
Ask HN: Germans, how to work legally remote? - throwaway9283i
Hey there,<p>being a freelancer in Germany is possible and well-known if you have multiple clients throughout the year and follow some rules.<p>However, being a remote worker and employee of a US corp&#x2F;startup seems to be a grey zone to me because German law requires to work maximum 80% of your time for one client only.<p>How do you solve that problem? Is there even a legal way to do that?<p>I also thought about incorporating a GmbH which then creates invoices to the US company. Nevertheless, this would introduce additional costs and probably risks (e. g. when you are no longer an employee of the US corp).<p>I asked some tax consultants. Nobody of them really understood what I want to do and additionally, the bigger problem seems to be the German Rentenversicherung and not only the Finanzamt.<p>More info: I want to stay in Germany and am a German citizen. I want to be for a significant time at the company (3y+).
======
ohthehugemanate
I did this for a few years. Here are your options:

Employment by the US company:

They're allowed to employ you and have you "stationed" in Germany. You pay no
US tax, and DE tax on 100% of this income. For Sozialversicherung,
Rentenversicherung etc it's just as if you were selbständig. Since you're
allowed to give up all sorts of rights in DE conteact Law, the US based
contract is probably fine.

Contractor for the US company: this is OK too. Since the company does not have
a DE presence they can't run afoul of the Scheinselbständigkeit rules. You
really should register as a Gewerbebetrieb, GmbH or English Limited company
though, as that solves a lot of tax questions for you. In any case as a
selbständiger in Germany You should expect to get audited in the first few
years... And this makes it less likely they'll find things you have to pay.

I am not a Steuerberater... But I've been in a two selbständig household in
Germany for 7 years. My income was from international tech contracts, just
like yours. And I went through a Steuerprüfung, where they decided that since
I dont have a degree in CS, I can't be selbständig in that field. Didn't
matter that I have a long resume of big organizations, and a letter of
reference from the CTO of one of the biggest companies in Germany. I had to
form a Gewerbebetrieb and pay back taxes for it. It sucked.

Also, good luck on finding a Steuerberater who will help you optimize at all.
Technically tax optimization is illegal, so most are very cautious even
talking about it. 99% are just form fillers.

~~~
heipei
Employment by US company: Did that for five years working remotely from
Germany for a US Incorporated. I'm German, had a German contract with all the
standard provisions for Germany (mandatory vacation, termination protections
etc, employer contributions to health-care etc). Worked without a hitch, like
being employed by a DE entity. The only gotcha is that my monthly pay would
have social contributions and health-care contributions already deducted, but
would not have income tax deducted. So you'd have to save up enough money to
pay income tax yourself at the end of the year (or quarterly, depending on how
competent your local tax office is). After five years the US parent
incorporated a German subsidiary, and since then the taxes were obviously
deducted as well.

Personal take on tax accountants or anyone in that profession: They're more
than useless. As parent poster said, 99% are form fillers, so if you tell them
that you're working for a US entity that is not paying income tax on your
behalf some of them will flat out say "but that's not even possible" (yes,
someone told me that). My tip is just to read up on some topics, band together
with co-workers in a similar situation and then just do the taxes yourself
using one of the popular services.

~~~
romanovcode
> They're more than useless.

Can attest to that. Had similar situation - Being DE tax resident however
working for my own company that is not based in DE.

I had just a simple question - when and how do I pay my taxes here from the
money I bring from my company that is not German. And they could not help me
because they really could not understand that someone might be living in
Germany but not working in Germany.

~~~
movingbritde
Did you ever find an answer to that question? Facing a similar scenario.

