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Working Remotely for US Company While Living in Germany

Working Remotely for US Company While Living in Germany titlecard

Are you considering relocating to Germany but wanting to keep your US job? This situation is more common than you think. People are moving from around the world to Europe with their remote jobs. If you are lucky to be able to work from anywhere and your employer doesn’t mind your move to Germany, there are several ways to do it.

You can live in Germany and work remotely for a US company if complying with all residence and work permit regulations. Your main options are:

  • Working as an employee
  • Use a payroll company in Germany
  • Working as a freelancer

Whether you are moving to Germany to explore Europe or join your significant one, you might be able to keep your US job. In that case, you should consider the questions about the residence permit, taxation, and social security law, among other things.

For your US company, there is a lot of extra work and costs associated with employing someone living in Germany. Read how to work remotely from Germany in this in-depth guide.

How to work remotely in the US but live in Germany?

Rolled US dollars on top of the American flag

International labor and tax law is a complex subject. In some cases, remote work leads to a change in taxation rights or in the employee’s tax and social security status. Here are only our recommendations.

Consulting professionals, e.g., a lawyer and an accountant in Germany, is always the best option.

Generally speaking, you can work remotely for a US company and reside in Germany. But there are a lot of nuances to it.

You must pay attention to tax and residence regulations. This, however, doesn’t apply to a tourist; if you stay only for a short time in Germany, there are no issues. Usually, tourists, including US citizens, can remain for up to 90 days in the EU if they aren’t European citizens.

The exact plan of how to work a US job in Germany will depend on several factors, such as:

  • willingness of your employer to put extra effort
  • your budget (potential costs for the lawyer)
  • your nationality
  • your job

Overall, EU/EEA citizens shouldn’t worry much about working remotely from Germany. They can live and work in Germany freely and with almost no paperwork.

Besides, Europeans can stay in Germany for up to 183 days in a year without any tax effects. But after that, they will become tax residents, which will be followed by some consequences.

Whereas US citizens (non-EU) need to consider the type of residence permit they can get to stay longer than 90 days. There are a few residence permit options you can apply for, depending on the person’s situation.

Nonetheless, the main ways one can work for a US company while residing in Germany are:

1. Working as a US employee

The first thing that comes to mind is probably to remain an employee for your US employer and just move to Germany. It’s indeed doable but requires some preparation.

1. Firstly, your employer must accept and approve that you work from Germany. Usually, working remotely in the US means working within the US. To make working from Germany possible, you need to complete further steps.

2. As a result of living and working from Germany for over 183 days in a year, you must pay German taxes and social insurance premiums on your worldwide income.

In addition, your US employer must pay their share of your social taxes in Germany. You and them must work together with the German tax authorities.

Yet, employers can pass this responsibility to you, and you will be paying income and social taxes in Germany yourself.

The employer, in that case, will transfer your total gross income, and you will handle all the paperwork to ensure the money is sent to the correct authorities in Germany. This, as you might expect, can result in a significant amount of work for you every month.

With income above around 50k EUR, you can opt for private health insurance, which can save you some money in the long run. If you plan to stay in Germany for a shorter period of time, consider health insurance from SafetyWing.

Coverage from Cigna Global is great for both short and long-term stays.

Lastly, your work contract must align with German labor law, not American. The rules for termination, working hours, paid vacation, sick days, and others must be respected by your US company.

For example, in Germany, you can’t be fired except for some instances, you can’t work more than 40 hours a week on average, you must have at least 20 days of paid holiday, etc.

Your employer doesn’t need to have a presence in Germany to make this work. They or you can refer to one of many German law firms and accountants who specialize in doing all the paperwork for overseas companies employing someone in Germany.

Residence permit for a US employee

Keep in mind that working for a US company doesn’t qualify you for a residence or work permit. Therefore, as a non-EU citizen, you will need to find a way to get a visa to live in Germany.

Also, read this guide on working remotely for a UK company and living in Germany.

2. Use a payroll company in Germany

Alternatively, your US employer can use the services of the employer of record to handle your employment and taxes. In Germany, there are plenty of such organizations; check them here.

A payroll company works as an intermediary between an employer and an employee, handling HR, legal, and financial aspects of hiring employees abroad.

This way, your employer won’t need to create a legal entity in Germany, and you will also have all the employment advantages.

3. Working for a US company as a freelancer

Another option for working in Germany for a US company is to become a freelancer for them. This way, you will bill your employer for hours worked, and the employer can avoid going through all the steps mentioned above.

However, to accomplish that, specific circumstances must be met:

  • Who can do freelancer work in Germany?

To freelance from Germany, you must either have a freelance residence permit, or any other permit that allows freelance work or be an EU citizen. Having only overseas clients doesn’t qualify you for a residence permit in Germany.

  • You must be officially registered.

In Germany, you must officially register your business/self-employment activity and abide by German law while running your business. This includes bookkeeping methods, taxes you pay/charge, etc.).

As a freelancer, you pay German taxes and social insurance premiums.

  • You need to qualify as a freelancer in Germany.

Not everyone is counted as a freelancer. Germany has strict rules when it comes to self-employment. If you are thinking of switching from an employee role to a freelancing agreement but keeping your old responsibilities, it’s against German law.

In Germany, it’s called “Scheinselbständigkeit” – when a freelancer works almost as an employee for a company.

Under German law, employers cannot reclassify their employees as freelancers in order to reduce their costs (by not paying social taxes).

Only real freelancers can register and work as freelancers in Germany; read more on it below.

