Reply to: Contracting in Munich

[Boo]

When then take MojoDog's advice and ignore it.

Nope, I think I will take a more active part and try to change it. But thanks for the carp advice, as usual.

Boo

[Munich1975]

Check out setting up as a freelancer (freiberufler). It's pretty much the standard way of operating in DE, using a company isn't unheard of but it's a bit of a heavyweight approach. A freiberufler is basically like being self employed in the UK. Bookkeeping and accounts are a lot simpler, and when I was there you could get a three year exemption from social taxes as well. A company employee doesn't get that, and a company may also be liable for trade tax (not 100% sure on this).

Open a German bank account for sure. They usually charge a monthly fee but there are generally no fees for paying for stuff or even for transferring money back to the UK or elsewhere in the EU. I went with Hypovereinsbank.



You will be better off if you plan to claim the VAT back on any purchases. If you are supplying a UK agency that wil be zero rated, so you'll get money back overall if you reclaim VAT. This can raise the taxmans interest and he might want to investigate (happened to me, accountants took care of all the hassle). You will most likely be compelled to register on that rate anyway due to being over whatever their threshold is.



If you're in DE long term you will need to declare, and be liable for tax on, your worldwide income. You will probably also remain UK resident. So the end result is that you fill in two tax returns and have to offset tax paid in one country against tax due in another. It's a bit complicated but your accountants will take care of it.



expattax.de

Thanks doodab and Yes taken most of your advice to date - what fee did you pay expattax for Accountancy? I am being quoted 520Euro per month for an all in service Inc VAT returns (which i understand is a bit of work)

Two issues that the Accountant advised which look positive since main residence is in UK was the House keeping and the profit share! Basically, he advised which ever is the greater ££'s for rent/mortgage/bills etc i receive the differance as a rebate - anyone benefited from this?

Secondly, my wife does not work (doing a great job raising our 4 amazing kids), but was advised there is a 15k euro pa benefit as a share holder (similar to profit share in UK) - she just needs to travel over and register as local resident. However, I was surprised to learn (accountants advice) that she does not have to be residing in Germany for so many day of the years - anyone share similar experience?

[doodab]

Accepted a long term contract out in Munich on a rate of 1080 EUR per day plus 2000 EUR a month accommodation allowance plus flights.

Initially, I was intending contracting via my UK limited company for the first 6 months before considering setting up a company in Germany. But, maybe better off setting up Germany company from the start, opening up a bank account etc so i can buy goods, pay rent etc in EUR without the fee's!

Check out setting up as a freelancer (freiberufler). It's pretty much the standard way of operating in DE, using a company isn't unheard of but it's a bit of a heavyweight approach. A freiberufler is basically like being self employed in the UK. Bookkeeping and accounts are a lot simpler, and when I was there you could get a three year exemption from social taxes as well. A company employee doesn't get that, and a company may also be liable for trade tax (not 100% sure on this).

Open a German bank account for sure. They usually charge a monthly fee but there are generally no fees for paying for stuff or even for transferring money back to the UK or elsewhere in the EU. I went with Hypovereinsbank.

Also, maybe i benefit from being VAT registered in Germany (Similar to Flat rate here in UK)

You will be better off if you plan to claim the VAT back on any purchases. If you are supplying a UK agency that wil be zero rated, so you'll get money back overall if you reclaim VAT. This can raise the taxmans interest and he might want to investigate (happened to me, accountants took care of all the hassle). You will most likely be compelled to register on that rate anyway due to being over whatever their threshold is.

I'm aware of the 182 day and world tax rule, but not sure if I get caught with additional tax working out of Germany or if I set up in Germany am I liable for tax in the uk being uk resident etc.

If you're in DE long term you will need to declare, and be liable for tax on, your worldwide income. You will probably also remain UK resident. So the end result is that you fill in two tax returns and have to offset tax paid in one country against tax due in another. It's a bit complicated but your accountants will take care of it.

Anyone recommend any German Accountants?

expattax.de

[d000hg]

+1. Good to hear I'm not the only one who finds the constant trolling about searching throuhg historic posts to be annoying and obnoxious.

Boo

When then take MojoDog's advice and ignore it.

[Boo]

Well then don't reply and move on to a more interesting post.

+1. Good to hear I'm not the only one who finds the constant trolling about searching throuhg historic posts to be annoying and obnoxious.

Boo

[Munich1975]

Maybe he just wanted to make sure we knew his rate

Not really mate - its always good to outline the main factors of any contract & conditions so you hopefully receive the correct feedback from people of similar levels and experience!!

[darmstadt]

Only concern I have is the Accountant/legal fee per month is circa 520Euro per month which i think is excessive & would like to challenge this with a comparison. Any feedback?

I honestly don't know how much I pay off the top of my head (I'll have to find my last bill from them) but I'm pretty sure its less than half that. I pay yearly though, over 6 grand a year!, and I wouldn't pay that much either. There's an 'understanding' here that your accountant's bill should not be more than the amount they save you on your tax bill...(I got a 72k tax bill one year which they managed to get down to 40k so am quite happy with mine)

[d000hg]

You read the stickied post 3 above this and tried a search first?

Maybe he just wanted to make sure we knew his rate

What are you, the forum police? What does it matter to you whether he's read a sticky or carried out a full and thorough search beforehand?

It's a bit like complaining when other people bring their dogs to do their business in a public park - you don't own the park but you don't want to be treading in dog-tulip.

