Working with self-employed people in Germany

Freelancers in Germany

Germany has one of the lowest percentages of freelancers in the EU. In our neighboring country, the number of freelancers is around 1.5 million, which is about 4% of the working population. Starting freelancers in Germany are also usually slightly older than in other countries. As a result, they also have slightly more work experience, on average about nine years. German self-employed people are generally knowledge workers.

Laws and regulations

There is currently a lot going on in the Netherlands regarding freelancers. The DBA Act, which is intended to prevent false self-employment for self-employed persons, is currently not being enforced. But the outgoing cabinet is working on new legislation. In Germany, this type of legislation and regulations has existed for some time.

Assessment of the employment relationship

In principle, the following main rule applies: the more freedoms the freelancer has when carrying out the project, the smaller the chance that there will be an employment relationship.

What criteria should you consider?

• Is the person who has to carry out the work allowed to know where, when and how he does this? The more instructions he has to follow, the greater the chance that there will be an employment relationship. This is also the case if the self-employed person uses the client's work equipment and therefore does not have his own laptop, telephone, etc.
• To what extent are the activities carried out at the company's location? And to what extent are the activities identical to the activities of one or more employees of the company? The more integration, the greater the chance that there will be an employment relationship. In construction, the example is given of two people doing a job together (such as tiling a bathroom). If at the end of the day it cannot be determined which work the freelancer has performed, this is a case of bogus self-employment.
• To what extent does the contractor have the freedom to reject the assignment and/or (in time) to accept other assignments (from other clients)? The less freedom, the greater the chance that there will be an employment relationship.
• Does the self-employed person have multiple clients? Is there only one for a longer period of time? Then this is an indication of false self-employment.

If the government (in Germany this is not the tax authorities, but the 'Clearingstelle' of the 'Deutsche Rentenversicherung') decides that an agreement with a freelancer is actually an employment relationship and therefore there is false self-employment, then this has far-reaching consequences: the The alleged freelancer is then an employee with all the legal consequences that entails. And the employer must pay social insurance premiums and payroll tax retroactively for the current year and the four preceding years. In addition, there is a risk of criminal consequences. In case of intent, a fine or prison sentence is possible. There is also a period for repaying social insurance premiums and payroll tax of up to 30 years.

Are you unsure whether there is an employment relationship in your case? Then you can apply for the Statusfeststellungsverfaren assessment from the Deutsche Rentenversicherung (DRV). The DRV will then assess whether or not there is an employment relationship in your situation.