UK Based LTD company contracting in Germany - How does this work?

[JackOfAllIT]

Need some advice here please...

I have been offered a contract in Germany and the LTD company is registered to a UK address. It may run to over a year or it may not. 50% chance either way.

How easy is it to work for this customer and invoice from my UK LTD company? What needs to be considered? Is it efficient? Is there a better way? Are there any pitfalls?

Its quite a good offer so I am seriously tempted...

[stek]

You'll pay German tax from day one. Otherwise the Finanzamt will be onto you like a rash.

[northernladuk]

Firstly there is a stickies thread titled moving to Germany. Might not be what you are planning but it does go off topic a little so has some interesting stuff.

Secondly there are quite a few threads on this but there isn't really one that covers it all. Best thing to do is go to the Welcome FAQ section. There is a sticky in there which explains how to search the forums using Google. You need to type Germany site:forums.contractoruk.com and in Google and it will find you everything you need to know.

[JackOfAllIT]

Really appreciate the numbering system thanks

[BlasterBates]

Using your Ltd is a not a good idea, you would have to register in Germany. As Stek says you'll be paying German tax and VAT from day one.

Set up as a freelancer ("Freiberufler"). This is very simply to do, just go through a German accountant and let him deal with the VAT and tax.

It's very easy just to keep your Ltd and "pretend" it's a UK contract but in the end it'll cost you an awful lot, you may wish you'd never done it. Either be prepared to register for tax in Germany or turn the contract down.

[m0n1k3r]

Register a branch of the UK Ltd in Germany so that it receives a German "life". The branch is not a separate entity, but should have separate bookkeeping and manage its tax affairs in Germany well.

Your chosen German accountant should be able to do this.

Many German freelancers have been doing this in the past due to the costs of setting up a Gmbh (and don't even think about an AG). It has become less common now since they introduced a 'starter' Gmbh that will gradually build up the required minimum capital (€25,000). Gmbh has a better 'ring' to it in Germany than an Ltd.

It is only when you try contracting abroad on foreign terms through some sort of limited company (whether UK or foreign) you realise how beneficial limited company contracting is in the UK.

Since I assume that you're the owner and main director, you would have to take salary on German terms. Your accountant will advice you on your ability to draw dividends efficiently, but don't count on it being very efficient. It is better to leave the money in the company to extract later, when you have been outside of Germany for a year.

German clients make payments in euro into your Ltd's UK bank account. They need the BIC and IBAN of the account. For them it is as easy (and cheap, e.g. virtually free of charge) as making a domestic payment. For you, settling invoices from Germany, your UK bank would probably slam you with international payment charges.

[scooterscot]

Using your Ltd is a not a good idea, you would have to register in Germany. As Stek says you'll be paying German tax and VAT from day one.

Set up as a freelancer ("Freiberufler"). This is very simply to do, just go through a German accountant and let him deal with the VAT and tax.

It's very easy just to keep your Ltd and "pretend" it's a UK contract but in the end it'll cost you an awful lot, you may wish you'd never done it. Either be prepared to register for tax in Germany or turn the contract down.

This is really the best, least stressful, pain free, simplest option. In fact once you dip your toe in simple profit/loss bookkeeping you'll be looking for reasons to dump your Ltd co.

[SueEllen]

Register a branch of the UK Ltd in Germany so that it receives a German "life". The branch is not a separate entity, but should have separate bookkeeping and manage its tax affairs in Germany well.

Your chosen German accountant should be able to do this.

Many German freelancers have been doing this in the past due to the costs of setting up a Gmbh (and don't even think about an AG). It has become less common now since they introduced a 'starter' Gmbh that will gradually build up the required minimum capital (€25,000). Gmbh has a better 'ring' to it in Germany than an Ltd.

It is only when you try contracting abroad on foreign terms through some sort of limited company (whether UK or foreign) you realise how beneficial limited company contracting is in the UK.

Since I assume that you're the owner and main director, you would have to take salary on German terms. Your accountant will advice you on your ability to draw dividends efficiently, but don't count on it being very efficient. It is better to leave the money in the company to extract later, when you have been outside of Germany for a year.

German clients make payments in euro into your Ltd's UK bank account. They need the BIC and IBAN of the account. For them it is as easy (and cheap, e.g. virtually free of charge) as making a domestic payment. For you, settling invoices from Germany, your UK bank would probably slam you with international payment charges.

Why do something as complicated as this when other posters including those currently in Germany e.g. scooterscot indicate doing something simpler is cheaper?

[AtW]

What's strange is that in supposedly free market it's not ok to just do work in Germany whilst being employee of UK firm, wtf???

[FatLazyContractor]

What's strange is that in supposedly free market it's not ok to just do work in Germany whilst being employee of UK firm, wtf???

Free market only applies to Prostitution and pimping.