Provision of Tradesman's Services in Germany
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Guide for the Provision of Tradesman's Services in Germany January 2021 Provision of Tradesman's Services in Germany Photo: Grecaud Paul – Fotolia Chamber of Trades of Lower Bavaria-Upper Palatinate · Ditthornstraße 10 · 93055 Regensburg Page 1 of 19
Guide for the Provision of Tradesman's Services in Germany January 2021 Table of Contents Foreword 3 Freedom to provide services 5 What steps must a foreign company follow? 5 Overview 5 1. Approval for providing services 5 2. Qualification 6 3. Notification of posted employees 7 4. Compliance with German labour and social law 9 5. Fiscal aspects 11 6. Social fund for the construction sector 12 7. Compliance with all German standards 13 8. Preparation of a construction site portfolio 13 Information for subcontractors 14 Bogus self-employment 15 Contract staffing 16 Freedom of establishment 17 Annex 18 Country-specific information 18 Austria 18 Czech Republic 18 Slovakia 19 Poland 19 Romania 19 Slovenia 19 Hungary 19 Good to know 19 Chamber of Trades of Lower Bavaria-Upper Palatinate · Ditthornstraße 10 · 93055 Regensburg Page 2 of 19
Guide for the Provision of Tradesman's Services in Germany January 2021 Foreword This guide was created as part of the project Centre for Skilled Workers “Handwerk – grenzenlos erfolgreich” (Trades – successful without limits). It was funded by the Federal Ministry of Labour and Social Affairs within the framework of the Initiative Neue Qualität der Arbeit (New Quality of Work Initiative) (INQA). New Quality of Work Initiative: securing the future, shaping work Attractive working conditions are a key to innovative and successful companies, as well as to efficient administrations now more than ever, and form the foundation for securing a skilled labour base in Germany. The New Quality of Work Initiative (INQA), launched by the Federal Ministry of Labour and Social Affairs, is committed to these objectives. The federal government, states and municipal umbrella organisations, employers' associations and chambers, trade unions, companies, the Federal Employment Agency, as well as social security agencies and foundations, are working together in the areas of leadership, equal opportunities & diversity, health, as well as knowledge & competence to develop ideas, aids and instruments that will strengthen the quality of work in Germany. As an independent network, the initiative offers concrete advice and information to companies and administrations and a wide range of exchange opportunities in numerous – also regional – company and industry networks. For more information on the New Quality of Work Initiative, visit www.inqa.de. Chamber of Trades of Lower Bavaria-Upper Palatinate · Ditthornstraße 10 · 93055 Regensburg Page 3 of 19
Guide for the Provision of Tradesman's Services in Germany January 2021 Disclaimer The information provided in this guide has been researched with great care. The contents of this guide are updated regularly. Although the most recently updated version, which is available on our homepage, applies, we cannot assume any liability for the accuracy, up-to-datedness and completeness of the information provided therein, especially the translations, and for the wording and validity of the legal provisions cited therein. The current, official version, as published in the official announcement organ intended for this purpose, shall always apply, for the correctness and legality of the content of websites which have been referred to in the guide. The content of these websites is dynamic and can change at any time. We expressly do not take ownership of this. Only the essential contents, which are of importance primarily to our member companies, have been selected from the relevant laws. Any legal references and information are not binding. We do not provide legal or tax advice. It is not permitted to use, process, duplicate or pass on this guide or parts thereof without the written permission of the Chamber of Trades of Lower Bavaria-Upper Palatinate. In you have any queries, please contact: Tel.: +49 (0)851 5301-129 Email: eap@hwkno.de www.hwkno.de/eap January 2021 Chamber of Trades of Lower Bavaria-Upper Palatinate Chamber of Trades of Lower Bavaria-Upper Palatinate · Ditthornstraße 10 · 93055 Regensburg Page 4 of 19
Guide for the Provision of Tradesman's Services in Germany
January 2021
Freedom to provide services
What steps must a foreign company follow?
Overview
1. Approval for providing services
2. Qualification
3. Notification of posted employees
4. Compliance with German labour and social law
5. Fiscal aspects
6. Social fund for the construction sector
7. Compliance with all German standards
8. Preparation of a construction site portfolio
1. Approval for providing services
Companies from the EU and EEA states have unrestricted freedom to provide services: they may
temporarily carry out "cross-border" commercial activities in Germany without having a branch office or
permanent establishment here.
