Ask HN: Germans, how to work legally remote?

Wouldn't you actually be paying more taxes as a one person company? Why does it matter if the company has only one client and one employee if everything is paid properly?

No, it's not. Well, if you are doing software related stuff. (Almost any other occupation is highly regulated in Germany (be it electrician, painting service or tax consultant, you need specific degrees to be allowed to open a specific business)).

To do (software) business those are relevant options (there are more, but those are more exotic or for larger businesses or startups):

a) "Freiberuf" (often translated as freelance, but it is actually something different). This is originally intended for architects and similar professions. It is hard to get, and even harder if you don't have some kind of engineering degree.

b) "Gewerbe". You just need to register, pay a few minor fees, and you can do business. However, you are personally liable for the business you do (so get proper insurances).

c) GmbH or UG. An LLC. This _used to be_ expensive (GmbH requires at least 12.5k of base capital to be put into the company). This establishes an own legal entity and the liability is restricted to the money you put into it. "UG" is a "new" (>10y old now!) version of a GmbH which only requires 1 Euro to be put into the company (should be more like 2k) ...

Costs

a) and b) are essentially "free". You don't necessarily need a tax consultant and all the filings are not that hard anymore (all online AFAIK, though I do let my tax consultant do that). a) is a little better because the taxes are setup a little different.

c) Setting up a UG is not _expensive_, but not exactly free either :-) Plan ~1k for setup, and then ~1.5-2k yearly for letting the tax consultant do the necessary paperwork. It's very easy too, you just setup the company at a notary, and they will essentially do everything for you.

Notably there are also lots of funding and startup programs in Germany, many of which are actually quite good.

Probably the most important thing is to find a reasonable tax consultant. It's not rocket science, but it's worth the money.

Disclaimer: I have a) for ~15 years, and I've setup two c)'s and an AG (a stock based company).

Yes, if you have an incorporation (UG/GmbH/...) where you are the only managing partner (Ein-Personen-GmbH) and you only have one client, you’re handled as if you were a freelancer with only one client. It was an easy way to circumvent several obligations until they “closed” that “loophole”.

Employment by US company: Did that for five years working remotely from Germany for a US Incorporated. I'm German, had a German contract with all the standard provisions for Germany (mandatory vacation, termination protections etc, employer contributions to health-care etc). Worked without a hitch, like being employed by a DE entity. The only gotcha is that my monthly pay would have social contributions and health-care contributions already deducted, but would not have income tax deducted. So you'd have to save up enough money to pay income tax yourself at the end of the year (or quarterly, depending on how competent your local tax office is). After five years the US parent incorporated a German subsidiary, and since then the taxes were obviously deducted as well.

Personal take on tax accountants or anyone in that profession: They're more than useless. As parent poster said, 99% are form fillers, so if you tell them that you're working for a US entity that is not paying income tax on your behalf some of them will flat out say "but that's not even possible" (yes, someone told me that). My tip is just to read up on some topics, band together with co-workers in a similar situation and then just do the taxes yourself using one of the popular services.

Because as managing director you don’t have to pay pension insurance (and others). So if you are employed, the social system will get more contributions.