[Munich1975]

Some interesting feedback. Thank you and apologies for the lack of contribution (and the poor grammar as stek pointed out)

So, I explored various options -

1. Facilitate contract direct through my current UK Limited Company. Advice sought from ExpatTax who informed me of no reason why the German tax man would come knocking on condition I don't pay myself a salary & pay dividends only. It was also advised to inform the German officials via ExpatTax of my pending arrival/contract then expect a "Thank you but we are not interested" response letter.

2. Set up as a Freiberufler. The company introduced a UK based Agent option who currently hold PO's with the company and whom my contract will be with, at no extra cost to me. The Agent provides an all-encompassing service including Accountancy (at an additional monthly cost) who files all the required taxes and VAT on my behalf and setting up bank accounts etc.

I opted for option 2, as I see huge tax advantages over the UK position. Including profit share and double house keeping ! The Agent also has fantastic reviews and local knowledge of the German system.

Only concern I have is the Accountant/legal fee per month is circa 520Euro per month which i think is excessive & would like to challenge this with a comparison. Any feedback?

[Boo]

Well then don't reply and move on to a more interesting post.

+1.

Boo

[gabox01]

Accepted a long term contract out in Munich on a rate of 1080 EUR per day plus 2000 EUR a month accommodation allowance plus flights.

That's sick dude. Well done!

[sunflower]

Actually a bit of a grey area this one. I have had only 1 customer for the last 3 years (5th year on the same contract) and haven't been asked to pay this. In theory it is correct but there are other criteria which also have to be allowed for. The Finanzamt tried to get me to pay Gewerbesteuer as they believed that I was Selbstständig and not a Freiberufler so after some to and fro-ing with them and my accountant (who doesn't cost me €350 a month BTW) I just sent them a copy of my CV and they said basically said they were wrong. For example, and a collegue had to go to court to prove this, a systems programmer would be a Freiberufler whereas an applications programmer would be Selbstständig. You need to get an accountant to sort this tulip out for you otherwise you'll get stuffed and as people have stated, register from day 1!

Thanks Blasterbates and Darmstadt for these clarifications.

How much are you paying for your accountant out of interest?

[darmstadt]

If you want to stay in Germany contracting for a longer project, the most efficient way is to register as a Freiberufler. Check out the threads on the forum. Get a local German accountant. There is something like IR35 (scheinselbstandigkeit) if you do not have 3 customers per year. An accountant usually costs €350 per month or so. You will normally have to take a German health insurance policy.

Actually a bit of a grey area this one. I have had only 1 customer for the last 3 years (5th year on the same contract) and haven't been asked to pay this. In theory it is correct but there are other criteria which also have to be allowed for. The Finanzamt tried to get me to pay Gewerbesteuer as they believed that I was Selbstständig and not a Freiberufler so after some to and fro-ing with them and my accountant (who doesn't cost me €350 a month BTW) I just sent them a copy of my CV and they said basically said they were wrong. For example, and a collegue had to go to court to prove this, a systems programmer would be a Freiberufler whereas an applications programmer would be Selbstständig. You need to get an accountant to sort this tulip out for you otherwise you'll get stuffed and as people have stated, register from day 1!

[BlasterBates]

This is a longterm project so you need to register from day one in Germany.

The best way is as a Freiberufler.

The IR35 rule "Scheinselbständigkeit" is not a tax rule in Germany it is enforced by the Pensions dept. You need to take advice but it sounds like you'll be caught by the rule, i.e. one long term client. You need to talk to a German accountant about it. Unlike IR35 I believe however it is possible to pay 50% of the rate which is about EUR 500 so it isn't so bad, and you do get it back as a pension when you retire. You really need expert advice on this.

These days they're systematic they go through a computer and send everyone a letter who doesn't pay Social Insurance and you have to explain why, if you say you're self-employed they will then ask for your contract and if you have only one client they'll send you a bill and you would have to challenge it. More or less how it works. Having said that it wouldn't happen for a while and if you were never registered in the Pensions dept you might slip through. For someone who was paying social insurance they definitely would be checked.

[sunflower]

Contracting in Munich

Accepted a long term contract out in Munich on a rate of 1080 EUR per day plus 2000 EUR a month accommodation allowance plus flights.

Initially, I was intending contracting via my UK limited company for the first 6 months before considering setting up a company in Germany. But, maybe better off setting up Germany company from the start, opening up a bank account etc so i can buy goods, pay rent etc in EUR without the fee's!

Also, maybe i benefit from being VAT registered in Germany (Similar to Flat rate here in UK)

Maybe people here have experience using a partner company/Agency?

My family and home will be located in the UK and intend commuting home every weekend.

I'm aware of the 182 day and world tax rule, but not sure if I get caught with additional tax working out of Germany or if I set up in Germany am I liable for tax in the uk being uk resident etc.

Anyone recommend any German Accountants?

Appreciate any advice on this?

If you want to stay in Germany contracting for a longer project, the most efficient way is to register as a Freiberufler. Check out the threads on the forum. Get a local German accountant. There is something like IR35 (scheinselbstandigkeit) if you do not have 3 customers per year. An accountant usually costs €350 per month or so. You will normally have to take a German health insurance policy.

Other option is to go via a payroll company, paying tax and social insurance in Germany. Offtakes are 50%.

Not sure about the consequences of this for tax on your worldwide assets if you were seen as taking up residence in Germany. You need to check with an advisor.

Maybe you can start by calling a company like ECRM Europe, who offer accounting services for a few countries?
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You have a generous rate and allowance so you should have no problems finding somewhere in Munich.