Contracting in Germany - options?

**northernladuk** · 5 March 2014, 15:05

Maybe the 46 page thread that is currently 3 below this might help?

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

A quick search will also find a raft of threads asking the same question.

**NeilS** · 5 March 2014, 17:24

Not particularly. It seems to be discussing a specific tax issue relating to split income. A search revealed one person asking about an existing limited company and another which is largely covering umbrella companies that had 5 replies that weren't all that useful. Maybe my search technique isn't all it should be.

**northernladuk** · 5 March 2014, 17:39

Originally posted by NeilS View Post

Not particularly. It seems to be discussing a specific tax issue relating to split income. A search revealed one person asking about an existing limited company and another which is largely covering umbrella companies that had 5 replies that weren't all that useful. Maybe my search technique isn't all it should be.

Did you try the one in the search bar or this one in the link below?

http://forums.contractoruk.com/welco...uk-forums.html

Using this method and 'contracting germany' brings back a couple of thousand results as you can see below...

https://www.google.co.uk/search?q=co...sm=93&ie=UTF-8

**ASB** · 5 March 2014, 17:46

Originally posted by NeilS View Post

Not particularly. It seems to be discussing a specific tax issue relating to split income. A search revealed one person asking about an existing limited company and another which is largely covering umbrella companies that had 5 replies that weren't all that useful. Maybe my search technique isn't all it should be.

You might need to kind of "invert it". It details some of the major issues people have had with the options they have been presented.

The particular status you discussed has been discussed in terms of how to apply, the responsibilites etc. But you do have to wade through quite a few pages of that rather long thread.

Alternatively BlasterBates has a habit of popping up with sensible suggestions as to impact. But yes, sadly some legwork is required.

Some exceedingly simple search terms to give you a decent start.

https://www.google.co.uk/search?q=fr...ntractoruk.com

The forum search here is a bit yucky.

Also, of course, your particular circumstances related to domicile, centre of economic interest, where you wife/partner chirldren if any are, your domicile, your tax residence, your habitual residence, where you own property, how much you travel, where to, what DTA's exisit between those jurisdiction that may potentially wish to tax you on various bits of your income all impact on what is appropriate for you.

**BlasterBates** · 6 March 2014, 08:38

Although it is theoretically possible to use your Ltd in Germany you really need to register or inform the tax authorities, and then argue you are exempt, otherwise if they find undeclared invoices they'll just press ahead with a criminal proceedings, which is not nice and expensive even if you win your case.

The Freiberufler is the simplest and most tax efficient way. You may be under the VAT threshold. There are no formal requirements about how you're accounts are done other than you delcare your earnings. The first time I was a freiberufler I just sent them some invoices, expenses, deducted the expenses and said that's my income. However I would recommend getting a German accountant to do this. If you stay less than 6 months you will only be taxed on this income and therefore the tax rates will probably be lower than in the UK. Probably therefore HMRC will add a bit on.

There are Umbrella companies which will set you up as a freiberufler, however they will be invoicing in your name so in effect they just doing the admin for you.

A lot of umbrella companies were setting up "evasion" schemes, so you want to avoid those.

A final option is to be an employee of an Umbrella co. but this is usually the least tax efficient and looks like the client doesn't want that, i.e. they don't want temporary employees though I don't see why this is a problem. If you did that you would want to avoid German Social Insurance, which isn't a tax and so not persued by the tax office. As long as you pay UK NI I think that would be possible.

**doodab** · 6 March 2014, 09:30

Originally posted by NeilS View Post

I have an offer for a 3 month contract in Germany (with extensions likely).

In the past working in Europe, I've used umbrella companies. I would use the same one I used before except they're registered a an AüG in Germany and the client doesn't seem to like that. According to my agent I'll get better retention as a different sort of contractor (Frieberufler?). Quite honestly, I don't really understand the details. The reason I go through an umbrella company is because I don't want to have to worry about this sort of thing.

Is it advisable to set up a limited company and find an accountant that specialises in this type of arrangement? What would I personally need to worry about that can't be delegated to an accountant? Would it make more sense to find a more client friendly umbrella company?

Anyone have experience here?

The AuG is a legal requirement for an umbrella company (if they are putting you on the payroll) in Germany because of their labour leasing laws.

http://grossbritannien.ahk.de/filead...EG_Licence.pdf

The Freiberufler is the generally accepted way to go, it's like being self employed here so completely different and much simpler than running a ltd, you just keep your books and put in your personal tax return at the end of the year with income minus expenses which you pay income tax on. You can also get a 3 year exemption from various social insurances. You will probably need to register for German VAT as well, that's a quarterly return. You will be asked various questions when you register with the taxman and/or local KVR e.g. whether you have a religon etc, this is relevant because if you answer yes you'll pay church tax. An accountant will handle all of the returns for you.

Retention will depend on if you are married, what your spouse earns, whether you have children etc as well as your worldwide income. A company will also have to pay corporation tax & trade tax (one is federal the other is to the local state) on profits as well as social insurances on salaries, so retention will be quite a bit lower.

**doodab** · 6 March 2014, 09:34

Originally posted by northernladuk View Post

Using this method and 'contracting germany' brings back a couple of thousand results as you can see below..

And this is exactly why I try and avoid internet forums as sources of information. A couple of thousand results, many of which are ill informed, are no help at all unless you already know the right answer so you can filter the crap out.

**EAFS** · 6 March 2014, 10:09

Originally posted by NeilS View Post

I have an offer for a 3 month contract in Germany (with extensions likely).

In the past working in Europe, I've used umbrella companies. I would use the same one I used before except they're registered a an AüG in Germany and the client doesn't seem to like that. According to my agent I'll get better retention as a different sort of contractor (Frieberufler?). Quite honestly, I don't really understand the details. The reason I go through an umbrella company is because I don't want to have to worry about this sort of thing.

Is it advisable to set up a limited company and find an accountant that specialises in this type of arrangement? What would I personally need to worry about that can't be delegated to an accountant? Would it make more sense to find a more client friendly umbrella company?

Anyone have experience here?

If you want to send me a PM I am happy to discuss contracting options in Germany.
My company offers both employed and self-employed solutions in Germany

Contracting in Germany - options?