Restrictions apply to companies from Bosnia and Herzegovina, Northern Macedonia, Serbia and Turkey:
their operation via work contracts is limited by quotas based on German labour market data. The work
contracts1 must be approved individually for each order/construction site within the framework of the
quotas. A corresponding application must be submitted for this and the work contract and information
about the foreign company must be enclosed herewith. Experience has shown that this approval can take
several weeks, at least for the first application, so it is advisable to take that much time into account.
Applications must be submitted to:
Federal Employment Agency, Stuttgart
Tel. +49 711 920–0
stuttgart@arbeitsagentur.de
www.arbeitsagentur.de
For information, visit the website of the Federal Employment Agency:
Merkblatt 16 - Beschäftigung ausländischer Arbeitnehmer im Rahmen von Werkverträgen in Deutschland
(Leaflet 16 - Employment of foreign workers under work contracts in Germany)
1Only the term “work contract" may be used for the quotas. There are currently no construction contracts in this area (see point "Bogus
self-employment").
Chamber of Trades of Lower Bavaria-Upper Palatinate · Ditthornstraße 10 · 93055 Regensburg Page 5 of 19Guide for the Provision of Tradesman's Services in Germany
January 2021
2. Qualification
The following information applies to companies from the EU/EEA states and Switzerland that provide
tradesman's, installation and other services in Germany without having a branch office here.
In the EU/EEA states, the respective national law always applies with regard to the execution of commercial
activities. EU directives simplify working across borders between the EU/EEA states.
Citizens of the EU/EEA states and Switzerland, who do not establish a branch office in Germany, are
permitted to provide cross-border services if they are entitled to carry out similar activities in their country
of origin. The decisive factor here is whether the activity is subject to approval in Germany or not. If the
activity is a trade that is subject to approval in Germany, a so-called notification of services must be
submitted as proof of qualification. This notification must be submitted to the Chamber of Trades in whose
district the first order is to be carried out.
Overview of the Chambers of Trades across Germany:
www.zdh.de/organisationen-des-handwerks/handwerkskammern/deutschlandkarte.html
a) Activities subject to approval/regulation in Germany:
Written notification of services is required
Link to trades subject to regulation: Annex A (Tradesman's Code – HwO):
www.gesetze-im-internet.de/hwo/anlage_a.html
b) Activities not subject to authorisation/regulation in Germany:
No notification obligation
Link to trades not subject to regulation: Annex B1/B2 (Tradesman's Code – HwO):
www.gesetze-im-internet.de/hwo/anlage_b.html
Prerequisites for the notification of services:
EU/EEA or Switzerland citizenship
Temporary and occasional professional practice without a branch office in Germany
Activity in a trade subject to approval mentioned in Annex A HwO
Applicant is legally established in the country of origin for the purpose of executing an activity subject
to regulation (similar activity)
If the country of origin does not require a specific qualification or training for executing the activity,
the activity must have been carried out in the country of origin for at least one year
Certificate from a national authority in the country of origin, a so-called EU certificate or EEA
certificate (for contact points, see "Country-specific information" in the annex)
The form for notification of services can be found in the download section under: www.hwkno.de/eap
In addition to the form, you will also need a certified copy of your passport, as well as the original EU
certificate and its certified translation.
If the above-mentioned requirements for the provision of services are met, the activity may be carried out
immediately after notification (exception: chimney sweeping trade, health trades).
For the health trades as defined in Annex A HwO No. 33 to 37 (opticians, hearing aid acousticians,
orthopaedic technicians, orthopaedic shoemakers, dental technicians) and for the chimney sweeping trade,
the Chamber of Trades may mandate a technical qualification examination.
Chamber of Trades of Lower Bavaria-Upper Palatinate · Ditthornstraße 10 · 93055 Regensburg Page 6 of 19Guide for the Provision of Tradesman's Services in Germany
January 2021
The Chamber of Trades issues a certificate regarding the notification of services upon receipt of the
notification of services. The cost for this is EUR 25 to 35. This is valid throughout Germany for one year.
After this year lapses, the notification must be submitted again (so-called follow-up notification). This re-
notification procedure is free of charge. This form can also be found under: www.hwkno.de/eap
3. Notification of posted employees
In the EU/EEA, the provisions of the labour and social law of the country in which an employee is employed,
always apply (there are exceptions for health and pension insurance).