~~~
romanovcode
Nope. Best I got was - Send money as salary and do yearly returns as
additional income.

~~~
movingbritde
I think taking a salary is the only way to do it. I've been reading about the
concept of opening a German branch of the foreign entity as a more formal
thing. But obviously I will need to seek out a professional who actually has a
clue.

------
purerandomness
You can join any "IT-Genossenschaft" like [0] or [1], which legally saves you
from falling into the "Scheinselbstständigkeit" category. One-time cost is
about 100-200€.

[0] [https://www.4freelance.de/](https://www.4freelance.de/)

[1] [https://www.it-projekt-eg.de/](https://www.it-projekt-eg.de/)

~~~
HelenePhisher
That contradicts their own statement in their FAQ:

[https://www.it-projekt-
eg.de/freiberufler/service/haeufige_f...](https://www.it-projekt-
eg.de/freiberufler/service/haeufige_fragen)

 _Reicht zum Schutz gegen Scheinselbständigkeit der einfache Eintritt in die
Genossenschaft?_

 _Nein. Unser Modell schützt Sie dann vor Scheinselbständigkeit, wenn die IT-
Projektgenossenschaft eG der Auftragnehmer ist und den Auftrag an Sie
übergibt. Die Mitgliedschaft alleine reicht nicht aus._

That basically translates to "A membership does not protect you from
Scheinselbstständigkeit. It will only protect you if the Genossenschaft is the
contractor and transfers the job to you."

This might not be possible for all cases.

------
cygned
Be aware that if you incorporate, you still will have problems with
Scheinselbständigkeit - being a small UG/GmbH does not prevent you from that!

Reg. your tax consultancy; we also do international business with freelancers
and other contractors. Write me a mail, we might be able to sort that out.

~~~
jotm
How so? Is there a problem with having a company with only one employee and
one client?

~~~
cygned
Yes, if you have an incorporation (UG/GmbH/...) where you are the only
managing partner (Ein-Personen-GmbH) and you only have one client, you’re
handled as if you were a freelancer with only one client. It was an easy way
to circumvent several obligations until they “closed” that “loophole”.

~~~
rooam-dev
Could you be more specific what loophole?

I am in a similar situation, I am full time employed (as a developer) by 1
person GmbH. I work with a tax agency that has not said anything about this.

Thanks.

~~~
cygned
The thing is, that just b/c someone at the tax agency said something, doesn't
mean that it is right nor respected when they audit you. A lot of things in
this area are not clearly defined and thus open to interpretation leading to
all kinds of weird decisions.

The following article (German) is a good read on that:
[http://www.schwerd.info/sozialversicherungsrecht/scheinselbs...](http://www.schwerd.info/sozialversicherungsrecht/scheinselbstaendigkeit-
vermeiden/1641/)

~~~
rooam-dev
Thank you.

------
BjoernKW
So, if I understand you correctly you'll be working on a contractual basis for
a single client, full-time for a prolonged period of time.

This kind of arrangement indeed is quite likely to be classified as "bogus
self-employment" by the German state pension system, no matter your legal
setup. I wouldn't bother setting up a GmbH (private limited company) because
it most likely won't help you anyway.

Unfortunately, there are no clear rules yet on when something is considered
"bogus self-employment" and when it is not. However, there are some criteria
for a setup to be more likely classified as "bogus self-employment" and other
than the remote working part yours sounds more or less like the prototypical
case.

The question remains, who would have to pay outstanding social security fees
in that case. Usually it would be your employer. However, given that in your
case they're in another jurisdiction social security might not be able to
enforce that. Still, it might cause some trouble and costs for yourself (apart
from the ethical issues that come with avoiding social security costs in such
a manner).

The way remote employment (not consulting, which as you've mentioned, involves
having multiple clients) could work relatively hassle-free in your case is
your US employer setting up a company in Germany (a UG for example, which is a
relatively cheap variation of the GmbH) and simply pay you from there,
including taxes and social security like any other local employer.

~~~
throwaway9283i
I don't think that my employer would do so only for me (given that I don't
even have an employer right now, I'm just speaking generally here). But I
agree this would indeed be the best option.

