With one of the largest and most respected economies in the world it is no wonder that Germany is a popular overseas location to work in for many people from around the world. Choosing to work in Germany comes with many benefits as a contractor working abroad, and with those many benefits come questions that need to be answered so you can get the best setup for your work in Germany.
WHAT ARE THE BENEFITS OF WORKING IN GERMANY?
The top three benefits of working in Germany are:
- It has the fourth largest economy in the world
- It is one of Europe’s largest contractor markets
- Its central location is an ideal long-term location
MAXIMUM SALARY RETENTION IS IMPORTANT TO ME; HOW MUCH WILL I TAKE HOME?
The maximum salary retention that contractors can expect working in Germany is dependent on a large number of factors. It will be influenced by your marital status, your expenses, your specific German Double Household tax situation and other elements. It will also differ dependent on whether you choose to work in Germany under an employer, through your own personal services company, or as self-employed.
WHAT ARE THE LEVELS OF TAXATION IN GERMANY?
Income tax in Germany is progressive up to 45% for incomes over €250,370 (Euros). There is also a German solidarity tax of 5.5% of income tax, and a further church tax of up 9% of taxpayers who are registered as Catholic or Protestant. Double Tax Agreements exist between Germany and many countries. This means you may only have to pay income tax on your German income under certain terms.
WHAT ARE THE SOCIAL SECURITY REQUIREMENTS?
Compulsory social security requirements differ dependent on your method of contracting in Germany. Locally employed contractors have to pay obligatory contributions, which amount to around 40% of gross income, although only half of this is paid by the employee with the other half paid by the employer. Self-employed contractors in Germany must pay compulsory health insurance unless covered by an approved health scheme, and there is also an optional pension contribution for self-employed people.
HOW DO I REGISTER LOCALLY IN GERMANY? WHAT LOCAL REGISTRATION DO I NEED?
To live and work legally in Germany you must have an officially registered address. You cannot live in Germany for more than three months without this and, by law, everybody who moves to Germany to live, work or study for longer than this amount of time must have a registered address.
DO I NEED A PERMANENT LOCAL LIVING ADDRESS IN GERMANY?
Although it is law in Germany that you have an official registered address, it is also possible to register using your permanent address in your home country, but only in the instance that you haven’t been able to find permanent residence in Germany.
IS THE PROCESS FOR CLAIMING EXPENSES DIFFERENT IN GERMANY? WHAT’S COVERED/NOT COVERED?
It is possible to claim expenses against your income in Germany. You must be able to prove that the expenses are exclusively related to your work. Where this isn’t the case, you need to be able to show what element is relevant to your work and which is private. It is recommended you keep all original expenses receipts, and make sure they are recorded properly so you can explicitly prove any claims made.
THERE ARE THREE WAYS TO WORK IN GERMANY: SELF EMPLOYMENT, EMPLOYMENT OR THROUGH YOUR OWN PERSONAL SERVICES COMPANY. WHICH ONE IS BEST?
All three methods of working as a contractor abroad in Germany have their benefits. All of our solutions are equally fast and trouble-free because we ensure you are working legally and compliantly in the way that best suits the nature of your business.
WHAT STEPS DO I NEED TO TAKE TO BE COMPLIANT?
When you partner with Access Financial you simply have to provide us with all your information, including your registered address. You need a residence permit to live and work in Germany but we can help with that too. Dependent on the way you choose to work you may need additional permits and we discuss some of these in more depth in this article.
CAN I PAY MY TAXES BACK AT HOME BECAUSE MY STAY IS LESS THAN 183 DAYS?
If you live in Germany for less than six months (183 days) you need only pay tax on your income earned in Germany. If you stay for longer than 183 days then you will have to pay German income tax on your worldwide income. This may be affected by double tax treaties between your country and Germany, and can be discussed when you make your move.
WHAT IS THE BEST SOLUTION FOR MY CIRCUMSTANCES?
Every contractor has their own individual circumstances and these impact on the solution that suits their needs. At Access Financial we offer local employment, self-employed and personal service company solutions for contractors. Our customer service team can discuss your options with you and find the solution that is best for your business.
I’M A NON-EU NATIONAL – HOW DOES EMPLOYMENT IN GERMANY WORK FOR ME?
Non-EU/EFTA nationals must apply for and obtain a Visa from the German Embassy or Consulate in your own home country or country of residence before you can move to Germany.
Access Financial will guide the applicant in preparation for an appointment with the nearest embassy or consulate for the entry visa for work purposes. Once the applicant has received the documents and instructions he/she will submit the application for the Work Permit. The applicant then must wait in their home country for approval of the work permit. Once the Work permit is granted, the entry visa with the right to work will be issued at the German Embassy in the home country. The Resident permit is applied for on arrival in Germany.
A work permit is granted subject to an investigation to ensure that the work concerned is skilled work, that the applicant has no criminal record, and that the work does not prejudice local employment or the employment of workers from the EU.
The validity of a work and residence permit is for the contract period with an option to extend for a further two or three years.
If you want to find out more, please contact one of our Access Financial sales consultants:
London +44 20 7017 3110
Cyprus +357 25 820 640 / +357 25 820 641
Luxembourg + 352 62 1677 847
Or email us firstname.lastname@example.org