This means that an employee from an EU country is subject to German regulations on working time and
holidays for the duration of his/her posting in Germany, and he/she must receive the minimum wages
applicable in Germany. He/she may also be entitled to additional social benefits, for example, from SOKA
BAU (see below for further details). Note: if the posting lasts longer than 12 months, it is considered a
"long-term posting". Information on this is provided in point 4.
Compliance with the provisions of the German labour and social law is verified by the Financial Control
Illegal Employment ("FKS"), a customs body. It also checks whether employees posted in Germany are
covered by health and pension insurance in their country of origin. To be able to carry out this check, this
customs body needs to know the location (e.g., the construction site) where the employee is employed.
All employees employed on construction sites in Germany must therefore be reported to the Directorate
General for Financial Control Illegal Employment, Directorate VII,
Wörthstraße 1-3, D-50668 Cologne, before they start work (not applicable for self-employed sole traders).
Employers with registered offices abroad, who send one or more employees to Germany for work or for
providing services, must observe the various rules regarding the reporting of their employees.
Reporting is done online via the "Minimum Wage Notification Portal":
www.meldeportal-mindestlohn.de
The use of the electronic notification portal requires a one-time registration to create a user account.
Changes to the original notification must be notified. This is also done via the portal.
Chamber of Trades of Lower Bavaria-Upper Palatinate · Ditthornstraße 10 · 93055 Regensburg Page 7 of 19Guide for the Provision of Tradesman's Services in Germany
January 2021
Authorised recipient:
An authorised recipient in Germany must also be mentioned in the notification. This can also be the
manager of the employees posted in Germany, provided that he/she can act responsibly on behalf of the
foreign company (for example, the foreman on a construction site).
An operation schedule must also be notified, showing which employees are working at which site and
when.
Exemptions from the obligation to notify:
Certain activities are exempt from the obligation to notify, for example, if your employee is posted in
Germany to
perform initial assembly or installation work (excluding construction services!), which:
is part of a delivery contract,
is indispensable to the commissioning of the delivered goods and
is carried out by skilled or semi-skilled workers of the supplier company and
the duration of employment in Germany does not exceed eight days within one year.
or to
conduct meetings or negotiations, prepare contract proposals or conclude contracts
attend a trade fair, conference or meeting
For details, see: https://www.gesetze-im-internet.de/aentg_2009/__24.html
Residence permit:
The following applies if a company from the EU/EEA states sends employees to Germany for the provision
of services (under a work or construction contract):
Employees from the EU/EEA area do not require residence or work permits. Employees from third
countries can be sent to Germany if they have a long-term residence permit (long-term resident EU) in the
sending country (country of the sending company) and if the temporary service in Germany does not
exceed three months within a 12-month period. If the posting in Germany is expected to last longer than
three months within a 12-month period, a visa application must be submitted to the German embassy in
the sending country ("van der Elst visa"). We strongly advise you to obtain this visa in good time.
Chamber of Trades of Lower Bavaria-Upper Palatinate · Ditthornstraße 10 · 93055 Regensburg Page 8 of 19Guide for the Provision of Tradesman's Services in Germany January 2021 4. Compliance with German labour and social law Social security: In principle, the social security law of the sending EU state applies. The A 1 EU-form, which is issued by the insurer in the country of origin, serves as proof. For employees who are working in Germany for more than 24 months without interruption, it must be checked whether the compulsory insurance shifts to Germany. There is no social security obligation for the contractor in Germany as long as he/she is appropriately insured in his/her country of origin and can prove this. Remuneration regulations: The German minimum wages must be observed and appropriately documented by companies that are temporarily operating in Germany. The current statutory minimum wage for employees working in Germany is EUR 9.50 (gross). However for certain trades, higher collectively agreed minimum wages are to be paid to employees working in Germany (also see the German Posted Workers Act and information below). Employer contributions for social security are not offset against minimum wages. Payment must be documented by way of wage records (see point "Preparation of a construction site portfolio"). Generally binding collectively agreed minimum wages apply in the following trade sectors: Construction trade, electrical trade, painting and varnishing trade, roofing trade, building cleaning trade, scaffolding trade, chimney sweeping trade, stonemason’s and stone sculpturing trade. The current list can be found on the website of the Federal Ministry of Labour and Social Affairs. Additional