Is there a way that I can pay the social security fees from day one on my own
to completely avoid all hassle and possible back-payments after a Prüfung
(audit)?

~~~
BjoernKW
I suppose there are legal constructs that allow you to do this. For example,
you could set up the UG mentioned above yourself and be its only employee with
all the taxes and social security costs that implies.

However, that will get complicated rather quickly:

You’ll not only be that company’s sole employee you’ll also be its managing
director. A managing director who owns a majority in the company usually is
considered to be self-employed. A managing director also is responsible for
filing annual accounts and tax statements. This is both expensive and time-
consuming.

Another point to consider is that you’d effectively cover for employer’s share
of the social security costs (unless they will be paying that on top of your
salary, at which point they might just as well set up the UG themselves).

Not only is this a dodgy practice but you’ll also have pretty rough deal.

In any case, because this will get complicated you’d have to ask a lawyer
who’s well-versed in both corporate law and social security law about the
specifics.

It’d be much easier if they either were your client rather than your employer
or if you were a co-founder.

------
johannes1234321
One way to set this up is using some form of consulting/temporary worker
company as an intermediate. I was employed in that form for a while. So
legally that company hires you and then invoices the U.S. corporation taking a
cut. In my case that was Kelly Services and was hassle free (I got my salary
as negotiated in time, only interaction I had with them was signing a contract
and terminating it) no idea how hard this is to setup or what the cut is they
take.

~~~
throwaway9283i
Someone else will make huge money only because bogus laws in Germany which
probably won't be fixed even in the year 2100.

Anyway, I really like the idea and it sounds totally hassle-free. I will
contact them and ask. Should I give you as a referral? Maybe you get a check
if it works out for me.

~~~
johannes1234321
About bogus laws: I think the employee protection in the German system is a
factor (not the single one) on why German economy did quite well and populists
for a long time had limited success. The strong safety gives guarantees so
that one has less fears and representation of employees on the board ensures
long term perspective over short term gains. (With the downside that employees
on the board represent current, not future employees and leads to more
conservative operation as change is hard) Anyways, that's a different complex
debate.

I don't know if that company is best. Just gave it as reference, also for
finding competitors. I think for most part you'd need a company with a
representation in U.S. and here, so that your "practical" employer can do a
contract under U.S. terms and you do one under German terms ... and not sure
they'd remember me - it's 10 years ago :)

------
leethargo
I'm in a similar situation (German citizen living in Germany, working as a
freelancer for a company in Asia). As far as I can tell from some research,
the only "risk" is that I might have to do some back-payments into the
Rentenversicherung.

But if I were to be employed regularly to a company (in the EU?) the same
would apply.

In either case, I have to pay for the health insurance, so there's no real
"avoiding the cost of social security".

~~~
helge5
Wrt to social security stuff, one should proactively run a
"Statusfeststellungsverfahren" \- you fill out some forms and the authorities
will tell you how they declare you. That puts you on a safer side.

Also there _is_ an "avoiding the cost of social security". If they consider
you properly self employed and independent, you do not pay gov social security
stuff, but you need to insure yourself (using private insurance companies).
That is why the process mentioned above is important. If you register self-
employed but later they declare you as dependently-employed, gov social
security has to be paid! Something you should avoid upfront, can be super
expensive. So => "Statusfeststellungsverfahren"!

~~~
leethargo
Thanks for the hint about Statusfeststellungsverfahren, I will research that.
I had previously filled the questionaire from Finanzamt and they had accepted
my status of "freiberuflich" w.r.t. software dev.

The possibility to use private insurance depends on having some minimum amount
of income.

Also, I currently use the option to use public insurance (voluntarily) so that
I can easily switch back to it once I become employed again in the future.
Apparently, there is some risk of not being accepted by the public insurers
after one had quit.

~~~
helge5
"Statusfeststellungsverfahren" is an (gov) insurance thing (the process is run
by the "Rentenversicherung" (the pension fund)), it has (I think, not a
lawyer) nothing to do with the Finanzamt (German IRS). That is an entirely
different thing.

> The possibility to use private insurance depends on having some minimum
> amount of income.

