IT contracting in Germany is a great opportunity for specialists. To make the most of it, you’ll need a strategy for handling the numerous admin responsibilities.
Going it alone: figuring out your visa and taxes
First off, you’re going to need a work permit to do any contracting in Germany. You should also be aware that you generally need an employer to sponsor you for this permit.
That’s tricky for contractors, because a lot of clients don’t offer sponsorship. Even if they can, you’ll need to find a new sponsor for each new contract. If you want to take on multiple contracts during your time in Germany, this creates an avalanche of paperwork – and takes up even more time.
Moreover, you’ll need to sort your taxes – in Germany and back home.
Using an intermediary: benefits of working with an Umbrella Company
Many contractors outsource burdensome admin tasks to an Umbrella Company.
The Umbrella Company essentially acts as your employer, even though they don’t control your clients, your workload, or your hours. They collect payments from the end client, filter out the necessary social security and other fees, and send you a net wage.
They also sponsor contractors for work permits. This means you’re working under a single permit, instead of constantly applying for a new one (or having to turn down clients who can’t sponsor you). You can find out more info on permits and visas in this FAQ.
They’re also experts in local tax law, so you don’t have to navigate a whole new tax system on your own. They ensure you keep the largest amount of earnings as you legally can. They can also help you reduce any tax liability back home.
You keep more of your earnings, all while staying on the right side of tax authorities in Germany and in your country of tax residency.
Basically: you get all of the benefits of a full-time employer, without giving up any of your independence as a freelance worker.
Get in touch with us if you’d like simple feedback on IT contracting in Germany.