What are the regulations for working remotely with a company from another EU country?

Freelancer working on a couch | Working remote

Question

What are the regulations for working remotely with a company from another EU country? I’m considering a remote job for a company based in Spain but researching on internet how to legally comply with all the tax and social security obligations I cannot find any clear information.

In general, it seems there are agreements between countries within the EU to avoid to double pay taxes, but if I understood well, also seems to imply that the employer would need to have the company registered in Germany to deduct the taxes, etc from my payslip.

Also considering as an option to work as a freelancer, but as far as I know, as a freelancer, you are not allowed in Germany to work full time only for one client. Any ideas or experiences in this regard? I’m quite lost on these topics, and it seems to be a good opportunity that I wouldn’t like to miss.

Answers

  • I know a friend is working remotely for a UK company and they hire a local payroll provider to handle taxes and insurances. Maybe that’s an option your company could consider. It’s called a PEO (professional employer organisation).
  • This is not legal advice, you should consult with a German lawyer for your specific situations. But generally, I understand that employers are supposed to register in Germany to pay you the salary and withhold social security taxes. They also have to pay half of your health insurance. The income taxes you can pay yourself to German Finanzamt but the other ones, like social security, pension, health and nursing insurance, the employer has to pay. Apparently, it’s very easy to register in Germany though, but the employer has to do it. They can hire a local payroll provider to handle the withholdings and pay you a salary. A freelancer might be an option, but as you said, there are restrictions on how many clients you can have and how much you can work for them. You should talk to this company about these things and see what your options are. They might offer you to be a freelancer without understanding the German law, so be careful. You may be hit with all the back taxes if the authorities find out you were working as a freelancer when you were supposed to be an employee. I also heard of people somehow finding loopholes in this system but I am not sure it’s legal so better consult with a German lawyer to avoid penalties later on.
  • I’m a freelancer from Spain and sometimes I am working remotely for German clients. For these jobs, I invoice from Spain to Germany without VAT and no other taxes. Just the plain fee according to an EU agreement. Then, every 3 months I have to pay an extra amount calculated because of the agreement. But, I do this for some short jobs, not for a day to day job. Beware if you are going to be a freelancer or a full-time employee that is paid on a freelance agreement. It is very common in Spain to work as “falso autónomo” that means “fake freelance” that is: a full-time employee with no contract, social coverage or guarantee. This is always bad for you and work conditions. Just get well informed in what your agreement is and consult with a lawyer so that you are protected and can work comfortably.
  • Since you live in Germany, income tax has to be paid here in Germany. The social security things (so far I remember) depends on the agreement between the countries. There are some complicated rules regarding signing contracts. Wasn’t important for me, didn’t read carefully. Basically, if have to sign contracts (not export) the employer could be forced to create a local company.
  • There are organisations your employer can use to employ you here in Germany if they don’t have a legal representation here. I think that is the cleanest solution for working remotely.
  • I am living here and working remotely in Finland! I’m still under the 6-months rule, which means you can stay in another EU country for 6-months until that country allows to gather taxes from you. I got advised to keep working normally paying taxes to Finland until the 6-months period has passed. My employer had to fill this A1 form to get a certificate that I’m “exported” employee, otherwise, my address would’ve made my apartment to be a German office. At least Finland has a tax agreement with Germany to avoid double taxing, maybe Spain has the same?
  • Look into PEOs. A few days ago I came across remote.com (on product hunt) that lists Germany as one of their “supported countries”, have a look.
  • I am living here and working remotely full-time in a French company. The only discernable difference for me is that I have to pay my taxes in advance and do a tax return. Otherwise, it’s basically as if I was employed here.

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