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"Self-employed" for UK company while being based in Germany?
Thread poster: AnnikaLight

AnnikaLight  Identity Verified
Germany
Local time: 09:09
English to German
Sep 14, 2005

Hi ProZians!

I hope you can help me.

I'm a freelance translator based in Germany.

I've recently received an offer from a UK translation agency to work as their full-time "in-house translator" while still being based in Germany.

Here's the "set up":

1) I've been freelancing for this company for almost a year, and I enjoy working for them. So this is not an offer from "total strangers"...

2) They want me to work from Germany because they would like me to act as a German liason for German clients - though translating/editing would be my main job.

3) They don't have an office in Germany and thus want me to officially keep my "self-employed" status, while working only for them (!). I would, however, as they say, be treated like a regular employee. (Quote: "You would treated exactly as a XYZ employee in every respect other than official status. So you would still be self-employed, but we would take on the burden of keeping up administration responsibilities for this role, and would give you the security of a long term contract."

4) In terms of getting treated like a regular employee: I would also not be allowed to work for other companies (though officially I'm "self-employed") and I wouldn't be able to choose my "vacation time" but accept their "25 days" a year offer.

5) Another quote from the job offer: "Healthcare options after six months’ service."

I'm very interested in the job (though we haven't had any salary negotiations yet), but I'm confused about the "self-employed" issue.

My question to those who live in the UK and/or Germany:

1) Could I be officially "self-employed" in the UK but an "unofficial employee"?? This sounds very confusing to me from a "tax office point of view".

2) Considering this scenario - where would I be self-employed? In Germany because I'm based there? In the UK because I work for them full-time?

3) Wouldn't I be considered "scheinselbständig" in Germany?

4) Would you accept an offer like this? They say, since they're not a legal entity in Germany and they can't create a "German office" for one person, we'd have to go this route.

Sorry for the novel. Looking forward to and would appreciate any and all input I can get.

Thanks!!!


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AnnikaLight  Identity Verified
Germany
Local time: 09:09
English to German
TOPIC STARTER
Maybe I should move this to a different forum? Sep 14, 2005

I'm not sure if this should be posted under "Money Matters" but "Getting established" didn't seem right either. If you have any ideas on "moving" this post, I'd be happy to hear them.

Thanks.


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Aleksandra Kwasnik  Identity Verified
Local time: 09:09
Polish to German
+ ...
Why not consult a lawyer? Sep 14, 2005

As BDÜ member you have the possibility to consult a lawyer for free or a reduced fee as far as I remember (?).
I think I would do so if I were you because the offer is indeed rather unconventional and I'd prefer to reduce the risk of working as "scheinselbstständig" which might in fact be the case here as you won't be allowed to work for other clients.

A.

[Edited at 2005-09-14 19:15]


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Charlie Bavington  Identity Verified
Local time: 08:09
French to English
UK self employment Sep 14, 2005

If all this was happening in the UK, the Revenue would throw a fit. A self-employed (and UK resident) person who gets all their income from one source is now deemed an employee of that source irrespective of the status they claim (IR35 rules).

Note too that the estimated total cost of employing a person in (or more accurately in your case, "from" ) the UK is 2.5 times the salary.

I guess your agency knows both these things and so wants you to a) stay in Germany and b) be self employed.

I've no idea if the German tax authorities have a similar rule to the UK's IR35, but given that the trend is allegedly towards European harmonisation in these matters....well, it has to be possible, you'd have to check.

It all smacks to me of trying to get you in their permanent clutches but doing so on the cheap. I mean, how on earth are they going to *know* if you do any work for anyone else? They're not going to see your German tax return, are they? By all means go for it, but with your eyes open, and don't be afraid to tell them to stick some of their terms up their...well, anyway, they seem to need you at least as much as you need them...


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Peter Bouillon  Identity Verified
Germany
Local time: 09:09
Member (2005)
French to German
+ ...
I wouldn't want to do it Sep 14, 2005

Annika Light wrote:

2) Considering this scenario - where would I be self-employed? In Germany because I'm based there? In the UK because I work for them full-time?

3) Wouldn't I be considered "scheinselbständig" in Germany?


I'm not a lawyer, but IMO you'd almost certainly become "scheinselbständig" in Germany as soon as the authorities find out about it. This might be mainly the agency's risk, though, since the Finanzamt (internal revenue) will then probably go marching up to them in order to collect hefty Sozialabgaben -- even after a delay of several years!

They say, since they're not a legal entity in Germany and they can't create a "German office" for one person, we'd have to go this route.


Just why can't they set up an office for one person, please?


4) Would you accept an offer like this?


What's the point of freelancing, if you aren't free?

P.

[Edited at 2005-09-14 22:01]


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RobinB  Identity Verified
Germany
Local time: 09:09
German to English
Time for the lawyers Sep 14, 2005

As Aleksandra suggests, you really ought to get legal advice on this.

Charlie: It's as illegal in Germany as it is in the UK, but I think this company is trying to exploit a cross-border loophole.

Annika, if the company wants you to act for them in Germany in any capacity in respect of its customers, I suspect there may be an implicit agency agreement, which in turn brings up a whole raft of legal issues (mostly in your favour, admittedly).

Personally, I think the whole thing stinks to high heaven. This company is trying to exploit you, period. It's trying to impose the obligations of an employee on you, but without the rights. It's unprofessional, unethical, and possibly illegal.

Best see what an labour law specialist with cross-border experience has to say about this.

