Working from Germany - contracting in the UK (most tax-efficient method)

[Leefair1]

Hi Matt, I actually just signed up to the forum to respond as I'm having similar issues since moving to Germany. I operate a Ltd Company in the UK, work in France and live in Germany... Still trying to find the best way forward! If you don't mind me asking, do you intend to claim business asset disposal relief when closing your UK Ltd company and if so how will you keep this out of the scope of the German tax net? This is what is preventing me from closing down my UK Ltd company and setting up as a Freelancer in Germany. Many thanks!

[nickkell]

Hi Matt1010101, I'm also a Brit in Germany. I've been working here in perm roles, but will be setting out as a freelancer in the new year. I've got a european client lined up, but would be interested in getting UK clients (there seem to be a lot of offers and speaking the native language is a plus).
I'd be interested in knowing what currency you (eventually) bill your client in, and also any useful software for managing this stuff. I'm waiting on speaking to a tax professional, so all this stuff is new to me!

Anyway, best of luck getting it all sorted!

[Sue B]

Glad I could help, good luck, and get in touch if you need anything further.

[Matt1010101]

Just a quick update, firstly thanks everyone for all of your advice, it's greatly appreciated.

I did have a call with Sue B and she was extremely helpful in explaining everything and the implications for running my UK company as well as living in Germany, and that it can be done, but it's a major head ache and doesn't have any tax advantages.

So I will be shutting down my UK Ltd, and setting up here in Germany.

The most likely route of the three options seems to be to register as a freelancer, and then negotiate with my client to pay me as a freelancer. I'm researching this, and will update when I've implemented.

Have a great Christmas everyone.

[Workr International]

The key thing is if you are in Germany you should be paying your taxes in Germany which it sounds like you want to do so that is positive. How you go about doing that can be done by any of the 3 options you put forward. With regards to Freelancing one of the key parts of the legislation in Germany is that no more then 5/6 of your income can come from one client, so you should have an intention to have multiple clients. When you first register as a freelancer you have 3 years to meet that criteria, so freelancing could be an option for you if it is your intention to have multiple clients and as long as you meet all other freelancing requirements. The most straight forward solution is probably a German umbrella company as they will do everything for you, but as you rightly say they will take a fee for their service. the option of setting up your own company is also a valid option but there could be a bit of admin for you do. It does look like you are on the right track though with the options you are considering.

[eek]

Ok, thanks for everyone's advice.

Would a programmer / IT consultant still be considered a Freiberufler? It's not explicity stated on the list I found, and I only work for one client not multiple at the moment. Is there then a requirement to be free lance that I have more than one client?

So it sounds like the other options are:

German Umbrella

1. Client pays -> German Umbrella
2. German Umbrella pays me

I won't have to run my own company either in UK or in England, umbrella takes a cut.

or..

German Company (owned by me)

1. Set up my own company
2. Client pays my German company

or...


FreeLancer (Frieberufler)

1. Set up in Germany as Freelancer
2. Client pays me to Germany as freelancer

Get some advice because the only option is a being on the Germany payroll of someone (that may be an umbrella it may be something else).

And I'm sat in the UK telling you this based on knowledge that you really need to get very quickly.

[Matt1010101]

Ok, thanks for everyone's advice.

Would a programmer / IT consultant still be considered a Freiberufler? It's not explicity stated on the list I found, and I only work for one client not multiple at the moment. Is there then a requirement to be free lance that I have more than one client?

So it sounds like the other options are:

German Umbrella

1. Client pays -> German Umbrella
2. German Umbrella pays me

I won't have to run my own company either in UK or in England, umbrella takes a cut.

or..

German Company (owned by me)

1. Set up my own company
2. Client pays my German company

or...


FreeLancer (Frieberufler)

1. Set up in Germany as Freelancer
2. Client pays me to Germany as freelancer

[jamesbrown]

Client knows I live in Germany, it's easier for them just to keep paying my UK company. If I have to, I could ask them to pay a different company and re-do my contract to go via the German Umbrella. Would prefer to avoid that if possible.

I thought it could be done the way I suggested. And the German Umbrella just deal with my payroll here in Germany.

There's "can" and there's "should". Simpler (for you) is almost always better.

[eek]

have you asked the Finanzamt what their take on this arrangement would be?
they do have a pretty draconian reputation on world earnings, and swingeing penalties for non-compliance.

I think that's the reason he is looking at using an Umbrella firm rather than pretending to be a Freiberufler

[BR14]

Client knows I live in Germany, it's easier for them just to keep paying my UK company. If I have to, I could ask them to pay a different company and re-do my contract to go via the German Umbrella. Would prefer to avoid that if possible.

I thought it could be done the way I suggested. And the German Umbrella just deal with my payroll here in Germany.

have you asked the Finanzamt what their take on this arrangement would be?
they do have a pretty draconian reputation on world earnings, and swingeing penalties for non-compliance.

[Matt1010101]

Client knows I live in Germany, it's easier for them just to keep paying my UK company. If I have to, I could ask them to pay a different company and re-do my contract to go via the German Umbrella. Would prefer to avoid that if possible.

I thought it could be done the way I suggested. And the German Umbrella just deal with my payroll here in Germany.

[jamesbrown]

Reading between the lines, it sounds like you don't want your UK client to be aware that you're living in Germany or something? Either that or they are not willing to change the contract to pay a German umbrella. Bottom line, you are introducing more complexity than needed, so there must be a reason for it...

[cojak]

Sue B This one is for you I think…

[Matt1010101]

Hi,

I recently moved to Germany and am looking to keep my contract with the UK company I contract for. I have my own limited company in the UK.
Since I live in Germany I need to pay tax here, I'm looking for the best way to do this.

As far as I am aware, I can sign up with an German Umbrella company, so the process would be:

UK client pays my UK Ltd Company ->
My UK company pays the German Umbrella, and that sorts out payroll here and pays me into my German Bank account.

Has anyone done this already? or can give me advice on this?

Thanks in advance.

Matt