UK LTD in Germany

[h202]

Hello Forum, newbie here.
I obviously searched the forum before posting.

I am offered a short term 4 to 5 month contract in Bavaria, Germany and agent’s advice is to use UK ltd company for this work.
I understand if I did this I will have to charge zero VAT and
I can chose whether my LTD receive payment as EURO or GBP (Agent will convert € to £ on the exchange rate prevailing on that date).

I know the popular opinion in the forum is to register as a freelancer, but I was wondering as it is really short term
(to tide me over to other side of Christmas), do I need to take any hassle in setting up German freelance.
Also, would I need to register with any authority in Germany?
Personally, if it is legit, I would prefer contracting through UK LTD company due to short term duration and continuity of UK LTD
This possibly also helps with expenses for weekly flight to home in UK plus hotel in Germany for weekdays while I am working there.
Note that I will maintain my permanent UK home as family will stay in UK and my agent is a UK based company with UK VAT registration.

Any help greatly appreciated.

[expat]

I got some useful advice in depth from a German adviser. Since this is his professional work, I'm not going to quote it all here.

Mods: may I recommend the adviser concerned?

[BlasterBates]

Theoretically you might be able to use your Ltd, but it is highly risky. We have had contractors on here who have had to face criminal charges because they used their Ltd for 5 months.

Setting up as a freelancer in Germany is not difficult and is risk free. The tax rate will be fairly low as you are only taxed on the 5 month earnings.

I would strongly advise registering in Germany and taxing yourself as a freelancer as the risk of ending up on the wrong side of the Finanzamt is too great. Not worth saving a few bob on extra admin to risk facing losing most of your earnings in a tax evasion case.

If you do wish to use your Ltd, do go through a German accountant and get approval from the Finanzamt. That way you know it's legal and above board.

[h202]

Theoretically you might be able to use your Ltd, but it is highly risky. We have had contractors on here who have had to face criminal charges because they used their Ltd for 5 months.

Setting up as a freelancer in Germany is not difficult and is risk free. The tax rate will be fairly low as you are only taxed on the 5 month earnings.

I would strongly advise registering in Germany and taxing yourself as a freelancer as the risk of ending up on the wrong side of the Finanzamt is too great. Not worth saving a few bob on extra admin to risk facing losing most of your earnings in a tax evasion case.

If you do wish to use your Ltd, do go through a German accountant and get approval from the Finanzamt. That way you know it's legal and above board.

Ok, now that the general opinion is not to use UK LTD for “freelance” work in Germany I may be inclined to set up German freelance.
However what about the “technicalities of 5/6 of income coming from one contract”. I will indeed have all the income coming from one contact/company.
How do I get around this rule if I wanted to setup freelance?

Also once I have set up myself as freelancer, would I be able to claim all travel/hotel expenses?

[BlasterBates]

Ok, now that the general opinion is not to use UK LTD for “freelance” work in Germany I may be inclined to set up German freelance.
However what about the “technicalities of 5/6 of income coming from one contract”. I will indeed have all the income coming from one contact/company.
How do I get around this rule if I wanted to setup freelance?

Also once I have set up myself as freelancer, would I be able to claim all travel/hotel expenses?

The 5/6 rule is not something that is checked as to whether you're a freelancer "Freiberufler". This is to establish whether you are disguised employee, which is determines whether you are liable for pension contributions.

Since you'll be there for less than 6 months this will be irrelevant. Social security is not handled by the tax office it's handled by the pensions dept, and they will never chase up someone who was never resident.

Theoretically one couldn't rule it out, but it is highly highly highly unlikely.

As for expenses since you won't be resident in Germany as you are there for less than 6 months I would have thought that would not be a problem to claim as you're based in the UK. This is generally acceptable when you maintain your main residency in a foreign country.

Still, you should check these things with a German accountant. Do not do anything without the support of one even if you use your Ltd, which might still be an option as long as it is done above board.