This is incorrect. If you are self-employed you are off the state records. You
can yourself choose to insure yourself using the gov insurances
("Freiwilligenversicherung"). But that is _usually_ an awfully bad deal
(though ethically the right thing to do and I personally hope they eventually
do the "Bürgerversicherung", which will level the terms for everyone).

The minimum income thing is only for dependent(regular)-employees. They are
forced to be in the gov-insurance unless they exceed a certain income. If they
do, they can choose (which often makes sense because private insurance has way
better benefits and is way cheaper if you (consistently) have a high income (I
don't know the current rate, 14% for the employee and 12% for the employer
[and both if you are self-employed?])).

> Also, I currently use the option to use public insurance (voluntarily) so
> that I can easily switch back to it once I become employed again in the
> future.

They have to take you back unless you are 50+ I think (google the details). If
you are dependently employed you _have to_ be in the gov insurance unless you
exceed the minimum income. Buckle up, it's the law! Because of that many
privately insured people therefore often seek to get back into regular
employment if they get closer to 50, to properly exploit the system.

> Apparently, there is some risk of not being accepted by the public insurers
> after one had quit.

This is age specific. Generally at least the "AOK" (kinda the fallback gov
insurance company) has to always take you. In fact I think even private
insurances _have to_ take you since quite a few years now - it's awfully
expensive, but you are never supposed to be uninsured in Germany.

~~~
throwaway9283i
I might be wrong, but they only have to take one if you are below a certain
age _and_ below the border income (Beitragsbemessungsgrenze). Always be
careful w.r.t. these kinds of decisions because they could cost you an awful
amount of money later.

~~~
helge5
If you are above the border income, the private version is less expensive (I
might also be wrong, checkout [https://www.finanztip.de/pkv/pkv-
basistarif/](https://www.finanztip.de/pkv/pkv-basistarif/)). It only really
affects people below that income (way too many!). It is the reverse, staying
in the gov insurance costs you an awful lot of money upfront. It's the ethical
but financially stupid thing.

~~~
leethargo
True, the private insurance is typicall less expensive _now_ (when I
researched, it was 50%-60% of what I pay), but you have no guarantee that it
will stay that way. They could just increase the fees for everybody, in the
future, or just increase it with your age, as the health risks go up.

------
chrisked
Feel free to reach out to me. We have seen this case couple of hundred times
already and I’m sure I can provide some direction. Certainly a Trade Office
registration or own limited company is the way to go. Can talk you through the
costs as well. My email is ck at firma dot de.

~~~
throwaway9283i
Done, thanks for your help :)

------
alien1993
In Italy there is a similar law for freelancers, but it's only valid if the
client is another italian company, so if I work only for a US company for
example there should be no issues.

In any case I suggest you ask a German lawyer, he know best for sure.

------
k__
Scheinselbständigkeit also takes into account other properties than "only one
customer".

There are plenty of freelancers working only for Daimler, Bosch, etc.

Can you decline projects?

Do you control your work times/place.

Do you have to handle on your own authority etc.

~~~
throwaway9283i
Thanks to let me know the additional conditions. As an employee I wouldn't be
able to control that.

------
planetburgess
You can be employed through a third party deployment company
(ArbeitnehmerÜberlassungsGesetz) for up to eighteen months. Such companies
(known in other countries as Employer of Record / GEO / PEO / Umbrella
companies) have an AÜG license. We offer this to our clients in Germany. After
eighteen months your company could setup (in order of complexity) a
representative office, branch or subsidiary. Or you could pursue one of the
self employed models.

------
movingbritde
I'm in a similar situation, except I'm a British citizen looking to move to
Germany. I already have a sole director, UK limited company set up for
contracting / freelancing.

I've head rumours of German contractors using UK limited companies instead of
the local GmbH/UG entities. How does that work generally? Are people setting
themselves up as German employees of the UK entity and collecting a salary? Or
is there something I'm missing here?