Robin


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xxxLia Fail  Identity Verified
Spain
Local time: 09:09
Spanish to English
+ ...
retainer fee Sep 14, 2005

Charlie Bavington wrote:


It all smacks to me of trying to get you in their permanent clutches but doing so on the cheap. I mean, how on earth are they going to *know* if you do any work for anyone else? They're not going to see your German tax return, are they? By all means go for it, but with your eyes open, and don't be afraid to tell them to stick some of their terms up their...well, anyway, they seem to need you at least as much as you need them...


Basically, waht are they offering you in terms of salary, to be exclisve in their terms! For this kind of deal, you need a generous reatainrer fee that compensates for other losses (clients, work etc)


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AnnikaLight  Identity Verified
Germany
Local time: 09:09
English to German
TOPIC STARTER
Monthly payment Sep 14, 2005

Thanks so much for all your input!! It's greatly appreciated!!!

I forgot to mention that they are planning on paying me a fixed income on a monthly basis...

I'm currently reading all your responses


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Gillian Searl  Identity Verified
United Kingdom
Local time: 08:09
Member (2004)
German to English
They should employ you in Britain Sep 15, 2005

In my opinion they should employ you in Britain full stop. You can be employed in Britain and have your place of work as Germany - why not?

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Neil Ashby
Spain
Local time: 09:09
Member (2011)
Spanish to English
+ ...
Can I be self-employed in the UK whilst non-resident (tax non-resident) Apr 20, 2011

Anika, sorry to piggy-back on your question but I've been looking for hours and this is the most relevant forum question that I have found that may be applied to my situation.

Lots of good information people, everyone is always so well-informed (apart from me).

I live and work in Spain and have done for 5 years and therefore under the UK's tax laws I'm well and truly considered non-resident. I've recently started translating and editing but to become 'autonomo' (self-employed) in Spain is very complicated and not at all beneficial for a start-up self-employment business.

I'm a UK citizen. Therefore I've thought that maybe I can register as self-employed in the UK and emit my invoices to other EU countries from there, pay taxes and social security there. The formalities are much simpler (and explained much more clearly) and cheaper (NIC's are £2.50/week as opposed to ~250 euro/month here in Spain). The tax office in Spain couldn't even tell me if I should pay tax on intracommunity bills.

Does anyone know is it viable and legal to become self-employed in the UK without living there or working there (I would just receive payment to a UK bank account) but whilst following UK tax and social secuirty laws???? From the UKgov.org website it seems okay but mine is a bit of a special case.....

Any help would be greatly appreciated.

TIA,
Neil


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James Heppe-Smith  Identity Verified
Germany
Local time: 09:09
Member (2010)
German to English

Moderator of this forum
Doable, but... Apr 27, 2011

I am not an expert, but do have some experience in HR/Social security/Tax in Germany, so my 2p worth.

From an employer's perspective I think they should get some competent legal advice about their proposals - if the German Finanzamt find out/decide that you are Scheinselbstständig they will charge the employer for both employer and employee social security contributions backdated to the start of the employment relationship. It can be expensive (have experienced this one for a slightly different reason, it smarts).

If they offer you a HGB based business representative type contract (Handelsvertreter §§ 84 - 92c HGB) then there is no reason on earth why you cannot be self-employed for their firm in Germany. A couple of provisos - there should be very clear definition about your duties, what is provided for by the UK based firm, and I would personally not recommend having a clause about working for other clients - not least because this is an indicator of Scheinselbstständigkeit for the FA.

A decent Steuerberater or lawyer should be able to give you some more detailed advice relevant to your particular situation. I also think the company would do well to spend a few euro on some advice too.

All this said, there is also no reason why they cannot employ you properly as a full-time employee over here in Germany, other than the fact it will probably cost them a little more! (I think the rate is around 1.40 x the gross pay in total.) Plus, watch out for the working hours directive, holidays etc etc.

Good luck!

James


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James Heppe-Smith  Identity Verified
Germany
Local time: 09:09
Member (2010)
German to English

Moderator of this forum
This is not a good idea! Apr 27, 2011

Dr Neil wrote:

I live and work in Spain and have done for 5 years and therefore under the UK's tax laws I'm well and truly considered non-resident. I've recently started translating and editing but to become 'autonomo' (self-employed) in Spain is very complicated and not at all beneficial for a start-up self-employment business.

I'm a UK citizen. Therefore I've thought that maybe I can register as self-employed in the UK and emit my invoices to other EU countries from there, pay taxes and social security there. The formalities are much simpler (and explained much more clearly) and cheaper (NIC's are £2.50/week as opposed to ~250 euro/month here in Spain). The tax office in Spain couldn't even tell me if I should pay tax on intracommunity bills.

Does anyone know is it viable and legal to become self-employed in the UK without living there or working there (I would just receive payment to a UK bank account) but whilst following UK tax and social secuirty laws???? From the UKgov.org website it seems okay but mine is a bit of a special case.....


Neil, I suggest that you are very careful about doing this - the tax liability (normally) is based on the location where you are ordinarily resident. This, it appears, for you is Spain.

Yes, I suspect you could work out of the UK in a "Virtual Office" sort of way, but as soon as you drew money into Spain you would be liable for taxation (and probably social security contributions) there. You would also need to pay tax etc in the UK if appropriate.

As I suggested to the OP - and particularly in your case - a very detailed discussion with a local tax expert would be a good idea.


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