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Guide to Contracting in Germany

Known for being Europe’s largest economy and the fifth largest in the world, Germany has become a   popular location for contracting. Certain industries such as IT, engineering and manufacturing provide lucrative work for those looking to freelance in another country.

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As your contract start date draws closer, no doubt you’ll have a to-do list with a million and one things on it. If you have not yet sorted out your international payroll solution, however, now is the best time to do so.

One less thing to worry about – using a payroll company

If you are planning on working in Germany, there are some essentials steps that need to be taken to ensure you get paid correctly and get the best take home pay possible.

For Germany, we offer two different solutions:

1)      AUG solution: employed solution (umbrella)

2)      Freiberufler (freelancer): self- employed solution

What’s the main difference between the employed and self-employed solutions?

The main difference between the employed and self-employed solutions in Germany are the social security contributions. The social security contribution is halved with the freelancer (Freiberufler) model; whereas employed workers pay nursing, healthcare, unemployment and pension insurance, self-employed workers only pay nursing and healthcare contributions. Under the AUG solution, the average retention is between 50% – 58% whereas under the Freiberufler, average retention is between 65% – 72%.

Freelancer checklist (self-employed) – here’s a list of what you need to obtain and supply to us before your contract begins.

  • Obtain suitable accommodation
  • Register as self-employed through our local accountant
  • Register at the town hall within 2 weeks of arrival
  • Complete the registration questionnaire we give you
  • Supply us with two forms of proof of your permanent home address
  • Supply us with a certified copy of passport
  • Obtain private healthcare cover

What Expenses claims can you make?  

Due to new expenses regulations but in place by the German authorities, what you can and cannot claim for has been revised:

  • You can claim up to 1000 euros per month for accommodation
  • You can claim for any flights
  • You can claim for first and last travel costs (to get to your hotel on your initial trip out and then on your return journey when you have finished your contract.)
  • You can claim €0.30 per KM for travel
  • You can only claim for subsistence (food and drink) for the first 3 months
  • For a full day in Germany, you can claim up to 24 euros
  • If it’s more than 8 hours you can claim for 12 euros per day
  • If you are not in Germany for more than 8 hours in a day you can’t claim

But remember:

  • To be able to claim you must have a main residency elsewhere.
  • To make the payroll as smooth as possible it is essential you keep your receipts!

Benefit of using a payroll company

Using a payroll service can connect you with experts who have years of experience helping contractors in the international marketplace. You will have a dedicated and personal accounts manager who will take care of your invoicing, expenses and payroll processing.

Cheats to learning German phrases quickly.

To feel at home in a foreign country, it’s much easier if you know some of the language spoken. There are a number of ways you can do this successfully.

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Even though the world’s longest word is in the German language and it is an astonishing 63 letters long (Rindfleischetikettierungsüberwachungsaufgabenübertragungsgesetz), if you are starting from scratch, picking up the basics isn’t as hard as you may think. 95% of Germans speak German as their first language, so despite the vast majority learning English at school, knowing the basics will be a huge advantage.

As German and English are both Germanic languages which contain Latin and Greek, you’ll be pleased to know there are several similar words that crossover both languages.

When learning a language, here are a few tips to get you picking things up quickly:

1)      Be realistic – set achievable goals that you know you will be able to stick to. Research has shown people can retain ten to twenty words within an hour’s worth of study. So a little a day can go a long way!

2)       Focus and Cluster – being focused on what you learn will make things ten times easier. Look at one topic per week and your brain will naturally cluster similar words together. Work in line with how your mind compartmentalises information when you learn and you will pick things up much easier.

3)      But stay clear of opposites – you might think it’s good to learn opposites in the same session: up/down, right/left, hot/cold. This isn’t the case however. Learning two words back to back can increase the chances of you mixing them up in the future. 

4)      Break down a new word – try and read deeper into the structure of the word. The vast majority of words are made up of prefixes and suffixes. Getting to grips with the formations can make it easier for you to make guesses when you come across new words in the future.

5)      Mnemonics – visuals often enhance the learning process. When learning new words, try visualising an image or imagine a scene that associates with the word you are trying to learn. Especially for long words, these visualizations can really aid the memory.

6)      Review, review, review! The key is to move all the new words and phrases you have been learning from your short term memory to your long term. Review every day. Even if it’s just for 15 minutes.

Adjusting to the German culture

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Germany has a population of over 82 million and as you can expect from being located in the centre of Europe, the country is a hub of activity. Two of the bordering countries, Austria and Belgium, have the greatest cultural influence on Germany. There is also a large population of Turks making up 2.4% of the population, followed by Greeks, Russians, Italians and Polish.

Business Culture 

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The German business culture is very structured and this shows in the day to day running of businesses. When you are contracting, you will notice the hierarchy in operation and will see that decisions are usually made by a group of managers/team leaders. When meetings are held they tend to be very well organised and employees are expected to stick to the agenda instead of engaging in debates and deviating from the topic.

As Germany has a thriving automotive industry, you may well be contracting in the engineering field, in which case you’ll know that engineers are held in high regard. Hands-on trades are also held in high esteem and many businesses are led by technical specialists.

Work life and social life

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Germans put emphasis on timekeeping, confidentiality and structure. The people are hardworking and try to be resourceful with a strong sense of community. If you are a contractor who will be relying on public transport to get you from A to B, you will be pleased to hear that Germany is a nation renowned for making their trains run on time.

Germans tend to be patient people and always try to achieve their best, aiming for perfection in what they do. They rarely own up to faults and seldom do they give out a compliment. Throughout the country you will get a solid sense of social integrity and a need for belonging which makes communities strong and united.

Food and drink

When you arrive for your contracting work, you may notice that Germans tend to have large, hot meals in the middle of the day, and do this even more so during the weekends with their families.

The most popular meat is pork with favourites being braised pork hock, known as Schweinshaxe and pork stomach – Samumagen, which are more of the traditional pork meals.  Another much loved German favourite is the sausage Bratwurst. When you start eating out more and more in Germany you will soon realise the popular vegetables that come with most meals such as potatoes (the most loved) cabbages, peas, beans, spinach and asparagus. Some of the prized dishes in German cuisine are in fact potatoes and sauerkraut.

Fun Fact:  On average, each German consumes 150 pounds (70 kg) of potatoes annually.

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If you are a big beer drinker, you will be pleased to hear that Germany has a good number of varieties including wheat beer, known as Weizenbier. If you enjoy a strong alcoholic beverage, Brandy and Schnapps are favourites in pubs and bars.



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