Reply to: An alternative to a management company in Germany?

[nicodeemus]

Thanks man. Yes I would be freiberufler with the MO, and would even make money out of it thanks to the negotiated rate increase to cover costs (probs save 2000 euros a year) but it's the principle really. Having rarely used agents I'm annoyed at adding in more layers that are needless as per my investigations and confirmed by folks on here.

We'll see how it goes.. something I am concerned about is setting a precedent.. as in I don't want to be stuck with the MO if i'm there for a few years... if the client has money in reserve to pay the MO i'd much prefer we split the difference tbh. and they can't tell me that every contractor on site there is with an MO, even the german ones, it's ridiculous.

[BlasterBates]

Just when I thought I had it all sorted... aaarggghh !!

Some legal bod in the clients office is making a big song and dance about an AUG.. or arbeitnehmerüberlassungsgesetz .. has anyone ever been required to get one of these for germany? and they cost like 4k euros.

Apparently if I used a management company apparently this would all be fine, and the agent actually already negotiated a proportionate increase in my rate to cover the MC costs, which is kinda nice, but the bottom line is that I prefer not to use one at all.


Anyone ever heard of anything like this or can advise?

One of the management companies would be Connexion Europe - any horror stories to share??

Become a Freiberufler, anything else just doesn't work. You can be a Freiberufler and an employee at the same time for 400 Euro's a month i.e. minimimum salary without being taxed to satisfy their Human Resources, but accept nothing less.

AUG law is only applicable if you've been working for two years for the same client, so if this is a 6 month contract, the legal bod is off the mark. However the client sometimes make a song and dance about it.

I would hold your ground, and go in as a Freiberufler. Management Co's often have illegal tax schemes, and you end up with a huge back tax bill and fines. If you do use a Management co. make sure they set you up as a Freiberufler, if not don't touch it. The combination of an employment contract and Freiberufler would be OK. I did that.

[nicodeemus]

Another alternative is to work thru my UK limited company, as the initial contract is only 3 months.. but very likely to get extended and I wanted to get into the German tax system from the start.. hmm..

[nicodeemus]

Just when I thought I had it all sorted... aaarggghh !!

Some legal bod in the clients office is making a big song and dance about an AUG.. or arbeitnehmerüberlassungsgesetz .. has anyone ever been required to get one of these for germany? and they cost like 4k euros.

Apparently if I used a management company apparently this would all be fine, and the agent actually already negotiated a proportionate increase in my rate to cover the MC costs, which is kinda nice, but the bottom line is that I prefer not to use one at all.


Anyone ever heard of anything like this or can advise?

One of the management companies would be Connexion Europe - any horror stories to share??

[darmstadt]

I did a contract some time ago here in Germany via a UK agency (was the only to go although they now have offices here) and they wanted me to go through an MC like their other contractors over here. Instead I went to a Steuerberater (being resident here, I take care to stick by the law) and talked to them. They, in no uncertain terms, told me that I would be putting my head on the block if I did that and may never see my money again. I'm glad I took their advice as some years my tax bill is damn small (some years though, it ain't.) I think people are learning from the advice given on this in regards to working in foreign countries is to talk to people who have been doing it for years. Do not listen to the agents or MCs or contractors who think they can dump and run.

[ThomasSoerensen]

Result!

The legal folks at the agency have now agreed that i am fine to be an individual freelancer - thanks everyone for all your help, if anyone is in Berlin maybe I can buy you a beer sometime !

The agent himself provided a nice little insight on the phone too - apparently they're pretty fed up with MCs and getting 20 calls a day from them offering hampers and tickets to football for contractor introductions etc

Nice to hear my experience influenced you positively.
Enjoy a beer on me for not beling gullible to the agents BS.

[nicodeemus]

Result!

The legal folks at the agency have now agreed that i am fine to be an individual freelancer - thanks everyone for all your help, if anyone is in Berlin maybe I can buy you a beer sometime !

The agent himself provided a nice little insight on the phone too - apparently they're pretty fed up with MCs and getting 20 calls a day from them offering hampers and tickets to football for contractor introductions etc

[nicodeemus]

With regard to Management Co's have you read the thread "Germany the taxman cometh.....", after reading that I'd be wary of the expertise of any management co.

Yes i have thanks man.. and recognised the name of one of them too!

Thanks for explaining those risks to me - no-one has done that thus far - I think they prefer scare stories, eg the tax expert today cited the stories of folks who have gone to prison over this.