Here are the main criteria for how you and German authorities can differentiate a freelancer from “Scheinselbständigkeit” or being a freelancer on paper and an employee in reality:
  1. You work for more than one client, and no one client can make up more than 85% of your income. Yet, working for one client temporarily can be recognized.
  2. You set your own working hours and are paid by deliverable instead of time – no fixed monthly salary.
  3. You are free to decide where to work.
  4. You are free to accept or turn down work.
  5. You don’t wear the uniform of your client.
  6. You don’t identify as part of your client’s organization. For example, you don’t have an e-mail address in your client’s domain, your business card doesn’t have your client’s name on it, and your e-mail signature doesn’t mention your client.
  7. You only have limited access to your client’s internal IT network.
  8. You aren’t a member of your client’s “all employees” e-mail list.

With that said, working for only one company in the US as a freelancer while living in Germany will fall into “Scheinselbständigkeit,” which can put your residence permit at risk. You probably need several US or Germany clients to make this plan work.

Otherwise, you can take on the risk and pursue this option regardless.

Registering as a freelancer in Germany

Consequently, to work as a freelancer for your US employer, you need to register properly in Germany. You will also pay your income taxes in Germany.

The registration is done at the tax office (Finanzamt). The tax office will be the authority to issue the tax number and collect taxes from you based on your freelance activity. You can do it easily by using the app Sorted. Kontist is another option; they also provide a bank accounts for freelancers.

It’s a handy software that allows you to manage all your freelancing activities in Germany within minutes.

Or you can do it yourself by submitting the tax number registration form known as “Fragebogen zur steuerliche Erfassung”. After the process is completed, you will receive your tax ID “Steuernummer.”

How many days can you work in Germany before paying taxes?

You will start paying taxes in Germany after becoming a tax resident. This happens after staying in Germany for more than 183 days in a calendar year.

Hence, you can travel to Germany, stay and work there within a Schengen limit of 3 months (for US citizens) without paying any taxes.

Visas when working remotely in Germany

Woman typing on laptop

Non-EU citizens need to consider which residence permit they can get to stay in Germany longer than 3 months.

Furthermore, to live and work in Germany, you must be legally permitted to work. This is possible by having a residence permit that includes a work permit. Some of them are:

  • German working residence permit
  • EU Blue Card
  • German freelance visa
  • Permanent residence permit
  • Residence permit based on family reunification
  • Student residence permit
  • Residence permit for interns and apprentices

German working residence permit

The standard working visa is granted to people with a job offer within Germany. Therefore, if your US employer doesn’t have a subsidy in Germany, you probably won’t qualify.

In most cases, the government will need a working contract with a local employer in Germany or the corresponding branch. Your stay in the country should be really justified.

Germany remote work visa

Currently, Germany doesn’t have any particular visa for remote workers. Qualified freelancers can apply for a German freelance visa.

German Freelance Visa

A German Freelance visa is one of the best options to work from Germany as an independent contractor or a freelancer in the US. However, you will need to meet the requirements to get it.

Your profession, by far, is the most critical factor for eligibility. It must be one of the liberal professions that are called “Freie Berufe” in Germany.

Liberal professions in Germany, according to EStG §18, are jobs in the following fields, among others:

  • Healthcare
  • Law
  • Tax and business counseling
  • Scientific/technical (+IT)
  • Linguistic and information-transmitting

It includes artists, teachers, scientists, engineers, software developers, and other independent professionals. See a more comprehensive list.

To prove that you have the required skills, you need to show a license or other authorization when applying for a visa. It’s particularly necessary for jobs in law, tax, and medicine. In many cases, you must also have clients or partners in Germany.

As mentioned above, fake self-employment (Scheinselbstständigkeit) isn’t a legitimate reason for a residence permit and is illegal in Germany.

Required paperwork for German Freelance visa:

  • Proof of income from abroad or in Germany – you must make enough money to support yourself. The amount must cover your rent and health insurance, plus 449 EUR per month.
  • Proof of health insurance coverage in Germany; Digital nomads can sign up for SafetyWing.
  • Proof of long-term accommodations (lease) in Germany
  • clients in Germany – it will be very hard to get a freelance visa if you don’t have any clients and work in Germany. In the end, Germany wants to see the interest in your freelance activity there.

Consequently, during your visa interview, you must show letters of intent from German companies or clients who want to hire you.

Read an in-depth article about German Freelance visa and its requirements.

Taxes in Germany

Depending on how long you are intended to stay in Germany, you may need to pay taxes there. Generally, a person becomes a tax resident after remaining in Germany for over 183 days without leaving the country.

Moreover, there is a rule that you pay taxes where you are present physically and not where the work is contracted or paid for. Consequently, you must declare income tax in Germany even if the job is abroad.

US citizens

US citizens are taxably liable for their worldwide income in the US, even if they live abroad. Therefore, you must file a US federal tax return every year and report your global income. A double tax law kicks in after becoming a tax resident in Germany.

Double tax agreement

Thanks to a double tax agreement, you won’t pay taxes in both countries. US citizens can subtract taxes that are paid in Germany from their annual tax declaration.

Therefore, you will be paying taxes in Germany first and only after getting a US tax credit based on the paid German taxes. Therefore, a US taxpayer must generally file returns in both countries.

See our in-depth tax comparison between Germany and the US.

Social taxes

Like with income tax, a person will be liable for social taxes in the country where they physically carry out the work.

When working remotely in Germany, you must pay attention to all necessary social contributions both in the US and Germany; otherwise, you might lose your right to a pension, etc.

You may remain on the US payroll while working for a US company as an employee. When paying taxes in Germany, you will also contribute to social insurance, e.g., pension, health, and care.

As a self-employed in Germany, you can opt out of the public retirement system and some other contributions, but you must definitely pay health insurance. The public will come almost to 15% of your monthly revenue, which is why we highly recommend signing up for private insurance.

Check out the cheapest health insurance policies for Germany.

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