information on the obligation to record working time (obligation to document) can be found under point 8. Furthermore, the wages of employees from abroad also include overtime rates, allowances and bonuses (e.g., hardship allowances, night-work allowances, hazard bonuses) or benefits in kind provided by the employer, insofar as these are prescribed by law or through generally binding collective agreements. An overview of the employment conditions in accordance with collective agreements and legal provisions is provided by the customs authorities (in German and in English). The EU employer may not offset travel, accommodation and subsistence costs, i.e., costs actually incurred as a result of the posting (so-called sending costs within the meaning of § 2 b Para. 1 of the German Posted Workers Act), against remuneration. However, if the employee receives a posting allowance for the duration of work performance in Germany, this can be offset against remuneration. For this reason, it is strongly recommended that the employment contract or a corresponding supplementary agreement supplementing the employment contract should specify the purpose of the allowance; in other words, it should specify whether and to what amount the posting allowance is paid as reimbursement for the sending costs or as part of the remuneration for work performed in Germany. In doubtful cases, the total amount paid is regarded as posting costs with the consequence that they cannot be offset against remuneration. As a rule, the law of the country of origin applies to allowances and reimbursement of posting-related costs. However, under § 2 Para. 1 Clause 8 of the German Posted Workers Act, the rules of the host country must also be observed. If the regulations of the country of origin are more favourable to the employee, this is maintained at the time of application (favourability principle). In this case, it appears appropriate to consult a tax advisor for support. Chamber of Trades of Lower Bavaria-Upper Palatinate · Ditthornstraße 10 · 93055 Regensburg Page 9 of 19
Guide for the Provision of Tradesman's Services in Germany January 2021 Working conditions for posted workers: Employee accommodations must meet the minimum standards of the Workplaces Ordinance. Based on the number of occupants, they must be equipped with: living and sleeping area (beds, cupboards, tables, chairs), dining area, sanitary facilities. If the accommodation is shared by men and women, this must be taken into account when allocating rooms. These requirements are given concrete form by the Technical Rule for Workplaces ASR A4.4 on setting up and operating accommodations for workplaces. All working conditions prescribed in Germany apply after this period for foreign employees who are posted in Germany for more than twelve months. Employers can submit an application for a six-month extension of the deadline to the customs authorities, stating their reasons. If employment in Germany began before 30th July 2020, a notification need not be submitted since this is deemed to have already been submitted through the fiction of § 25 Para. 2 Sentence 2 of the German Posted Workers Act. You will find more information on long-term posting and calculating the period of employment in Germany on the Customs website. Occupational health and safety in Germany (source: Bavarian Trade Supervisory Authority): The role of employers: The occupational health and safety legislation in Germany delegates to the employer a comprehensive responsibility for the safety and health protection of his/her employees. The employer is obliged to take the necessary measures for occupational health and safety, taking into account the circumstances that impact the safety and health of employees at work. The employer must check the effectiveness of these measures and, if necessary, adapt them to changes, i.e., keep them up-to-date. It is his/her duty to strive for the continuous improvement of the safety and health protection of employees. The employer must appoint safety experts and company doctors to support him/her and advise him/her on occupational health and safety issues. The role of employees: Employees are also partially responsible for their own safety and health. They must observe and support the relevant measures taken by the employer and, if necessary, inform the employer of any deficits in occupational health and safety. Small and medium-sized companies can check their occupational health and safety organisation online using the GDA-Orgacheck of the Offensive Mittelstand – Gut für Deutschland (Promoting SMEs – Good for Germany) & the Mittelstand-Gesellschaft-Verantwortung foundation: https://inqa.de/DE/handeln/inqa- checks/gda-orgacheck-arbeitsschutz-mit-methode.html Chamber of Trades of Lower Bavaria-Upper Palatinate · Ditthornstraße 10 · 93055 Regensburg Page 10 of 19
