# Working remotely within the EU as a German resident



## Berlin_expat_2022 (2 mo ago)

Hi, I am a Canadian citizen married to a German. I have a temporary residence/working permit (Aufenthaltstitel) and live in Berlin. Recently I got a job offer to work remotely for an International company. Unfortunately, the company is not licensed to operate in Germany (cannot directly employ people from Germany). But they are licensed (registered) in other EU countries and can employ people from Austria and Spain. Is there a way for a German resident (Canadian citizen) to work remotely for a company from Austria or Spain?

Thanks in advance.


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## Harry Moles (11 mo ago)

Do you need to be hired as a salaried employee or can you do this on contract?


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## Bevdeforges (Nov 16, 2007)

The main thing tends to be that you are considered to be working in the country you are physically present in while doing the work. So, in your case, Germany. That means that you would have to observe the tax and labor laws of Germany - so unless there is some way that the company can put you on a "German payroll" (either through their German branch if the have one, or through a special registration with the German authorities to pay your taxes and social insurances) your only option may be to establish a personal business entity and bill the "employer" for your work (which means that you become responsible for taxes and social insurances - plus possibly also VAT). 

You may want to discuss this with the company HR people because there are some "issues" related to working on contract like that which you may or may not be able to work out with the company.


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## Berlin_expat_2022 (2 mo ago)

Harry Moles said:


> Do you need to be hired as a salaried employee or can you do this on contract?


A salaried employee.


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## Berlin_expat_2022 (2 mo ago)

Bevdeforges said:


> The main thing tends to be that you are considered to be working in the country you are physically present in while doing the work. So, in your case, Germany. That means that you would have to observe the tax and labor laws of Germany - so unless there is some way that the company can put you on a "German payroll" (either through their German branch if the have one, or through a special registration with the German authorities to pay your taxes and social insurances) your only option may be to establish a personal business entity and bill the "employer" for your work (which means that you become responsible for taxes and social insurances - plus possibly also VAT).
> 
> You may want to discuss this with the company HR people because there are some "issues" related to working on contract like that which you may or may not be able to work out with the company.


Thank you so much! The company, unfortunately, doesn’t have a branch in Germany. You mentioned "a special registration with the German authorities to pay your taxes and social insurances". Is it something ubiquitous in a business/legal practice or it would require additional efforts from the employer?


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## Harry Moles (11 mo ago)

I think you need to clarify a few things. There are two separate questions here.

When you say "the company is not licensed to operate in Germany (cannot directly employ people from Germany)" do you mean that there is some sort of regulatory issue that would prevent you from even doing remote work while in Germany? If yes then this whole discussion is pointless for as long as you live in Germany. If no, then working for this company should be possible but you would need to deal with the problem of German tax and social insurance and labour laws and all that.

Normally there are two approaches one takes to the problem of working for a foreign employer. First, if you want salary and benefits and all the rest, you need to go through a local "employer of record" firm. They will hire you under German law and bill the company for your services. Needless to say this isn't offered for free; I don't know how large a cut they take, but it won't be nothing, and you'll need to negotiate with your employer. The alternative is to work as a contractor rather than an employee. You'd need to set yourself up appropriately under German rules (as an "Ich AG" I believe) and bill your employer as a client. There are all sorts of prohibitions against _Scheinselbstständigkeit_ - i.e. a freelancer with only one client is not really a freelancer - but I don't believe that this applies to foreign clients, who could not otherwise hire you as an employee. Be aware that the health insurance and pension rules are very unfavourable to freelancers, as you'd be responsible for the full contribution instead of half (so around 15 percent total); if you can piggyback onto spousal coverage that might be an option. Lots to think about and you'll almost certainly need to talk to a Steuerberater to run the numbers.


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## Berlin_expat_2022 (2 mo ago)

Harry Moles said:


> I think you need to clarify a few things. There are two separate questions here.
> 
> When you say "the company is not licensed to operate in Germany (cannot directly employ people from Germany)" is that a regulatory issue that would prevent you from doing remote work in Germany? If yes then this whole discussion is pointless for as long as you live in Germany. If no, then this could be possible but you would need to deal with the problem of German tax and social insurance charges and labour laws and all that.
> 
> Normally there are two approaches one takes when working for a foreign employer. First, if you want salary and benefits and all the rest, you need to go through an "employer of record" firm. They will hire you under German law and bill the company for your services. Needless to say this isn't offered for free. I don't know how large a cut they take, but it won't be nothing, and you'll need to negotiate with your employer. The alternative is to work as a contractor rather than an employee. You'd need to set yourself up appropriately under German rules (as an "Ich AG" I believe) and bill your employer as a client. There are all sorts of prohibitions against _Scheinselbstständigkeit_ - i.e. a freelancer with only one client is not really a freelancer - but I don't believe that this applies to foreign clients, who could not otherwise hire you as an employee. Be aware that the health insurance and pension rules are very unfavourable to freelancers, as you'd be responsible for the full contribution instead of half (so around 15 percent I believe); if you can piggyback onto spousal coverage that might be an option. Lots to think about and you'll almost certainly need to talk to a Steuerberater to run the numbers.


