Freelancing in Germany on dependent visa
Thread poster: Ashwini Shankar
Ashwini Shankar
Local time: 22:04
German to English
Jul 21, 2006

Hi,
I need an important clarification!!
I provide freelance services (G-E translation) for an agency here in India. My husband is going to Germany on work permit for a year or more and i would be joining him on dependent visa.
Can I continue to provide my services to Indian clients from Germany? If yes, then how do I handle the tax issues?
Could anybody throw some light on this...?


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Woodstock  Identity Verified
Germany
Local time: 18:34
German to English
+ ...
You will need both a residence and a work permit Jul 22, 2006

Hi, Ashwini,

Based on your husband's status, the residency permit should be easy - but time-consuming because of lengthy waiting periods. Always bring a good book to the government agencies!
I'm afraid I don't know about the work permit in your case. I have an unlimited one, but I've lived here for over 20 years and had a German husband when I got here, so it was practically automatic. The laws have probably changed since then as well.

If you are granted a work permit, you'll have to establish a business by applying for a "Gewerbeschein", generally at the town hall where you reside. Fees vary, depending on the town/city. Then come the taxes, which are very high. You would also need a tax consultant - I have one, because the system is far too complex for me to deal with on my own, and that costs quite a bit, too.

To be honest, you'd be better off running your business as if you were still in India! You should definitely get all the relevant information on permits and formalities from the German Embassy or Consulate before you leave, otherwise there might be problems. The Germans are sticklers for rules, and tend to take them very, very seriously. This CAN have advantages - I'm trying to give you a sense of what to expect when you get here, if you don't know already. (I'm half German, and grew up in both the US and here. In fact, I've lived in Germany a LOT longer than I lived in the States, so obviously I like it here.)

I hope this helps you some, and good luck!

PS: Where are you going to be living?


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RobinB  Identity Verified
Germany
Local time: 18:34
German to English
Dependent visa conditions Jul 22, 2006

Ashwini,

I'm pretty sure that the conditions governing your residence in Germany will be spelled out in the dependent visa. If you're not sure, contact the German embassy. Otherwise, I'd have thought that your husband's employer would be able to provide that sort of information and other support as part of the relocation package.

In a nutshell:

I doubt very much whether your dependent visa will permit self-employment - that's not normally the case with non-EU citizens. But if you are permitted to work as a self-employed translator, the rules are pretty simple. Contrary to what Woodstock writes, you will *not* need a Gewerbeschein as the law stands today, as you would be classed as Freiberufler(in). You would need to register with the local tax office (Finanzamt) and, as you would be resident in Germany for more than 6 months, I imagine you would be tax-resident in Germany and thus liable for income tax here.
If that's the case, and you were to follow Woodstock's advice to run.. "your business as if you were still in India!", you would possibly be committing tax evasion, which is probably not such a good idea.

The other question is whether you can really afford to work for Indian clients if you're based in Germany. My understanding of translation prices paid in India is that you might - just - be able to make enough to pay your utilities and phone bills, but not really any more than that.

But it all hinges around the question of whether you can legitimately work on a self-employed basis here in Germany. Best to take professional legal advice on that if you can't get the necessary information from the German embassy or your husband's employer.

HTH,
Robin


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Woodstock  Identity Verified
Germany
Local time: 18:34
German to English
+ ...
I am NOT encouraging tax evasion Jul 23, 2006

RobinB wrote:

....

Contrary to what Woodstock writes, you will *not* need a Gewerbeschein as the law stands today, as you would be classed as Freiberufler(in). You would need to register with the local tax office (Finanzamt) and, as you would be resident in Germany for more than 6 months, I imagine you would be tax-resident in Germany and thus liable for income tax here.
If that's the case, and you were to follow Woodstock's advice to run.. "your business as if you were still in India!", you would possibly be committing tax evasion, which is probably not such a good idea.


Robin


A) I use my Gewerbeschein for a number of things, and my new bank wanted one when I changed banks last year, so for some things it is still useful to have, if what you say is true (i.e. it is no longer required). It certainly was at one time. As I said, I originally got mine quite a few years ago. The Gewerbeschein I have IS for registering as a self-employed person.

B) If she continues to pay taxes in India, I don't see why this would be tax evasion, depending on the laws and if there is a double-taxation treaty between India and Germany, which, of course, I know nothing about. This is information to be gotten from the various government authorities.

I don't appreciate being accused of advocating illegal behavior in a public forum without clarifying my intention first. That's only courtesy. I pay all my German taxes, and they are considerable.

Added on edit: I just did a little research and according to Wikipedia, every business, including a one-person one, must register with the local (communal) government as such (Ref. § 3, only in German, unfortunately):
http://de.wikipedia.org/wiki/Gewerbe

and another article:

http://www.hast-recht.de/gewerbeanmeldung/artikel.html

So who's right here, hmmm? Maybe you should have checked first before telling me I'm wrong in a public forum, and possibly damaging my reputation. That's two things you were wrong about in one post, and I think an apology is called for. Thank you.

You will also note that I make the point that EVERYTHING should be checked with the proper authorities, and more than once. I did NOT claim expertise, only my own experience. So get off your high horse, Mr B.



