I work for an Italian nonprofit from the US, after I moved back from Italy for family reasons. I'm a full-time contractor. I (or my 'employer') have to prove to the Italian government that I am a US taxpayer, but beyond that it's fine, and at least from my perspective much easier than dealing with the Italian government otherwise (those who know the language and system may feel different of course). I am very happy not to be throwing a huge chunk of my paycheck into the Italian pension system since I have never intended to retire in Italy, so it was simply a gift to the government of those lovely people.
I'm not sure how much variability there is with this kind of setup within EU member countries.
Also let's say you have an American company with 200 german employees but no office on german soil, does that mean they don't pay any local tax because technically they don't operate their business in the country ?
The American perspective on this is that the employer pays employment taxes for their employees (but not contractors), and the employees/contractors are responsible for their own income taxes, wherever they work (US or abroad). Surely the German employees would report and pay their income tax?
Taxes are not a tithe to the Church. They are not a moral obligation. They are a payment for past, present and future government services. If you (or your family) are not receiving services from that government, then you shouldn't be obligated to pay them. Pay for the services from your own government.
It is good to question how much of the tax burden should be paid by employers vs. employees, but the idea that some tax burden is split by different parties in different nations is not a new one. For example, international trade has been occurring for as long as nations have existed. There is no shortage of precedent to draw from.
The dev can't be a freelancer because a freelancer with a full time, fixed hours, single customer is illegal in many places
This might actually be what may changes rather than the 'closing of loopholes'. From what I have understood after talking with German in-laws, these laws are nominally to prevent the abuse of workers who are denied the rights and benefits of full employment. From a workers' rights perspective, this makes sense for 20th C. laborers, but not really for 21st century knowledge workers who could be getting paid >2x working from Germany for an American company compared to what they would be able to get working domestically. So in practice, this type of law can keep wages lower and give more control to German companies at the expense of the workers, so you know who will fight the changes to the laws to preserve the status quo. But if tech/knowledge workers who wish to have better remote employment opportunities can band together to pressure their elected officials, then this could change.