Legal to work freelance outside Germany?

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Legal to work freelance outside Germany?


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Old 31st March 2020, 12:53 PM
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Unhappy Legal to work freelance outside Germany?

I'm a US citizen who was living and working in Poland based on my marriage to a Polish citizen. I moved to Germany in January of 2019 and obtained a German residence permit on the basis of marriage (Aufebthaltskarte) which allowed me to work in Germany, and continued to do regular freelance work for the Polish company on the side, signing an "umowa o dzieło" every month, typical for freelance work in Poland.

In May, a decision about my Polish residence card was made, and I assumed it was positive, but didn't pick it up until March 2020 as I was out Poland for some time. It turns out this decision was negative.

I've just filed my taxes in Poland claiming all the income I've made in Poland in 2019. My questions now:

Was I working illegally from May 2019 until now?
Could I be charged and pay all this money back to the state?
Could my company sue me?
Was it actually legal work since I did not reside in the territory of Poland while I was doing the work?
Should I be very concerned and hire a lawyer?

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Old 31st March 2020, 02:17 PM
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Quote:
Originally Posted by wenerska View Post
I'm a US citizen who was living and working in Poland based on my marriage to a Polish citizen. I moved to Germany in January of 2019 and obtained a German residence permit on the basis of marriage (Aufebthaltskarte) which allowed me to work in Germany, and continued to do regular freelance work for the Polish company on the side, signing an "umowa o dzieło" every month, typical for freelance work in Poland.

In May, a decision about my Polish residence card was made, and I assumed it was positive, but didn't pick it up until March 2020 as I was out Poland for some time. It turns out this decision was negative.

I've just filed my taxes in Poland claiming all the income I've made in Poland in 2019. My questions now:

Was I working illegally from May 2019 until now?
Could I be charged and pay all this money back to the state?
Could my company sue me?
Was it actually legal work since I did not reside in the territory of Poland while I was doing the work?
Should I be very concerned and hire a lawyer?
Well, I don't know anything about Polish law, but I suspect that you were not illegally working, as you were not actually physically in Poland.

From what I can see, you unnecessarily paid taxes and social contributions in Poland and neglected to do so in Germany.

Not sure whether anything should/could be done to rectify this retroactively (there usually is no double taxation, so if you paid taxes in Poland, little to no taxes should be owed in Germany). You'd need to ask a tax accountant with EU knowledge.

What I think should have been done, since you are tax resident in Germany:

1. Tell you Polish company that you have moved to Germany, have them pay you your full salary before taxes/social contributions.

2. Register your freelance work in Germany/with your local tax department, talk to your German health insurance, make arrangements to pay taxes and social contributions in Germany on your Polish income. Maybe somebody else can weigh in on this, as I have never been self employed in Germany.

3. Declare all your income where you are tax resident = Germany.

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Old 31st March 2020, 03:23 PM
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Well, I don't know anything about Polish law, but I suspect that you were not illegally working, as you were not actually physically in Poland.

From what I can see, you unnecessarily paid taxes and social contributions in Poland and neglected to do so in Germany.

Not sure whether anything should/could be done to rectify this retroactively (there usually is no double taxation, so if you paid taxes in Poland, little to no taxes should be owed in Germany). You'd need to ask a tax accountant with EU knowledge.

What I think should have been done, since you are tax resident in Germany:

1. Tell you Polish company that you have moved to Germany, have them pay you your full salary before taxes/social contributions.

2. Register your freelance work in Germany/with your local tax department, talk to your German health insurance, make arrangements to pay taxes and social contributions in Germany on your Polish income. Maybe somebody else can weigh in on this, as I have never been self employed in Germany.

3. Declare all your income where you are tax resident = Germany.
First of all, thank you for your advice. I understand it's not your exact area of expertise, but I appreciate it nonetheless

My company knows I live abroad, my German address and even my german tax number are all recorded and I've declared officially that I only reside 20 days in Poland every year.

I haven't registered any freelance status in Germany, but I plan on declaring all foreign income as well.

My Polish accountant filed my taxes on the polish income already, and she's looking into declaring the German income as well.

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Old 31st March 2020, 04:08 PM
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Normally speaking, you are considered to be working in whatever country you are physically located in while you do the work. From what you say, you were thus working in Germany for 2019 and you should probably be paying taxes and social insurances to Germany rather than to Poland.

Obviously, for the employer, it's easiest to just keep you on the Polish payroll. But you need to check out how to rectify the situation. If you were doing "freelance work" for the Polish company, you should have been billing them for your work and them paying you like a vendor (i.e. without making any social insurance or tax payments on your behalf). You are then responsible for making any tax or social insurance payments to the country in which you are living and working.

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Old 1st April 2020, 09:19 AM
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Quote:
Originally Posted by wenerska View Post

My company knows I live abroad, my German address and even my german tax number are all recorded and I've declared officially that I only reside 20 days in Poland every year.

I haven't registered any freelance status in Germany, but I plan on declaring all foreign income as well.

My Polish accountant filed my taxes on the polish income already, and she's looking into declaring the German income as well.
You really need to get advice from a German Steuerberater ASAP! You need somebody who knows the (complicated) laws in the country where you are working, not someone in a different country who may not even speak German to a standard that they truly understand what is asked. I am a native speaker and I mostly just numbly stare at tax language in hopes that it will somehow reveal its meaning (it generally doesn't).

A friend of mine (from Ireland, where things are more relaxed, it seems) started working as self-employed and didn't register this with the German authorities before starting. First thing the tax authorities sent him was a 1200 € fine for tax evasion.

Your German tax number doesn't do anything in Poland. The Polish authorities are not somehow connected to the German ones. Income tax is a national matter, not an EU matter.

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Old 1st April 2020, 09:21 AM
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Quote:
Originally Posted by wenerska View Post
continued to do regular freelance work for the Polish company on the side

Do you have a job in Germany?

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Old 3rd April 2020, 10:27 AM
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A friend of mine (from Ireland, where things are more relaxed, it seems) started working as self-employed and didn't register this with the German authorities before starting. First thing the tax authorities sent him was a 1200 € fine for tax evasion.
I didn't mean to scare you with this. You have paid tax, albeit in another country.

Depending on whether you work in Germany or not and how you are covered for health insurance, you may or may not owe health insurance and social contributions for 2019.

In any case, you should rectify this situation going forward.

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Old 31st May 2020, 08:52 PM
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There is freelance and freelance in Germany, meaning work that you have to get a Gewerbeanmeldung for (for example trade or crafts etc.), and work that is only applicable with the tax filings (for example you do web design, museum tours or so on, "Selbstständiger"). The final decision on what your work is will be by the tax authority (Finanzamt), allthough in general you can deduce it from what you actually do. Selbstständig is better as it does not need a filing with the local authorities *prior* to start your business (or else pay a fee). You will have to file for taxes anyway, and as has been suggested it seems that you filed in Poland without proper cause. Anyway, freelance in Germany means you send your customers an invoice (with or without explicit written Umsatzsteuer, kind of VAT, depending on the status you claim and your purpoted business. Your invoice has to display your address and tax number from Germany, and you are required to cover your social security on your own, i.e. its not deducted from your bill, it is not a salary you get.

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