Working for a US company in Germany

[kaffeemitmilch]

I have an issue for which I'd love your feedback. So, I'd like to work with/for my brother, who has a business in California, and this is my understanding of the situation. Please let me know where I'm wrong, what other options I'd have, and what you would do in my situation. I am really bad at this stuff even when all the material is in English, so I'm more confused about my options here. If you know of a professional with whom I could discuss this, please let me know.

He could hire me directly, which would be ideal, but I have read that he'd then have to treat me as a German employee, meaning he'd have to cover all the statutory things that are in an employee's payslip (Rente, Krankenversicherung, etc.), and retain a German accountant. He is looking into this possibility. Is there a way for me be employed in the US, and cover all of these myself like a freelancer/pensioner would?

Were this not to be feasible, it seems being freelance (Freiberufler) would be the easiest status for me, and I would just bill him. My understanding is that setting up a company or the other options would be unnecessarily complex, and would make it hard to get the money out. Also, is it correct that I would not need to charge VAT for a client outside the EU? I have also read that if I have just one client, I could be accused of Scheinselbstaendigkeit eventually, but that they usually give you a few years, and may or may not come after you for that. Is there any way around this?

Finally, can he pay into a bank account in the US? What would be the best way to bring that money here? I would use Wise at this point.

Thanks!

[Franklan]

Your brother hires you.

This company will be the "man in the middle". Your brother pays them, they pay you.

https://www.intertax-consult.de/

[kaffeemitmilch]

Your brother hires you.

This company will be the "man in the middle". Your brother pays them, they pay you.

https://www.intertax-consult.de/

This is the most efficient way? Do you know in general what percentage they would take? And, this is of course only possible if he is able to take on the additional costs of a German employee, correct?

[PandaMunich]

it seems being freelance (Freiberufler) would be the easiest status for me, and I would just bill him. My understanding is that setting up a company or the other options would be unnecessarily complex, and would make it hard to get the money out.

Correct.
You would simply be self-employed, depending on your activity, either a Freiberufler or a Gewerbetreibender, please scroll down to the section "What kind of self-employed are you?" in here to find out which: https://expertise.tax/en/get-a-german-tax-number/
--> you would need to find a Steuerberater (not me) and he/she would announce the Finanzamt that you intend to be self-employed and would apply for a self-employed tax number and for a VAT ID number for you through the "Fragebogen zur steuerlichen Erfassung".

Also, is it correct that I would not need to charge VAT for a client outside the EU?

Since your brother, who would be your client, is a non-EU business, you wouldn't charge German VAT, correct.
But depending on in which US state your brother runs his business, there may be US sales/use tax due: https://www.avalara.com/blog/en/north-a ... -know.html

I have also read that if I have just one client, I could be accused of Scheinselbstaendigkeit eventually, but that they usually give you a few years, and may or may not come after you for that. Is there any way around this?

It's not Scheinselbständigkeit (which would mean that you're exploited by your "employer" and he therefore owes all social security contributions), but being an arbeitnehmerähnlicher Selbstständiger (which means that you are not exploited but know full well what you're doing, in which case only you would owe 18.6% * profit in public pension contributions, no other social security contributions. Though I would recommend staying in public health insurance as a voluntary member, since you have a family) if you get at least 5/6 (= 83.33%) of your turnover from just one client.
This is laid down in § 2 Nr. 9 SGB VI: https://www.gesetze-im-internet.de/sgb_6/__2.html

Way around this:
Hire someone in turn for your own business (it cannot just be a cleaner, it needs to be someone you need specifically for your own business) at a salary of at least midi level (in 2024: at least 538.01€ per month gross salary), i.e. at the level for which social security contribution have to be paid for that employee both by you as the employer and by that employee (= at a salary that comes with its own public health insurance).

As an Existenzgründer, you can apply for an exemption for the first 3 years from having to pay public pension contributions as an "arbeitnehmerähnlicher Selbständiger" through the DRV form V0050, but after 3 years and 1 day, DRV will come knocking and will want their 18.6% of your profit from that moment onwards: https://www.deutsche-rentenversicherung ... V0050.html
DRV usually find out about arbeitnehmerähnliche Selbständige through auditing the client, but with your brother not being a German business, DRV will never audit him...

Finally, can he pay into a bank account in the US? What would be the best way to bring that money here? I would use Wise at this point.

Yes, no problem.
My clients use either Wise or Revolut: https://www.forbes.com/uk/advisor/money ... s-revolut/

[kaffeemitmilch]

Thanks for the detailed answer, Panda. So, Franklan's suggestion isn't doable?

My brother's in California, so the tax might be significant. Hmm.

I thought I could request the tax number myself. I remember I had one when I was an English teacher when I first came here 10 years ago, and there definitely wasn't an intermediary when I requested the number. I wonder if I can still use the same number.

Re- health insurance, my partner is privately insured and covers the kids, so it would just be myself. Makes it a bit easier.

So, if DRV won't audit my brother, are you saying I could get away with this? My plan is really to try it for a year or so as a freelancer, and if it works out, to make the setup more robust/long- term.

Do you know of a person (not you I can chat to about the details here?

[PandaMunich]

So, Franklan's suggestion isn't doable?

It's doable, just more expensive.

I thought I could request the tax number myself. I remember I had one when I was an English teacher when I first came here 10 years ago, and there definitely wasn't an intermediary when I requested the number.

Back then, you were allowed to fill in the Fragebogen zur steuerlichen Erfassung on paper.
You now have to do it via ELSTER, i.e. you would first need to get an ELSTER certificate.
Besides, as soon as you have international business, things get complicated very fast.

I wonder if I can still use the same number.

No, since it is linked to a specific activity and you presumably:

1. stopped being a freelancer
2. you will anyway not be teaching English

So, if DRV won't audit my brother, are you saying I could get away with this?

Yes.

Do you know of a person (not you I can chat to about the details here?

Chats with Steuerberater cost money.
There is a Steuerberater linked from my website who still accepts new clients: https://www.baier.tax/expat-en

[kaffeemitmilch]

Ok thanks for the clarifications

I will try to get in touch with the guy you linked.