This is very helpful. Thank you!!!


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## Harry Moles (11 mo ago)

Berlin_expat_2022 said:


> This is very helpful. Thank you!!!


Best of luck. As a part-time Berliner, I'm slightly jealous...


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## ALKB (Jan 20, 2012)

Harry Moles said:


> I think you need to clarify a few things. There are two separate questions here.
> 
> When you say "the company is not licensed to operate in Germany (cannot directly employ people from Germany)" do you mean that there is some sort of regulatory issue that would prevent you from even doing remote work while in Germany? If yes then this whole discussion is pointless for as long as you live in Germany. If no, then working for this company should be possible but you would need to deal with the problem of German tax and social insurance and labour laws and all that.
> 
> Normally there are two approaches one takes to the problem of working for a foreign employer. First, if you want salary and benefits and all the rest, you need to go through a local "employer of record" firm. They will hire you under German law and bill the company for your services. Needless to say this isn't offered for free; I don't know how large a cut they take, but it won't be nothing, and you'll need to negotiate with your employer. The alternative is to work as a contractor rather than an employee. You'd need to set yourself up appropriately under German rules (as an "Ich AG" I believe) and bill your employer as a client. There are all sorts of prohibitions against _Scheinselbstständigkeit_ - i.e. a freelancer with only one client is not really a freelancer - but I don't believe that this applies to foreign clients, who could not otherwise hire you as an employee. Be aware that the health insurance and pension rules are very unfavourable to freelancers, as you'd be responsible for the full contribution instead of half (so around 15 percent total); if you can piggyback onto spousal coverage that might be an option. Lots to think about and you'll almost certainly need to talk to a Steuerberater to run the numbers.


Careful about any piggybacking!

Free family insurance for spouses is only possible if the spouse does not have any income. Conceiling income (wherever it comes from) is fraud and when this comes out, it will neither be pretty nor cheap.


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## Berlin_expat_2022 (2 mo ago)

ALKB said:


> Careful about any piggybacking!
> 
> Free family insurance for spouses is only possible if the spouse does not have any income. Conceiling income (wherever it comes from) is fraud and when this comes out, it will neither be pretty nor cheap.


Thank you!


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## Bevdeforges (Nov 16, 2007)

Berlin_expat_2022 said:


> Thank you so much! The company, unfortunately, doesn’t have a branch in Germany. You mentioned "a special registration with the German authorities to pay your taxes and social insurances". Is it something ubiquitous in a business/legal practice or it would require additional efforts from the employer?


I don't know if it exists in Germany, but in France there is a way for a foreign company to register with the social insurance agency as a "French employer with no French presence" (or something to that effect), which permits them to make direct "payroll tax" payments to the appropriate agencies directly while maintaining a French based employee. However, as far as I know this is a "peculiarity" of the French system and not available in Germany. The other thing is that few foreign employers want to use this option because the French "payroll taxes" tend to hit the employer much harder and so maintaining a French based employee like that is more expensive for the employer. 

It may be that working as a "contractor" is your only real option here - and that requires you to handle your own taxes and social contributions, which can be a significant effort on your part, over and above whatever work you would be doing remotely.


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## ALKB (Jan 20, 2012)

Berlin_expat_2022 said:


> Thank you so much! The company, unfortunately, doesn’t have a branch in Germany. You mentioned "a special registration with the German authorities to pay your taxes and social insurances". Is it something ubiquitous in a business/legal practice or it would require additional efforts from the employer?


When I was working for an Embassy in Berlin, I was working for/in a non-EU country, so my Employer paid me my salary without any deductions, I went to the local tax authority (Finanzamt) they calculated the tax I owed and I think it was automatically taken from my account every three months, which was a lot of money at once. My health insurance had a specialist just for Embassy employees and set up my social contributions for me. So instead of my employer, my health insurance took care of my unemployment insurance, retirement, etc. I had to pay 100% of social contributions, a German employer would pay 50% of that, so my take home pay was pitiful.

How about you contact your health insurance provider and ask whether something like this would be doable in your situation. If yes, maybe you can negotiate higher pay with your employer since you will be bearing all "payroll taxes" on your own. If no... maybe this work situation is too complicated.


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## Berlin_expat_2022 (2 mo ago)

Thank you so much, everyone.
I am amazed how quickly and thoroughly people addressed my challenge here.


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