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employee vs. freelancer in Berlin

Hello Everyone,

I've moved to Berlin exactly one year ago from Budapest, Hungary. There are still a lot of things that are kind of mystical for me about income and taxes. Is here anyone who knows more about these issues?

I am working for an early-stage startup as a freelancer, and I have the courtesy to find out how much exactly employing the team members would cost for the company as the founders want to know the exact amounts. I tried to google this but the picture is not clear at all. Now we get paid between 750-1500 EUR but a lot has to be paid for health insurance and it is not ideal for the members of the team. None of the team members is German and as we are bootstrapping (we don't have investors atm) I am trying to find everything out by myself without having to pay a tax advisor.

All the team members are freelancers except one of us who has just arrived from Canada with a working visa and in her contract is a gross amount of 18.000 EUR, but I'm not sure that it covers all the costs and what is the exact breakdown. She is single, no kids, no religion and she also has an international health insurance for 1 year (she has a 1 year contract). Should she still register herself in one of the public health insurance providers or it is not possible anyway for non-EU citizens? I tried to register her via sv-net but without a public German health insurance provider it just doesn't go through...

Also, in case of selling our product all team members get commissions - I am wondering how this works taxwise, is it better to pay these commissions on a monthly or quarterly basis, and is there a difference if an employee or a freelancer gets a commission?

Thank you very much for reading this through and giving me any advice how to find the answers (without using a tax adviser of course :))

Have a very nice day!

Lili

German tax and social security issues are VERY complicated and, if done wrong, can have serious consequences for both employer and employee/freelancer - from high fines to jail!
So please do get a good tax consultant (employees/freelancers) and accountant/HR consultant (employer)!

To answer your direct questions:
- For your EUR18k/year-colleage the company must deduct the correct tax and social security amounts and send them to the relevant authorities, incl. the employer's co-payment. Altogether the employee has to pay around EUR5000/year and the employer another approx. EUR4000 (on top of the EUR18000) to public coffers.
- She has to get German (public or private) health insurance. The premiums for public insurance is included in the deducted amount above (private may vary). An international insurance is not accepted.
- Freelancers, too, will have to get German health insurance, but have to pay the "employer co-payment" from their own pocket. This means (for the public scheme) a monthly premium of EUR350-900, depending on overall income. (The private scheme charges by age and prior health condition, independent of income.) Freelancers are also income taxed, but do not need to contribute to social security (pension, unemployment).

Hello,

thank you for your reply. I agree that the best would be to use tax accountants/consultants,
and I am going to push this but until then, thanks for all the information :)

if there is anyone who can recommend me any reliable source of information, that would be highly appreciated.

Have a nice sunny day you all :)

Tax consultants in Germany have a legally sanctioned monopoly on tax advice - meaning nobody other than regustered Steuerberater are allowed to help you in such matters.
Their fees are also regulated, so no matter which one you choise it will cost the same (but the quality might vary).
But for the company you need an accountant. It is almost impossible (even for a native speaker) to do these things correctly without one. Many tax consultants are also accountants (or lawyers, which is another service you may need).

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