Working for a Spanish company in Germany

[m90]

Hello guys,

I hope you all are well I've been living and working as an employee in the UK for 1.5 years. I was given an opportunity by a Spanish company to work for their customer based in Germany (initially 6 months contract). I've been wondering - is it possible to have a company based in the UK (so being paid in GBP, paying taxes and stuff here) while I work in Germany for the client? Is it worth the whole management process?

Cheers!

[Midland White]

Hello guys,

I hope you all are well I've been living and working as an employee in the UK for 1.5 years. I was given an opportunity by a Spanish company to work for their customer based in Germany (initially 6 months contract). I've been wondering - is it possible to have a company based in the UK (so being paid in GBP, paying taxes and stuff here) while I work in Germany for the client? Is it worth the whole management process?

Cheers!

Technically yes, but probably not worth the legal and management process.

[stek]

Hello guys,

I hope you all are well I've been living and working as an employee in the UK for 1.5 years. I was given an opportunity by a Spanish company to work for their customer based in Germany (initially 6 months contract). I've been wondering - is it possible to have a company based in the UK (so being paid in GBP, paying taxes and stuff here) while I work in Germany for the client? Is it worth the whole management process?

Cheers!

Be aware the German Tax Man is not far off from the Gestapo, so whatever you do get it right....

[m90]

Ok, but in that case I should be charging the Spanish company, right? Because on their behalf I will be working for the German client.
But I've just read (another thread on this forum): "if you spend more than 183 days or more actually in the country (irrelevant of whether your on business or for personal reasons) within 1 german financial year (jan - dec) then you are deemed as you live in germany, along with this comes various things such as you must fill in a tax return on worldwide income etc etc". Now I am confused. If the Spanish company will be the one paying me, how can I even pay any tax in Germany? Or is it all about where my physical location is?

[stek]

Ok, but in that case I should be charging the Spanish company, right? Because on their behalf I will be working for the German client.
But I've just read (another thread on this forum): "if you spend more than 183 days or more actually in the country (irrelevant of whether your on business or for personal reasons) within 1 german financial year (jan - dec) then you are deemed as you live in germany, along with this comes various things such as you must fill in a tax return on worldwide income etc etc". Now I am confused. If the Spanish company will be the one paying me, how can I even pay any tax in Germany? Or is it all about where my physical location is?

Because there is a body of opinion that whilst you as an employee of your Ltd can use the 183 day rule, your Ltd can't - either it's a operating in UK or it's not, and if it's not it's liable for DE tax...

It's a minefield, I sailed close the wind when I did 8 months in Dublin, (155 actual days) it's just not clear exactly what you have to do, too many opinions, too many aggressive and unfamiliar tax regimes, add language into the mix and you're on a hiding to nothing. While tax-harmonisation is not in place yet within EU, there's just enough info shared to bite you back.

Unless the rate is super-stratospheric I won't consider a role in EU now, I value my piece of mind too much, and my testicles even more......

[BlasterBates]

Agree with the above it is a bit of a minefield. You need to talk to a very good accountant in Germany.

In theory you might be able to use your Ltd in German for 6 months particularly if you are working for a Spanish company and it isn't an agency or the contract is about personnel leasing (they generally don't count) BUT....probably the easiest and safest route is simply to set up as a German Freiberufler. You won't be resident in Germany, well not fully, so you would only pay tax on your German income and because you're not fully resident and your earnings for the project will be low (annually) the tax rate won't be high.

Whatever you decide do get a good accountant in Germany to handle your affairs.

We have had contractors who worked in Germany for less than 6 months and are facing charges on tax evasion.

The 183 day rule doesn't exempt you from paying tax on German sourced income, it only exempts you from paying tax in Germany on worldwide income, i.e. non German income. This is generally misunderstood by most contractors. Whether your income is Spanish or German when you work in Germany is a grey area.

[m90]

Unless the rate is super-stratospheric I won't consider a role in EU now, I value my piece of mind too much, and my testicles even more......

Yeah, the position is interesting, but not "super-stratospheric". It's better than my current position though.... I will think about this.

Thank you stek & BlasterBates for your precious output.

[International Adviser]

Working in Germany

The first question is whether the company in Spain is the Economic Employer.

If the Spanish Company is recharging your services to an end user client in Germany, then an Income Tax Liability will arise from day 1 as when applying the Double Tax Treaty the definition of Employer is not the company who pays you, but the company that ultimately benefits from your services.

The same general rule applies across Europe and as many contractors have found out the German Authorities are not shy in requesting the UK Authorities to pursue a debt under MARD (Mutual Assistance Recovery Directive).

Another concern often overlooked is Social Security. The general rule is that you pay Social Security (NI) in the country in which you work. So if you are British working for a Spanish Company, then you would be liable to pay Social Security in Germany, this is because you are not Spanish Resident and can't pay in to their Social system. You could not obtain a UK Certificate of Continuing Liability to UK NI which would exempt you from German Social for two reasons, one because you need a UK Employer and two because you can't hire through one company to a second to provide you on to a third company.

If you chose to set up a UK Company to provide you directly then it is highly likely that company will be deemed to have a permanent establishment in Germany and any money that is generated would be subjected to German Corporation Tax.

As many contractors have found out, what is acceptable to the UK Authorities is not necessarily acceptable to the German Authorities.