Reply to: Working in Germany

[tim123]

Ok, let's do some math and define 'lucrative'!

Let's say I have a friend called "John Doe" and single. Once upon time, John takes his dick and came to DE.

He makes 500 euros a day, based upon 20 work days average he makes 144,000 euros in a year. His naked tax liability (Class 1) is 55,000 euros for 2009.

He cannot claim "secondary home allowance" because he is single and f-amt claims his 'center of life' is in DE. ..

completely wrong!

tim

[tim123]

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, .

It might be difficult, it isn't technically impossible.

I know of UK agents who have obtained AUGs, as long before the taxman came knocking there were a number of multinational German companies who insisted on their "externals" being AUGed.

tim

[BlasterBates]

There you go just a matter of knowing how good you have it

It doesn't matter where you work in Europe, in most countries it is very difficult to offset travelling expenses, mostly they won't have it regardless of whether that is the UK (non UK), Luxembourg Switzerland etc. It is roughly the same. Most legit solutions in different countries take around 35%.

That is the norm. In fact I reckon on that high a rate 150000 EUR I would put the average tax take higher than 35% because my rough rule of thumb is around 100 grand.

[SalsaFever]

By the way, "John Doe" is no way related to me and he is just a fictitious character I made up. I didn't calculate holidays, vacations and time offs any kind etc.

BB,
Thanks for the comments. I sincerely asked for your opinion. If you say "John Doe" having a good deal, I respect your word.

By the way, "John Doe" indeed talked to a number of accountants and based on the 'center-of-life' argument, he cannot claim 'secondary home' expenses and all the other things accountants suggest doesn't really fit well with his particular situation. Because he doesn't spend much, so nothing to deduct.

Flying home once a month also doesn't help, according the f-amt his center-of-livelihood is Germany. His visits to UK are considered touristic.

So he stuck with paying %38 tax. If this is a good deal and even better than Switzerland, he only thanks the Lord day and night.

"John Doe" thinks German accountants are not coming up with creative solutions, if you have any innovative solution in mind, please do share.

[BlasterBates]

Ok, let's do some math and define 'lucrative'!

Let's say I have a friend called Joe the single. Once upon time, Joe takes his dick and came to DE.

He makes 500 euros a day, based upon 20 work days average he makes 144,000 euros in a year. His naked tax liability (Class 1) is 55,000 euros for 2009.

He cannot claim double housing expenses because he is single and taxman claims his center of life is in DE. So he neither can deduct rent, nor his flights to UK. He doesn't like talking on phone much, so no phone bills. No internet connection. He doesn't drive in Germany, no car expenses.

Please advise Joe, how to turn his contract to a 'lucrative' one, of course with no help from MCs???

The bottom line is if you are single, your DE taxbill will always be a nightmare. Double housing allowances are almost always scrunitized especially for single people based on the-center-of-life argument, if you are very very lucky, maybe you can get some reduction for the first 6 months only, even that is very very exceptional, like lottery.

I hear so often people like Bates saying 'oh it's very 'lucrative', doesn't even hurt!', then it turns out that their particular situation is completely different.

I have a associte here, he's married and 3 kids living in London. So he can save huge in taxes because he is married + allowances for 3 kids + because his family is in london, f-amt accepts his center of living is indeed in UK, so he can deduct every f*ucking penny spent in DE, including rent, flights, electricity, car + gas, plus even per diem daily allowance for food..

You've just described a lucrative contract. I don't see anything wrong with the maths. If Joe wants more he has to move to Germany, or fly back once a month, or speak to a better tax advisor to argue his case about claiming expenses.

[darmstadt]

Please advise Joe, how to turn his contract to a 'lucrative' one, of course with no help from MCs???

I hear so often people like Bates saying 'oh it's very 'lucrative', doesn't even hurt!', then it turns out that their particular situation is completely different.

Don't come to Germany then!

If you do, then follow some of the advice that has been given here, particularly BB and especially if you're a UK contractor don't follow the advice of your UK agent but get yourself a local tax advisor (plenty on Gulp) and you might find that you'll get a good deal. Personally as a single person contracting and doing it within the German system is pretty lucrative.

[SalsaFever]

The proper legal route to contract in Germany is perfectly simple and lucrative.

Ok, let's do some math and define 'lucrative'!

Let's say I have a friend called "John Doe" and single. Once upon time, John takes his dick and came to DE.

He makes 500 euros a day, based upon 20 work days average he makes 120,000 euros in a year. His naked tax liability (Class 1) is 45,000 euros for 2009, takes 75,000 eruos home, which translates to %37.5.

He cannot claim "secondary home allowance" because he is single and f-amt claims his 'center of life' is in DE. So he neither can deduct rent, nor his flights to UK. He doesn't like talking on phone much, so no phone bills. No internet connection. He doesn't drive in Germany, no car expenses.

Please advise "John Doe", how to turn his contract to a 'lucrative' one, of course with no help from MCs???

The bottom line is if you are single, your DE tax bill will always be a nightmare. "secondary home allowance" is almost always scrutinized especially for single people based on 'the-center-of-life' argument, if you are very very lucky, maybe you can get some reduction for the first 6 months only, even that is very very exceptional, like lottery.

I hear so often people like Bates saying 'oh it's very 'lucrative', doesn't even hurt!', then it turns out that their particular situation is completely different.

I have a associate here, he's married and 3 kids living in London. So he can save huge in taxes because he is married + allowances for 3 kids + because his family is in London, f-amt accepts his center of living is indeed in UK, so he can deduct every f*ucking penny spent in DE, including rent, flights, electricity, car + gas, plus even per diem daily allowance for food..

[BlasterBates]

The proper legal route to contract in Germany is perfectly simple and lucrative. There won't be any shortage of contractors. I doubt that the mamangement co's saved anyone very much.

[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.

[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.

[AlfredJPruffock]

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

Is it really as bad as that ?

[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..

[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.

[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!

[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