Accommodation in Germany for employees or freelancers

Accommodation in Germany for employees or freelancers

More people than ever are freelancing or working as self-employed individuals. High-speed internet has made it easier to complete tasks online, and the global economy values skilled freelancers who can work independently and travel while doing so.

What differentiates a freelancer from a self-employed individual?

The distinction between freelancing and self-employment can often be unclear. Freelancers work for other businesses, often under their own names, while self-employed individuals frequently operate under a legal name. This matters because it affects business registration, permits, and tax obligations, which vary in Germany between freelancers (Freiberufler) and self-employed (Selbstständiger) individuals.

Accommodation in Germany for freelancers

Germany is not a pricey place to live, despite being one of the richest nations on earth. However, whether or whether Germany looks affordable to you will depend on your lifestyle.

Here is a list of costs for necessities:

Accommodation Cost
1-bedroom apartment in the city centre €872.69 (each month)
1-bedroom apartment outside the city centre €621.57 (each month)
3-bedroom apartment in the city centre €1,593
3-bedroom apartment outside the city centre €1,186
minimal needs for an 85 m2 apartment €€242.59

German taxes for freelancers

You as a freelancer pay taxes in a different way than people who work for an employer. You are responsible for covering the total tax bill. The income tax rate for independent contractors and the self-employed ranges from 14% to 45% of their earnings. Your tax obligations are based on your income:

    • If your annual income is less than €9,744, you are not required to pay income tax.
    • If you earn between €9,745 and €57,918 a year, you must pay 14% to 42% in taxes.
    • 42% of your annual income, between €57,919 and €274,612, must be paid.
    • 45% of your annual income exceeding €274,613 must be paid.

Accommodation in Germany for employees

    1. Corporate lodging or corporate services?

      In Germany, when a company rents an apartment for an employee, the rental and employment contracts are separate, allowing flexibility. However, the company can link the rental contract to the job. If the job ends, the landlord can terminate the rental contract sooner for another employee. The works council has a say in these matters, and local courts handle disputes.

    2. Having the option to end a lease is crucial for companies.

      Company rental and service apartments make employers more attractive to employees. Companies typically prefer current employees to use these apartments, not former ones. German law (§ 576 (1) No. 2 of the BGB) allows employers to require employees to use the apartment if the job demands it.

    3. Certain points are necessary.                                                                                                                       The distinction between business rental and company service apartments depends on how the employment contract is handled, not how the apartment is described in the contract. Company service apartments often involve a clear connection between accommodation and employment, like little or no cost for the employee or a contractual obligation to live there. In corporate housing, there are separate contracts for rental and employment.
    4. Tax advantages started in 2020                                                                                                                       The Annual Tax Act of 2020 brought about significant tax-related improvements. Previously, taxation of cost-reduced corporate housing primarily as a non-cash benefit and the requirement for social insurance contributions existed.
    5. Integrating both legal and tax considerations.                                                                                                But it pays to be cautious: If businesses want to deduct from their taxes the costs of purchasing an employee apartment, the amount of rent also matters. Therefore, providing accommodations for employees necessitates a comprehensive legal and tax strategy that tackles questions like: Is it preferable to include the accommodations as corporate property or as the employer’s personal property? Can issues occur as a result of corporate succession or insolvency?

In Conclusion, freelancers, self-employed individuals, and corporate employees in Germany face unique accommodation and tax challenges, which require a comprehensive approach for effective navigation.

Read more at How To Abroad:

Employees in Germany frequently overlook tax deductions

Health Insurance for International Employees in Germany

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