Guide for the Provision of Tradesman's Services in Germany January 2021 5. Fiscal aspects Value added tax: The uniform EU regulations apply only to goods deliveries. Services rendered to private individuals in Germany are subject to the German value added tax. Registration with the competent German tax office for foreigners is required. Link: www.ofd.niedersachsen.de/portal/live.php?navigation_id=17533&article_id=67782&_psmand=110 Construction and expansion services provided on a property in Germany are also subject to German value added tax. For services to contractors (value added tax identification number), the tax liability is transferred to the service recipient (customer). Construction-based withholding tax: If someone provides a construction service (service provider) in Germany to a contractor or to a legal entity under public law, the service recipient (customer) is obliged to make a tax deduction to an amount equal to 15 percent of the consideration (including value added tax) (§ 48 of the Income Tax Law (EStG)). Construction services are all services which are carried out in relation to the construction, repair, maintenance, modification or removal of structures. To prevent this deduction, the foreign (sub-)company must submit a valid exemption certificate to the customer in accordance with § 48b Para. 1 Sentence 1. The exemption may be granted on an order basis or for a specific period which, however, should not exceed three years. Contractors domiciled abroad with residence/registered office and management abroad apply for the exemption certificate informally at the German tax office responsible for their country (for link, see above). Link to the application form: www.finanzamt.bayern.de/Informationen/Formulare/Weitere_Themen_A_bis_Z/Bauleistungen/Musterant rag-Freistellungsbescheinigung.php Application or extension is not possible online! Information is provided in the leaflet on tax deduction: www.finanzamt.bayern.de/Informationen/Formulare/Weitere_Themen_A_bis_Z/Bauleistungen/merkblatt /StAb-Bau_Merkbl_18_deutsch.pdf Wage and/or profit tax: The 183-day rule usually applies, which means that if an employee stays in Germany for more than 183 days in a year, he/she will be liable to pay wage tax here. The same applies in principle to the foreign contractor in connection with his/her income tax. Details are regulated in the respective double taxation agreements between the Federal Republic of Germany and the country of origin of the foreign company. Cross-border commuters (they live in an area up to 30 km from the German border and return to their home country every working day) from Austria and Switzerland are always liable to pay wage tax in their country of origin. Chamber of Trades of Lower Bavaria-Upper Palatinate · Ditthornstraße 10 · 93055 Regensburg Page 11 of 19
Guide for the Provision of Tradesman's Services in Germany January 2021 6. Social fund for the construction sector When carrying out construction services in Germany, it must be checked whether there is an obligation to contribute to the leave and wage equalisation fund (ULAK) of Soka Bau (social fund for the construction sector). The Urlaubs- und Lohnausgleichskasse (ULAK) of the German construction industry is an institution that collects and centrally processes payments from companies for social benefits for their construction employees. These are special social benefits not covered by the health and pension insurance that are disbursed in the country of origin of employees posted in Germany. The ULAK in turn receives information from the "Financial Control Illegal Employment" that you have reported a posting of employees. However, this does not release you from the obligation to report to ULAK. Contributions to the ULAK, which are currently 15.4% of gross wages, need to be made if the sending company provides services that fall within the scope of the German collective agreement for the construction trade. For further information, visit www.soka-bau.de, SOKA BAU - Urlaubs- und Lohnausgleichskasse der Bauwirtschaft (ULAK) (Leave and Wage Equalisation Fund of the German Building Industry) - - Zusatzversorgungskasse des Baugewerbes AG (ZVK) (Supplementary Health Insurance of the Building Industry) - Wettinerstraße 7 D-65189 Wiesbaden Tel.: +49 (0)800 1200 111 Email: service@soka-bau.de At SOKA BAU, employees are available to provide information and information material in most languages of the EU countries: www.soka-bau.de/europa/ Exemption from the ULAK obligation in Germany is possible if comparable contributions are already being made for the posted employees in their country of origin and there is a recognition agreement with the ULAK. The following needs to be checked: does the activity carried out in Germany fall within the scope of the German collective agreement for the construction trade? Is the sending company engaged in construction services for more than 50% of the working time? Paid-up contributions that are not demanded by companies can be refunded to the employees sent to Germany. Info: www.soka-bau.de/europa/de/leistungen/abgeltung-fuer-arbeitnehmer/ and www.soka-bau.de/fileadmin/user_upload/Dateien/Europa/Deutschland/europa-antrag_deutsch.pdf If your company has paid ULAK contributions for employees sent to Germany and these have not been demanded by the company as holiday pay, you should inform your posted employees of this reimbursement possibility in January of the following year so that they can have the money refunded from SOKA. Chamber of Trades of Lower Bavaria-Upper Palatinate · Ditthornstraße 10 · 93055 Regensburg Page 12 of 19
Guide for the Provision of Tradesman's Services in Germany
January 2021
7. Compliance with all German standards
For all goods (e.g., materials, construction products, technical components), which are brought into
Germany to provide the service and for which no harmonised EU standard exists, the national German
standards apply in Germany.
