Question Consulting in Germany

[coating]

Greetings to all,

I've been reading this forum for the past few days and I've learned a lot.

I'll be doing some consulting in Germany in the coming weeks. My initial plan was to so it for like a year but I'm looking to improve the tax situation so may end up only being there 180 days to avoid residency.

I've sent an email to some accountants that specialise in international tax but until I get a consultation I thought I'd ask here as well.

I actually have a GmbH in Germany but I never really lived there other than visiting for business a couple of times a year. I'm a resident in Bosnia and Herzegovina. Before it was just business with physical goods so the taxes were pretty clear, only tax implication was transfer pricing.

Now though I want to do some consulting in Germany where I would need to spend some time there with clients probably every month. Getting a flat would probably also be a requirement though maybe I could make due with an Airbnb.

Ideally I'd love to just open a company in Bosnia, invoice from there, pay the 10% dividend tax and that's it but with all the tax rules in place in Germany with the location of the management and unlimited tax liability and residency its a tiny bit overwhelming.

To TLDR need to do consulting in Germany and spent some time on site with clients looking for best tax solution.


Thanks in advance!

 

[Sols]

Germany is very aggressive in determining tax residence. How many days you spend there is just one factor. If you have strong economic interest, earn income from activities in Germany, or simply have access to a place of residence in Germany, you are at risk of being considered German tax resident.

They aren't completely unreasonable but in your case, I see no legal, sustainable way around paying taxes in Germany on your income earned there.

If you are citizen or permanent resident of Bosnia and Herzegovina and if the scope of your work in Germany is less than a year, you might be able to just have your company invoice your client in Germany and you keep the funds there without the Germans finding out or being concerned about it. A risky but maybe doable method would be to split your income, so that your company invoices for x% and you personally get the remainder from the clients in Germany. No German tax (maybe) on the x% and the rest is for yourself, enough to live on while in Germany. This wouldn't hold up if you ever draw attention from tax authorities. I certainly wouldn't recommend it.

Germany is the kind of country that might go after your clients as well if they suspect taxes have been evaded. Think of the long-term reputational fallout if companies face tax investigations after having worked with you.

As a consultant, if you want to earn a certain amount from a job, your fee should be that amount plus all taxes you'll be paying.

 

[RealDude]

You and your client should also make sure that you are not categorized as a sham self-employed person (Scheinselbständigkeit) in Germany.

 

[Gravity]

Depending on what you are planning to do as consulting, as well as the turnover, there's ways to prep this correctly. Germany is very aggressive in terms of taxes and you'll face issues if you just invoice them from elsewhere.