I studied in the USA for 4 years and started working as a Software engineer in the USA. Now I was wondering if I could work full time remote from Germany for the same US company. After some research it seems like this is possible, but how would it be if my salary would still get paid on my US bank account? Would I have to file taxes in the USA and Germany? Or how would this work? Anyone in the same situation?
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Would you be working as a contractor - freelancer? If so it's no problem. They would just pay your (whole, gross) amount to you in Germany. (It would be no different from them buying a robot from Siemens .. whatever.) YOU would be entirely responsible for paying all taxes IN GERMANY, like any other freelancer working in Germany. (The fact that that one client happened to be in the USA, means nothing. You're just a German freelancer in Germany! mfg !)– FattieCommented Apr 18, 2019 at 13:21
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3When you are a freelancer only working for one company the authorities will very likely think that you are scheinselbständig. This basically means that the authorities do not agree with your classification as an independent contractor and that they will still treat you as an employee. What means all social insurances and tax laws still apply to you and the company that contracted you. Make sure that you consult lawyers or tax agents upfront to avoid running into this situation because all these payments that haven't been done will sum up and might lead to huge claims.– spickermannCommented Apr 18, 2019 at 14:33
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@spickermann - yes of course, but that's a matter of tax law in Germany. (Note that, of course, "being a freelancer" (in many/most countries) usually means that you have some sort of shelf company (regalfirma right?), which is just implicitly part of the hassles of "being a freelancer".)– FattieCommented Apr 18, 2019 at 15:13
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2It's really not only "a matter of tax law". Putting it that way makes it sound like only a minor problem. If you are self-employed and only have a single client, it's highly likely you will be treated as bogus self-employed ("scheinselbstständig"), which will bring you into serious trouble you really don't want to be in. Founding a company to act as intermediary doesn't change the situation at all. It's the same as with RyanAir claiming their pilots are self-employed by having all of them found their own company. You can only hope OP has as good lawyers as RyanAir has, if he goes that way.– s1lv3rCommented Apr 18, 2019 at 17:52
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hi @s1lv3r {Purely as an aside: I can think of a couple freelancers, i.e I mean Germans in Germany, who in fact only have, in reality, one captive client. However, indeed even in the US that can (theoretically) be a problem.} continued! ...– FattieCommented Apr 19, 2019 at 17:59
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2 Answers
If you work for the US company, but both live and actually perform the work in Germany, then it's a sure bet that the arrangement makes the company a German employer in the eyes of German labor law. They'll have to withhold German tax, pay German social contributions, follow German notice rules if they need to lay you off, and so forth.
They may or may not be prepared to take on that administrative burden for your sake. If you're their only non-US person, they'll almost certainly need to pay a German employment lawyer to get them up to speed with what they're getting into before they can even make a decision -- unless they reject the proposal out of hand, that is.
It does not matter where the bank account your salary is paid into is located -- though, since the employer will probably need to contract with a German payroll processing company to get the tax withholding and reporting etc done properly, they would likely insist on paying you in euros into a German account (or at least somewhere in the Single Euro Payment Area) because that's what the payroll processor supports.
If the employer does agree to you working remotely (perhaps they have other remote workers in Germany, in which case most of the administrative overhead is taken care of already), then as far as your economy is concerned, you'd just be a German employee -- working in Germany, being paid in Germany, paying tax in Germany. Not paying tax to the US.
answered Apr 17, 2019 at 15:25
hmakholm left over Monicahmakholm left over Monica
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So the company has a few locations in europe but none in germany. What would happen if they just kept paying on my us bank account and I wire the money to myself?– DevchrisCommented Apr 17, 2019 at 15:41
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3@Devchris: You and the company would be committing tax fraud against Germany. If you file taxes in Germany to keep your own path clean, German authorities would discover that the employer is guilty of employing people in Germany without withholding tax. The employer would be fined and Germany might try to recover the fine and missing taxes by seizing the company's assets elsewhere in Europe. Commented Apr 17, 2019 at 15:51
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3If you could instead be employed by an existing European subsidiary or branch of your company, much of the bureaucracy would be much easier. It might not obviate the need for a German payroll processor (and the fine details of employee rights would still need to be researched not just on the German federal level, but also for the Land you plan to settle in), but it sounds much more likely to work overall. Commented Apr 17, 2019 at 15:51
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Ok that makes sense. Thank you! What if I would be filing taxes in both countries? With the tax treaty, this would make me only pay taxes in germany but I would still fill out taxes on both countries– DevchrisCommented Apr 17, 2019 at 17:14
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2@Devchris If you're neither resident in the US nor a US citizen, then you don't need to file a US tax return for German income. That your employer is ultimately domiciled in the US doesn't change the fact that the employment is in Germany. Commented Apr 17, 2019 at 17:20
Just for the sake of putting in an answer,
OP wants to change from working for X (on salary) in the US, to working remotely for X, while living in Germany.
- This is completely commonplace
and how you do it is
- You change from salaried to freelance, then go live anywhere you want.
TBC then in that situation
- You're just a normal German person living in Germany and freelancing. You'd of course pay all normal taxes/etc just like any other German self-employed programmer. (The fact that your main client happens to be in the USA is irrelevant. It's just "a client".)
(Just TBC in that situation, you have utterly no connection to the USA to USA taxes; you do nothing whatsoever in relation to the USA's IRS. You're just a normal German self-employed person.)
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All due respect, you’ve been a member for 4 years, do DVs still surprise you? I used to look at my answer and wonder what, exactly would trigger a DV, but then I realized, it takes little effort to vote either way and no need to comment why. Don’t take it personally. Commented Apr 19, 2019 at 16:42
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You're totally right @JoeTaxpayer - indeed I couldn't care less about votes one way or another on these sites! What I was more trying to express was this: to whoever downvoted, just be aware that the only way to do what the OP is asking is to be a freelance/contractor.– FattieCommented Apr 19, 2019 at 17:54
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All I can share with you is my experience on another site, which left me thinking "Who downvotes cheesecake?" And for your answer here, the DVer is probably not even going to see the comment. That's the toughest part of this. (My knowledge is near zero on any foreign issues, I gave you a +1 just to cancel the DV) Commented Apr 19, 2019 at 17:58
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1For sure. Again I just expressed myself, uh, incorrectly. :) Regarding points on these sites. On SO itself, I find having a lot of points embarrassing, so, I send them all away as bounties :)– FattieCommented Apr 19, 2019 at 18:04