In today’s entry, we examine the employment of Hungarian workers in Germany. Why is it important to get all information before you undertake a work with your company in Germany? For example, if you do not comply with the reporting obligations, you are punishable up to 500 000 euros.
Remember our slogan: instead of paying the price for learning the lesson, spend your money on the improvement of your enterprise! Trust us, the fee of a consultant is still less than the penalty of the Customs and Finance Guard.
Let’s see step by step what are your obligations if you work on the territory of Germany with a Hungarian business license or with your Hungarian company:
- The certified German translation of the company register extract
- The company and the employees shall be declared to the Customs and Finance Guard on the appropriate form (there may be serious consequences if you fill in the wrong form)
- Declare the company and the employees to the Soka-Bau holiday fund (here, I recommend to request immediately the exemption) – only applies to the construction industry.
- Requesting the permission from the chamber of crafts trade (in Germany)
- Obtaining the A1 forms
- Obtaining the tax authority’s “zero value”, that is negative tax clearance certificate
- Form to determine the domiciliation (this serves for avoiding the so-called double taxation, it is important mainly in the construction industry, in order that the 15% construction industry tax shall not be deducted from the invoices. If it is still deducted, you can reclaim it at the end of the year at the German tax authority).
Of course, for the purpose of being able to start this, you will need the contract concluded with the partner. I recommend you to ask a competent lawyer, who knows the legislation of both countries, to review it. If you do not know such a lawyer, ask for our help and quotation.
The most frequently asked question: what payment obligations do I have in Germany?
The answer: your company does not have payment obligations to the German authorities but this statement is only half-true.
- If you have a construction company, based on your activity, it is possible that you are subject to the Soka-bau, the holiday fund. In this case, you will need a payroll accountant who is competent in the German construction industry, who only and specifically performs the Soka-bau payroll for your company.
- You have contribution payment obligations to the Hungarian state if the duration of posting of your employee does not exceed 183 working days and he/she has interrupted twice his/her stay in an attested manner.
- The payment of the company’s taxes for 12 months shall be completely performed to Hungary.
If your company crosses these boundaries, or you plan for a longer term, you must establish a branch site. Many factors influence whether it is considered as an individual or non-individual branch site.