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Germany - Tax Guide for Freelance Contractors

Welcome to our guide to German Taxation. You will find a wealth of information which will be useful if you plan to work in, or place consultants in, Germany.

Our tax guides give a general overview of the actual taxation rates and rules at the time of writing. There are of course many ways to legally reduce tax or social security burdens in Germany. Please contact us for more information or an actual breakdown of your situation, and to find out more about our range of payroll and contact management services in Germany.

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Nationals of the first 15 EU Member States, Cyprus and Malta as well as of Switzerland, Liechtenstein, Iceland and Norway (EFTA) do not need a work permit to take up employment in Germany. After arrival in Germany, and if they stay more than 3 months, then a residence permit (Aufenthaltserlaubnis) must be applied for at the local commune. A registration form (Anmeldung) must be completed, and a tax deduction card (Lohnsteuerkarte) also obtained at the local commune.

For citizens of the following ten new EU Member States - Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Slovakia and Slovenia (who joined on 1 May 2004) - and Bulgaria and Romania (who joined on 1 January 2007), transitional rules still apply and they may only take up employment if they have an EU work permit issued by the Federal Employment Agency (Bundesagentur für Arbeit) (BA). Usually, a work permit is issued for one year (Arbeitserlaubnis-EU). After one year a work permit without restrictions as to the employer and without an end date may be issued (Arbeitsberechtigung-EU). Citizens of the new Member States are, however, to be given priority over citizens of third-party countries entering Germany in search of employment. The German government has extended these transitional rules for the third and final period until 30 April 2011 for the States having joined on 1 May 2004 and for a third period until 31 December 2012 for Bulgaria and Romania. On the other hand, since 1 January 2009 the labour market has been opened to highly skilled workers from these countries, i.e. graduates from a university or a university of applied sciences. The screening to determine whether other job candidates with priority are available to fill the position has been abolished.

Citizens from all other countries need to go through a full work permit and residence permit application.
 
To obtain a work permit:
  • The German client must be able to show that it has been unable to find anyone on the local German market or from any of the EU/EFTA Member States.
  • The employer has to apply for the work permit before the employee can come to Germany.
 
 
 

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The information presented on this website gives a superficial overview of a very complex topic. You should seek professional advice about what to do before leaving one country, what to do when arriving in a new country of work, and most importantly, what your tax and social security liabilities will be in both, before, during and after an assignment. Please contact us for more detailed advice at info@capitaltaxconsulting.com
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