Comment by jansan
1 year ago
I realized a few weeks ago how broken IT in Germany is when I talked to a guy who turned out the CIO of a known German retail company. We did not talk about technology, exciting projects, ideas or similar, but about the complexity of the privacy act and "Scheinselbständigkeit" (false self-employment, which is a huge issue for start-ups and self-employed people in Germany). Out brains are so busy thinking about stuff that should just not have that much brains share, that we have not enough time to think about innovation and technology. I really wish they would drastically cut bureaucracy, but I just don't see it.
I think you got this wrong. Laws against Scheinselbständigkeit are protecting individuals from being exploited, and it's one of the things that characterizes the EU.
Don't forget that outside of Europe, most big economies were built on the ongoing exploitation of the working class. I am not saying this didn't happen in Europe, but at least there are efforts to curb this.
So a CIO complaining that he can't exploit people for cheap labour is not an argument for broken IT laws. It's an argument for seeing that it works as intended.
Nobody is being exploited, most people _want_ to self-employ to not get chewed by income tax.
Most states in Europe treat you like you're mister money bags for anything above 50k a year.
You can choose:
- Cost of living (read Housing)
- Taxation
- Income
Government's need to curb one of the first two or boost the third, otherwise people will always be looking for the exit door.
Thank you for giving an insight into the typical German way of thinking by immediately suggesting that the CIO was complaing about not being able to exploit his employees. He was not. I told him that I am running a tiny company and he warned by about the pitfalls of Scheinselbständigkeit.
The best argument against the EU is a 5 minute conversation with anyone who supports it.
>Scheinselbständigkeit" (false self-employment, which is a huge issue for start-ups and self-employed people in Germany)
Can you provide more details about this? How is this a problem and why does it affect startups?
Germany has really, really strong employee protection. Hard to fire, mandatory vacation, mandatory pensions, mandatory maternity and paternity leave, ect.
If you run a society like that, you immediately face a problem: people try to get around the employee protection measures by relying on the gig economy, by hiring freelancers or by starting small companies.
So, the German tax agency has the additional authority to crack down on that. If you work freelance or run your own company, you need to always have several customers. If your only customer is a single company, the tax agency argues that you aren't actually a freelancer/small company, you are a de-facto employee of that company, and the two of you are violating several laws and owe back-payment on several employee benefit systems. Also, that's fraud BTW, here's your case number.
>Germany has really, really strong employee protection. Hard to fire, mandatory vacation, mandatory pensions, mandatory maternity and paternity leave, ect.
All EU countries have these perks with some variations between them. Only the "hard to fire" part varies more.
Well, if you employ self-employed people in your company and after a while you or they get audited and it turns out that you are their only customer, the will be classified as employees of your company. As a result you may have to pay social insurance, pension fees, etc. for the all time they have been working for you, which can be a hefty sum and may break your neck as a small company. Oh another problem that I had not mentioned is that it's extremely difficult to fire people once you have reached a certain size (I think 10 employees or something).
One of the most important rules in Germany for startups: Employ as few people as possible. And I am not joking.
As someone who was CEO at a German company with more than 10 people: this absolutely overblown. Some people just want to larp US-style at-will firing power fantasies.
It's actually surprisingly easy to still fire people, you just have to have valid reasons: employee didn't come to work, employee works badly (Schlechtleistung), employee yells at customer, lack of work to do at the company etc. You just have to create the paper trail and follow the clearly defined process for firing (i.e. it has to happen at least two times, and you had a stern talk with the employee about it (Abmahnung).
You can also still fire employees without given cause in the first (up to) 6 months of employment.
What you definitely can't do is discriminate against employees, e.g. fire pregnant women because they are pregrant, fire migrants because they are migrants and so on. You have to have an actual, factual cause.
Also let's be clear with the concept of Scheinselbstständigkeit: This is simply a hedge against companies engaging in tax fraud by pushing people to be self employed when they really aren't. Scheinselbstständigkeit only triggers if a person gets over 80% of their revenue from a single customer, over a longer time, and has other things that hint at employee status, e.g. an own desk and company mail account, has to ask for holiday and so on. Simply having a large contract for e.g. 4 months with a single customer won't trigger Scheinselbstständigkeit.
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No the OP, but Scheinselbstständigkeit is one of the scarecrows of freelancers and their clients in Germany. It is actually not very difficult, but in certain cases it is very limiting. If you can read German, here is a handy reference sheet, which is distributed by virtually all tax advisors [1].
[1] https://www.sup-kanzlei.de/fileadmin/user_upload/Scheinselbs...
And if you can't read German, it's very similar to the IR35 [0] rules that we have here in the UK.
Effectively... "Don't work as a freelancer for a company if they are your only client. That's employment."
[0]: https://www.gov.uk/guidance/understanding-off-payroll-workin...
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If you are self employed and work a prolonged time for an single customer the german irs can rule that you are effectivly an employed person under the guise of self-employment. The company and the person have to pay then a sum of money for different social security insurances.
https://redtapetranslation.com/do-i-need-to-be-worried-about...
https://allaboutberlin.com/glossary/Scheinselbstst%C3%A4ndig...