawyers...

I guess this is a decision individuals need to make for themselves and evaluate the cost of the lawyer versus the likliehood of reducing any tax debt that the finanzamt have calculated as being owed.

I'm sure all parties involved were in trouble except those that made a deal to sell us out in exchange for immunity
...
If the Heat comes down, EVERYONE will sell you out! (Including your "Friends", nevermind your Agent or the CC).

This is well known. Try reading some of the posts on this thread:

http://forums.contractoruk.com/accou...an-cometh.html

There is an ongoing situation where a German tax accountant, who apparently got into trouble with the finanzamt, sold out a whole load of contractors to the Finanzamt in Bavaria and opened a whole nasty can of worms.

[CodeKid]

Just caught up with this back and forth between Blighty and Edeleweiss.
For what it's worth, my understanding is:
UK nationals working for GCT as employees in GE were paid subsistance in UK. GCT's partner company in UK (GED) stated that this was tax free and all agreed with UK HMRC. Probably load of bull but who knows. The level of sub was significant but actually WAS in accordance with HMRC rules although they withdrew these in 2007. Therefore these UK guys did not consider this as some dodgy split income scheme but as legit. They were of course naive to do so because of GE rule re tax on worldwide income. I should add, at no time were any of them advised to consider freiberufer status. GCT were probably up to something dodgy with other employees (eg traditional split scheme) cos they got busted big time by F-amt as a result of a F-amt investigation that started with P+Z which itself was probably kicked off by the O2 debacle. GCT were raided which gave the F-amt a nice paper trail to follow (not to mention GCT probably hanging their guys out to dry anyway to save their own sorry a**es, ). Every single person who worked thro GED GCT will probably come under F-amt scrutiny, many criminal cases have been formed so far, many are dealing with lawyers to resolve the problem, some are toughing it out.

That's it. Fact. End of.
Moral is, avoid being employer (certainly with GCT anyway who were either stupid or negligent or both regarding their guys) and go for freiberufer status.

CK

[Edelweiss]

Just caught up with this back and forth between Blighty and Edeleweiss.
For what it's worth, my understanding is:
UK nationals working for GCT as employees in GE were paid subsistance in UK. GCT's partner company in UK (GED) stated that this was tax free and all agreed with UK HMRC. Probably load of bull but who knows. The level of sub was significant but actually WAS in accordance with HMRC rules although they withdrew these in 2007.
Therefore these UK guys did not consider this as some dodgy split income scheme but as legit. They were of course naive to do so because of GE rule re tax on worldwide income. I should add, at no time were any of them advised to consider freiberufer status. GCT were probably up to something dodgy with other employees (eg traditional split scheme) cos they got busted big time by F-amt as a result of a F-amt investigation that started with P+Z which itself was probably kicked off by the O2 debacle. GCT were raided which gave the F-amt a nice paper trail to follow (not to mention GCT probably hanging their guys out to dry anyway to save their own sorry a**es, ). Every single person who worked thro GED GCT will probably come under F-amt scrutiny, many criminal cases have been formed so far, many are dealing with lawyers to resolve the problem, some are toughing it out.

That's it. Fact. End of.
Moral is, avoid being employer (certainly with GCT anyway who were either stupid or negligent or both regarding their guys) and go for freiberufer status.

CK

"...Subsistance"?
You mean Tax Evaision?
Give us all a break!
It's all over, either you go AUG, or you're a Criminal.
There is no basis to be Free-Lance (Fact).
All men would admit this.
What's toughing it out?
You mean running away??
Anyone with assets in Germany now has a big Mortgage.
The joke here is that the whole Split System was ultimately controlled by the German C.C.'s.
Have they been touched?
No!

[SalsaFever]

Just my 2 cents..
Last month or so, tax man returned from the summer vacation. I heard some activity in Bayern and Hessen, where Mr.H's clients targeted (again). In Hessen case I heard some interesting details:

It's appear that they changed tactics, now putting more focus and pressure on employers. The warrants obtained for the contractor but addressed for the end-client's premises, sounds awkward but true (in one case for example, high profile Investment Bank in Frankfurt).

Once they arrive the end-client is freaked out (maybe because of their role in financial crisis LOL) and 5 corp attorneys instantly arrived to the scene. The raid put the investment bank on red alert!

The tax men were intentionally a bit loose lipped and told the whole story to the corp lawyers. The contractors desk searched, pc is confiscated front of co-workers.

Next day, UK agent called and told the contractor that the client beleives that he poses high risk to the bank and his services not required anymore cos the bank's attorney said the warrant is a court order, the court orders are public records and may be discovered by the press any minute,so bank's stock prices might be tanked blah blah.

The contractor catched the next plane to London.. and happly lived everafter !??

Lesson 1: Your corp desk is not out of reach, so keep it clean.

However I didn't get the motivation of taxman. They %1100 surely know that the search would mean termination of his contract and he would be out of here immediatelly.

So my interpretation is they have a new motto: "If you can't beat 'em, kill 'em"..

Maybe this investigations are going nowhere, so they need a Die Endlösung (final solution) to exterminate Brits by doing shock and awe raids to the employers, so then, the employers would prefer subcontracted permies from India and Russia.

[SalsaFever]

I don't want to be sound like a troll. This morning it struck me that the fact that the raids are always almost happening Brits. (I'm not British by the way)

There should be a reasonable explaination of this phenomenon outside of cheap racist cliches.

Then I reminded what my MC told me when the raids first started: "Because of some EU law changes, now f-amt can see transfers going to/coming out from UK, so we don't work with clients using UK accounts anymore" and he added, "south americans should not worry".

Maybe because of some EU laws changed, Brits can be really sitting ducks, easy targets!

Did you hear any recent changes in EU legislation might provided powers to see beyond the borders?

Maybe you should check whether they can see UK bank accounts/transfer?
whether UK Inland Revenue are now actively corporating with them?
whether now they have means to freeze your UK assets, do garnisments or cofiscate and sold your house in foreclosure auction..

I beleive they should be a reason besides 'They hate the brits' cliche. In case You are sold out by 'Her Majesty The Queen', you better know it and act quick..

[AlfredJPruffock]

so they need a Die Endlösung (final solution) to exterminate Brits

Is it really as bad as that ?

[BlasterBates]

They're simply chasing anyone they know is evading tax. There was an article about some Germans freelancers who also got tempted a few years back and got caught. I think you'll find though that most Germans operate as Freelancers, and that almost all Brits are in a managment scheme, which is usually illegal. This is part of the UK system of contractors being tempted into "tax efficient" solutions by cowboys.

[SalsaFever]

Is it really as bad as that ?

Ok, let me put in this way: There is definitely an 'Endlösung' going on for the management companies and 'the contracting' as we know it..

Harassing employers eventually will cut the demand for the foreign contractors.

The 'educated' employers will be more cautious. For example, a new development to the previous story, now the bank asked the UK agent to obtain AUG license which is technically impossible, eventually put the UK agent and his contractors out of the game.

Maybe cornering the employers is more effective than chasing small fish contractors.

After all, I did not hear any contractors convicted so far.. Some left, some settled down the bill.