[Edited at 2006-07-23 15:26]

[Edited at 2006-07-23 15:33]


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RobinB  Identity Verified
Germany
Local time: 18:34
German to English
No Gewerbeschein needed for translators Jul 23, 2006

Woodstock wrote: A) I use my Gewerbeschein for a number of things, and my new bank wanted one when I changed banks last year, so for some things it is still useful to have, if what you say is true (i.e. it is no longer required). It certainly was at one time. As I said, I originally got mine quite a few years ago. The Gewerbeschein I have IS for registering as a self-employed person.


But only if you're a Gewerbe, and translation isn't a Gewerbe. This is pretty basic stuff. A Gewerbeschein has *never* be required in Germany for freelance translators, at least since they acquired Freiberufler status in the ?early 1960s?. No bank will want to see a Gewerbeschein from a Freiberufler(in), though evidently in your case you are engaged in activities in addition to translation that are classed as a Gewerbe.

B) If she continues to pay taxes in India, I don't see why this would be tax evasion, depending on the laws and if there is a double-taxation treaty between India and Germany, which, of course, I know nothing about. This is information to be gotten from the various government authorities.


Exemptions under double taxation agreements don't extend to activities such as self-employment in the sort of scenario being described here. If Ashwini is permitted to work as a freelance translator in Germany, she will be tax-resident in Germany.

I don't appreciate being accused of advocating illegal behavior in a public forum without clarifying my intention first.


Then I suggest you shouldn't advocate a course of action that can so be easily interpreted as such.

I pay all my German taxes, and they are considerable.


I wasn't suggesting otherwise for a minute, was I. And I'm perfectly aware of how miserable it is to pay tax at the top marginal rate, *plus* the Soli.

Added on edit: I just did a little research and according to Wikipedia, every business, including a one-person one, must register with the local (communal) government as such (Ref. § 3, only in German, unfortunately):
http://de.wikipedia.org/wiki/Gewerbe


Where it says: "Nach der Gewerbeordnung (GewO) und dem Bürgerlichen Gesetzbuch gelten auch die Land- und Forstwirtschaft, sowie freie Berufe wie Ärzte, Rechtsanwälte, Steuerberater als Gewerbebetriebe, sind jedoch gemäß § 6 GewO dem Anwendungsbereich entzogen. Nach Definition des Einkommensteuer- und Gewerbesteuergesetzes zählen sie nicht dazu, siehe unten Steuerrecht."

And that's why translators don't need a Gewerbeschein (nor should they obtain one, because they're then liable to Gewerbesteuer and a range of other obligations that are simply not needed for Freiberufler). You've been in Germany long enough - somewhat surprised you don't know this.

and another article:

http://www.hast-recht.de/gewerbeanmeldung/artikel.html

So who's right here, hmmm?


I am.

That's two things you were wrong about in one post, and I think an apology is called for.


You're wrong on both counts, so perhaps you should apologise to Ashwini for providing misleading information in the first place.

Robin


[Edited at 2006-07-23 15:31]

[Edited at 2006-07-23 15:31]


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Ralf Lemster  Identity Verified
Germany
Local time: 18:34
English to German
+ ...
'Freiberufler' don't need a 'Gewerbeschein' Jul 23, 2006

Hi all,
Please keep things matter-of-fact.

Robin is right as far as the need for a Gewerbeschein is concerned: certain professionals referred to as Freiberufler (this includes translators and interpreters, as well as doctors, lawyers, and tax advisors) do not need to establish a commercial business (Gewerbe), unless they do their business in the form of a limited company (as I do).

Best regards,
Ralf


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Woodstock  Identity Verified
Germany
Local time: 18:34
German to English
+ ...
Hi Ralf Jul 23, 2006

Ralf Lemster wrote:

Hi all,
Please keep things matter-of-fact.

Robin is right as far as the need for a Gewerbeschein is concerned: certain professionals referred to as Freiberufler (this includes translators and interpreters, as well as doctors, lawyers, and tax advisors) do not need to establish a commercial business (Gewerbe), unless they do their business in the form of a limited company (as I do).

Best regards,
Ralf


Ok, I accept that I was wrong about the Gewerbeschein, but I have had one for years. The local people at the town hall never told me I didn't need one when I changed my profession to teaching and then translating, and my tax consultant never mentioned it (if it ever came up), so I just assumed it was required for all types of business. Frankly, I just never thought about it. The Gewerbeschein is really a minor aspect of starting a business, and not worthy of dispute: in my very rural town I only paid 35 euros, so I won't go back to demand a refund. Ovviously, the local employees are not that well-informed about the differences between Freiberufler and Gewerbe, either.

The most important point, which I made very clear, was that Ashwini should check her status, both in terms of employment AND taxes, with the appropriate authorities before she comes here. All of these types of questions should be definitively cleared with the appropriate experts, and not on a public board, where people who are not necessarily experts (self-proclaimed or otherwise) are willing to give advice that may or may not be accurate, albeit well-meaning. And because I made that point abundantly clear, I felt that RobinB's criticism was unjustly harsh, and responded in kind. There are other, more tactful ways to correct people, as you prove all the time, Ralf.


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Ashwini Shankar
Local time: 22:04
German to English
TOPIC STARTER
German Consulate Jul 24, 2006

Hi!

I am so glad to have received your inputs in this matter...
Thank you for the info.

And following your suggestions to contact the respective legal bodies, I am contacting the German Consulate and will update you with information received.

Thanks again!

Ashwini


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