{"id":1610,"date":"2021-03-17T06:34:39","date_gmt":"2021-03-17T05:34:39","guid":{"rendered":"https:\/\/interstellar.accountable.de\/?p=1610"},"modified":"2025-07-23T14:18:47","modified_gmt":"2025-07-23T12:18:47","slug":"how-to-avoid-false-self-employment-scheinselbststandigkeit-in-germany","status":"publish","type":"post","link":"https:\/\/interstellar.accountable.de\/en\/blog\/how-to-avoid-false-self-employment-scheinselbststandigkeit-in-germany\/","title":{"rendered":"How to avoid false self-employment (“Scheinselbstst\u00e4ndigkeit”) in Germany"},"content":{"rendered":"\n

One of the things people may warn you about when you first <\/b>start freelancing in Germany<\/b><\/a> is the trap of false self-employment, and they\u2019re right to do so! False self-employment is an issue of fraud that is taken very seriously by the tax authorities, and it\u2019s very important to be aware of your rights and responsibilities so that you can avoid getting into real trouble. <\/b><\/p>\n\n\n\n

\u201c<\/span>Fraud?<\/span><\/i>\u201d I hear you thinking, \u201c<\/span>I\u2019m not going to engage in fraud!<\/span><\/i>\u201d. While it\u2019s great that you don\u2019t want to do so intentionally, we want to make sure that you can identify potential clients or situations that could be deemed as false self-employment so that you don\u2019t do so by mistake. Foreigners freelancing in Germany are more likely to be the ones to unwittingly fall into a trap, as they\u2019re typically less aware of the regulations that govern these situations.<\/span><\/p>\n\n\n\n

This guide sheds light on this grey area of freelancing and provides you with the know-how to identify any questionable clients or arrangements so that you can confidently operate as a freelancer in Germany in compliance with local regulations.<\/span><\/p>\n\n\n\n

False self-employment<\/strong><\/span><\/h2>\n\n\n\n

What is it?<\/span><\/h2>\n\n\n\n

In order to explain what false self-employment (\u201c<\/span>Scheinselbstst\u00e4ndigkeit<\/span><\/i><\/a>\u201d) is, it will help to define what genuine self-employment looks like, and why false self-employment exists at all.<\/span><\/p>\n\n\n\n

Genuine self-employment<\/span><\/h3>\n\n\n\n

When someone is genuinely self-employed, they generate income through work with multiple clients. They have the freedom to provide services to clients and customers without being integrated into the organisation. They can choose how they manage their own workload, as well as where and when they work. When accepting a project, a genuinely self-employed person is able to negotiate their rates and define the scope of the work that will be involved. <\/span><\/p>\n\n\n\n

The freedoms and flexibilities of self-employment also comes with certain negatives when compared with employment. Self-employed people forgo the right to a minimum wage, must make their own <\/span>health insurance<\/span><\/a> and <\/span>pension<\/span><\/a> contributions, and don\u2019t accrue paid vacation or sick leave. Many employers provide several other benefits to their staff, such as training budgets, equipment, and things like subsidised gym memberships or lunch. These are factors that should be considered when setting and negotiating rates, as freelancers must ensure they too can manage financially if they fall ill and take a holiday every so often. <\/span><\/p>\n\n\n\n

False self-employment<\/span><\/h3>\n\n\n\n

The lack of working rights and benefits for freelancers can attract some unethical and noncompliant behaviour from employers who, in hoping to circumvent the full costs of hiring legitimate employees, hire freelancers and ask or expect them to carry out the duties of an employee. Hiring freelancers to subcontract tasks and projects is absolutely fine, but when a freelancer is expected to do the work of an employee, without the benefits or employment rights, it\u2019s not genuine freelancing, it\u2019s <\/span>false self-employment<\/b>. <\/span><\/p>\n\n\n\n

Despite the importance of this issue, it still remains somewhat of a grey area. The criteria with which false self-employment is distinguished from genuine self-employment can be complex, with multiple factors that are taken into account. Broadly, false self-employment exists when a freelancer or self-employed person is acting as a pseudo-employee. More specifically, it occurs when the majority of a freelancer\u2019s income comes from one client (80% is the rule of thumb) and when that freelancer does not have any employees of their own. <\/span><\/p>\n\n\n\n

Why is it bad?<\/span><\/h2>\n\n\n\n

If false self-employment is proven, both the client and the individual will face legal and financial consequences. In the client\u2019s case, all their would-be financial obligations will be applied retroactively, so they\u2019ll be required to back-pay all the social security contributions and other costs they have avoided paying for the period you\u2019ve worked together, up to a period of 4 years.<\/span><\/p>\n\n\n\n

The freelancer may be required to make back payments to the German national pension system (\u201cDeutsche Rentenversicherung\u201d) and risks having their freelance status revoked.<\/span><\/p>\n\n\n\n

How to avoid false self-employment<\/span><\/h1>\n\n\n\n

False self-employment can affect people in <\/span>any line of freelance work<\/span><\/a>, in any industry. The best way to avoid false self-employment is to be aware of the various criteria that are used to verify genuine self-employment. We recommend going through the checklists below.<\/span><\/p>\n\n\n\n

Freelance\/self-employed checklist<\/span><\/h2>\n\n\n\n

These are some criteria that would be considered by the people investigating whether you were false self-employed. Make sure you can answer yes to these questions to prove you are a genuine freelancer.<\/span><\/p>\n\n\n\n