Doing business with German comapnies

[yasockie]

I read quite a few pages of the of the working in Germany threads and I am looking for a best way to deal with German side of business.
Under no circumstance will the .de stuff be 100% of my activities - my Ltd has a small but ongoing source of UK income and I am looking to supplement it with some German money.
Basically I am looking at two or three options:
1. Simply send my German client an invoice from my UK company - as long as I'm not working on site I don't how would this be wrong as I have no ties to Germany at the moment, but because others have reservations, I'm listing further options
2. Setting up a German company that would license software and buy support and consultancy from my UK one - definitely more hassle, but perhaps beneficial in therms of expending things etc? WOuld that company have to hire anyone beyond me, in any case on what terms?
3. Working freelance / self-employed in Germany. I am told that child care benefits + ability to claim traveling expenses make it worth ca 500 Euro per month but probably means I'd have to pay German tax on my UK dividends?

Any other options, basically I'd prefer to stay with 1. but from my limited negotiations so far, a lot of potential German clients are looking to hire people rather than companies. Needless to say I dislike the idea for reasons other than money (HR, performance reviews, working hours and what not) but I'm just looking at my options now.

[BlasterBates]

The key is where you work. If you work in the UK then you manage it through your Ltd. If you work in Germany you need to register there, and the most tax efficient way is as a "Freiberufler". You could set up a branch of your Ltd in Germany, which for all intents and purposes would be a German company.

[yasockie]

The key is where you work. If you work in the UK then you manage it through your Ltd. If you work in Germany you need to register there, and the most tax efficient way is as a "Freiberufler". You could set up a branch of your Ltd in Germany, which for all intents and purposes would be a German company.

The way I expect to negotiate things is:
I go to the client, I gather the requirements, we agree on terms and schedule onsite and I take the work home, work on the technical bits of it and then we iteratively review the progress, over the the Internet, or if need be in person and finally I'd definitely do the final handover, celebrations and training onsite in Germany.
I think for all intents and purposes that still means I am a UK business entity.
Any chance you could point me to the relevant bits of UK/DE or EU legislation that support that view?

[TheFaQQer]

If you aren't going to be working in Germany, then the first is the simplest and most logical.

Explain to the client that if they were engaging a consultant from Acidenture UK, then they would just set them up as a supplier and have them invoice the client. This is what you need them to do - your company is a supplier of services to the client, so get them to treat you as such.

[doodab]

The way I expect to negotiate things is:
I go to the client, I gather the requirements, we agree on terms and schedule onsite and I take the work home, work on the technical bits of it and then we iteratively review the progress, over the the Internet, or if need be in person and finally I'd definitely do the final handover, celebrations and training onsite in Germany.
I think for all intents and purposes that still means I am a UK business entity.
Any chance you could point me to the relevant bits of UK/DE or EU legislation that support that view?

Even a "UK business entity" can become liable for German tax on that portion of it's profit due to it's operations in Germany if it's deemed to have a "permanent establishment". By the sound of it you should be OK though.

http://www.hmrc.gov.uk/international/germany.pdf is probably worth a look. It's the tax treaty between the UK and Germany.

[BlasterBates]

The way I expect to negotiate things is:
I go to the client, I gather the requirements, we agree on terms and schedule onsite and I take the work home, work on the technical bits of it and then we iteratively review the progress, over the the Internet, or if need be in person and finally I'd definitely do the final handover, celebrations and training onsite in Germany.
I think for all intents and purposes that still means I am a UK business entity.
Any chance you could point me to the relevant bits of UK/DE or EU legislation that support that view?

That sounds like you should go through your UK Ltd as you are simply visiting Germany on business trips.

If you do this on a regular basis and spend a significant time in Germany, and I don't know what the percentage would be, strictly speaking you might have to set up a business in Germany for the work you do there and invoice from Germany to your Ltd in the UK; but it doesn't look like this would be necessary from your description.The double taxation treaty states if a business operates in two countries the income should be divided up. However it looks like you're not doing enough in Germany to warrant that.

[yasockie]

Thanks, while I understand that you're not lawyers etc - it seems simple enough - the way it should be and therefore worth pursuing.