~~~
throwaway9283i
Without being able to contribute to your question: in hindsight of Brexit (UK
will leave the EU) this might not be possible (as easy?) as in the past
anymore.

~~~
helge5
I think the "only" real change is that he will need a work visa, the other
aspects should remain the same. A EU citizen can freely choose his workplace
in the EU (which is a reason why the British voted exit, they specifically
didn't want that).

~~~
movingbritde
Thankfully freedom of movement is still in effect until the end of October. So
no visa's required just yet. As for residency after the brexit date that's
completely in the air but I would rather be already inside germany than
outside.

------
rurban
I avoided the Gewerbeproblem by proving that I am a free Systems Developer, in
contrast to Application Developer. A true Freiberufler, even without a CS
degree.

Of course the tax office did their "Steuerprüfung", but compared to my
Steuerprüfung in Austria it was very simple, and needed just one day in their
office.

No Gewerbe tax, 100% (independent, systems) work for big US companies.

I never spoke to a lawyer or tax assistant, I did remote work most of my life.

------
bitL
Either make your own UG or use individual W8 form for US company (reverse
charge in DE, no VAT). Still, you need to have at last 20% of your income from
another source if you stay a freelancer. Ideally if the US company had two
legal entities and you could issue invoices to both. Most people start their
own GmbH with all the increased taxes it brings.

~~~
throwaway9283i
Wouldn't that still be a grey zone to just invoice two different legal
entities even though they are technically the same?

~~~
bitL
I don't know, it's best to discuss with a lawyer of course. Still, if they are
two different entities with two different TINs, why would that matter to the
tax office?

------
kevinherron
How long do you want to stay for?

I'm by no means an expert, but when I looked at this recently (same scenario -
remote worker for a US company), I found the only real option was to apply for
a Residence / Long Stay Visa.

I was only looking to stay for ~1 year in theory.

~~~
throwaway9283i
You mean VISA in the US? I want to stay in Germany (I am a German citizen).

I would plan to be there for a significant time, more than three years.

~~~
kevinherron
I'm sorry, I completely missed that you were a German citizen and assumed you
were a US citizen who wanted to move to Germany. Nothing I posted is relevant
to you.

------
wozmirek
[https://bluemarblepayroll.com/about/](https://bluemarblepayroll.com/about/)
might be able to help? needs your employer to set this up tho

~~~
throwaway9283i
Thanks, will have a look :)

------
literallycancer
You could stay in Germany for less than 183 days a year and in
Austria/Switzerland/etc. for the rest. And have permanent residence somewhere
like Georgia.

~~~
sparkling
Nope.

------
rjsw
Is it really that expensive to set up a company in Germany ?

~~~
A2017U1
Bulgaria if you want Eurozone incorporation. The benefits are too huge to
ignore. (more a comment for anyone browsing and thinking about it)

~~~
chrisked
Yes, corporate tax rate in Bulgaria is attractive. However, how does this help
if op wants to stay in Germany. Immediately cross-border tax issues are
introduced you have to deal with. Only the tax accountants and lawyer are
winning in this case with their billable hour. Also do not discount the
language barrier too much.

------
telcy
Just use a Gewerbe and make sure you issue a few invoices to other clients. I
have done that for years and never had any problems.

~~~
throwaway9283i
I don't have and I don't want to have any other clients.

------
zeug
You should give the Rentenkasse an call. They are happy to tell you, if this
would be Scheinselbständigkeit.

~~~
throwaway9283i
I already know the answer: yes, it will be Scheinselbstständigkeit. The
question is how to legally avoid that classification.

------
Aardwolf
Off topic, but why are Ask HN posts displayed in gray like a negatively voted
comment? This entry has 35 positive points currently so shouldn't be made so
low contrast...

~~~
frfl
It's to de-emphasize post bodies. It's like that for all post bodies on HN. I
believe the rationale was to focus on the title/link and any comments.

~~~
Tempest1981
For me, the title is also gray:

"Ask HN: Germans, how to work legally remote?"

~~~
majewsky
I think that's the styling for a:visited. (It links to itself.)