The thing that annoys me is the lack of knowledge at the agency - they originally requested that i go thru an MC which deals with freelancers, then when i said i prefer not to, they turn round and use arguments against the freelance status as reason for going with the MC and then even steer me to an employed solution. I guess they just want me to go with the flow as they have standard ways of working but don't question the underlying belief system until someone else does.

Bottom line - I guess it's analogous to declaring yourself outsite IR35 but then stashing the cash in case this one day gets called in, but like closing down your ltd co, if you leave Germany after a coupla years it's all done and dusted and the money's yours?

[BlasterBates]

how long have you all been freiberufler's then?

the agent doesn't know what he's talking about, he was taking advice from a tax consultancy whose position is that for my circumstances (and yours too i guess) working as a german freiberufler is too risky, and had an eyewateringly expensive 'employment' option to propose instead, forget that.

the agent was confusing this opinion with freiberufler via MC vs freiberufler direct.. but still i have to convince him.. tssssk

This is crap because the only non-risky solution is to pay Gewerbesteuer (business tax) and Social Insurance. If the Finanzamt decide not to accept your Freiberufler status you then pay that Gewerbesteuer, so ...so what, there would be no penalty, just a bit of extra tax, hardly a huge risk.
The second "risk" is Social Insurance. This is not dealt with by the Finanzamt, and they don't care, they really don't. That is a risk going ahead over several years, and your risk is if the pensions authority check up on you. In the longterm this will happen. If this happens and they decide you're not self-emplyoyed they simply charge you the social insurance for a max. of up to 4 years, on the basis of 500 a month. Generally if you change your contracts every few months this is avoidable. There is 5/6 rule don't earn more than 5/6 from one employer. But this is nothing to worry about in the first few months.

There is an option that for 2 years you can opt to declare yourself as "employee-like" and you pay a reduced rate of EUR 200, which then increases to 500 after 2 years.

I was a Freiberufler for 5 years. I've had my Freiberufler status questioned once when I stupidly registered a business, and then realised my mistake and had to grapple to get myself deregistered, and I've had a "Kontenklärung" from the pensions authority, asking me to clarify why I hadn't been paying social insurance, but they just ignored my time as self-employed because it was more than 4 years ago.

With regard to Management Co's have you read the thread "Germany the taxman cometh.....", after reading that I'd be wary of the expertise of any management co.

[nicodeemus]

how long have you all been freiberufler's then?

the agent doesn't know what he's talking about, he was taking advice from a tax consultancy whose position is that for my circumstances (and yours too i guess) working as a german freiberufler is too risky, and had an eyewateringly expensive 'employment' option to propose instead, forget that.

the agent was confusing this opinion with freiberufler via MC vs freiberufler direct.. but still i have to convince him.. tssssk

[chef]

I am doing this right now. I send invoice and timesheet from my german freelance personally owned company to my agent every month. No management company involved.

Tell your agent that they are full of bulltulip.

WHS +1

[BlasterBates]

With regard to 5/6. This won't be a problem for several years as social insurance isn't handled by the Finanzamt. The Finanzamt doesn't care. The Sozialversicherung is dealt with by the Federal Pensions authority. If you don't pay the public pension then at some point they'll send you a form to fill out, and depending on how you fill out the form or not, they might decide to audit you, and if you don't fulfill the 5/6 criteria, they will more than likely charge you Sozial-Versicherung. They go back a maximum of 4 years, and charge you EUR 500 a month, max about 20 grand. There are no penalties to pay as it isn't a tax.

[darmstadt]

Have you ever been presented with the argument about 5/6 ths of your turnover being generated by one client, and therefore not being seen as 'independent' ?

Yes, although I don't work via UK agencies my steuerberater mentions this to me from time time, especially if I'm working too long for one client which is why I try to keep a couple of other projects on the slow cooker. Haven't been caught for it yet though.

[nicodeemus]

no, never

thanks man.

reading between the lines my position seems like a challenge to the agents normal ways of working, they feel unnerved by that and are coming up with muddled arguments to try and persuade me otherwise. lately they seem to be confusing the freelancer status argument with the need to have have a management co, like you can't be one without the other. the debate goes on!

[ThomasSoerensen]

Thanks Thomas,

Have you ever been presented with the argument about 5/6 ths of your turnover being generated by one client, and therefore not being seen as 'independent' ?

This as just come thru to me on an email from a uk overseas tax advisor, via the agency, as reason for needing a management co - have asked my steuerberater for an opinion as it seems spurious to me.

no, never