Info:
LGA/TÜV Rhineland een
Tillystrasse 2
90431 Nuremberg
Tel.: +49 (0)911 655-49 33
Email: lga@lga.de
8. Preparation of a construction site portfolio
According to the German Posted Workers Act, which applies to construction and installation work in the
broadest sense, and to gardening and landscaping work, as well as to the building cleaning trade when
using employees, documents that need to be retained in Germany must be provided:
www.zoll.de/DE/Unternehmen/Arbeit/Arbeitgeber-mit-Sitz-ausserhalb-Deutschlands/Pflichten-bei-
Pruefungen/pflichten-bei-pruefungen_node.html
Maintenance of working time sheets (obligation to document):
Employers are obliged to record the
start (to be noted immediately at the start of work)
work breaks
end and duration
of the daily working time of employees, at the latest by the end of the seventh calendar day following the
day of work performance, and to preserve such records for at least two years. The records must always be
kept available at the construction site for the entire duration of order processing. There are special
regulations for building cleaners.
Extension of the obligation to document:
If hour-based allowances are to be granted, the obligation to document must be extended accordingly. This
means that the respective allowance must now be indicated, and the start, end and duration of the working
time which justifies a claim to this allowance must also be documented in addition to the already existing
obligations to record (see above). This must be done under the same conditions as previously described.
This is the case, for example, if the collective agreement provides for allowances for overtime or work
performed on Sundays and public holidays.
Keeping documents ready:
Employers with a registered office in Germany or abroad must keep the documents required for verifying
compliance with the working conditions under the German Posted Workers Act available in Germany and in
German:
Employment contract + supplements proving that the employees receive the German minimum wages
(in German). For example, an additional contract (in German as well as in the language of the country
of origin) indicating that the employee (specify exact job) receives a wage of EUR ... during the period
of employment in Germany, signed by employer and employee
Pay slips
Proof of wage payments made (from 15th of the following month)
Chamber of Trades of Lower Bavaria-Upper Palatinate · Ditthornstraße 10 · 93055 Regensburg Page 13 of 19Guide for the Provision of Tradesman's Services in Germany
January 2021
Proof that the employee/contractor is covered by health and pension insurance in the country of
origin:
Health insurance card (chip card, EHIC),
Pension insurance: A 1.
If working time is made flexible, the following additional documents must be kept at hand:
Written agreement on making the working time flexible
Adjustment account (for each employee), if necessary, separate hourly records for new federal
states/old federal states
Proof of security for the adjustment account (e.g., bank guarantee, escrow account)
Information for subcontractors
In practice, German clients demand further information and documents from their contractors to keep
their own risk low. The client initially has the following questions for the subcontractor:
From a legal perspective, is the "subcontractor" a company with which a work or construction contract
can be concluded? The reason for this is the fear of the subcontractor's "bogus self-employment". The
customer usually requires an excerpt from the commercial register or similar record and/or proof of
trade registration (with trade + date of registration). Subcontractors can also prove their
entrepreneurial status by proving that they pay profit tax in their country of origin.
Does the subcontractor have the capability/permission to carry out the delegated trade? In this case,
the trade law issue is usually of secondary importance to the customer. The customer is mainly
concerned about liability or technical issues, and this applies particularly to trades subject to
regulation. For this purpose, a confirmation of recognition by the competent Chamber (of Trades) is
usually required. In the case of complex trades however, other documents are often also required that
prove that the subcontractor has already carried out work of the required nature (in his country of
origin among others) (EU certificate and notification of services).
Are the subcontractor's employees duly covered by health and pension insurance in their country of
origin? This is a very sensitive point, because considerable financial and criminal law risks can arise for
the customer if this is not the case. We advise our companies to ask the subcontractor to present the
pension insurance certificate A1 for each employed worker, to request a list with the names and
photos (and, if applicable, dates of birth) of the employed workers, which have also been reported to
the Federal Financial Directorate West, Financial Control Illegal Employment, and to check the health
insurance cards (chip card EHIC) of the employees at the start of work.
Irrespective of this, companies increasingly require their subcontractors to provide proof of liability
insurance before placing an order. They themselves are often asked to do so by their own customers
or insurance companies. For larger orders in the areas of heating, gas, water or electricity, coverage
amounts of EUR 5 million are quite common. If subcontractors cannot provide proof of sufficient
insurance of their own, their customers have to close this gap at their own risk and expense. Usually,
special obligations to report or special construction supervision must then be agreed in the contract.
Does the subcontractor require a value added tax identification number or, in the case of
construction activities, a valid exemption certificate for the construction-based withholding tax from
the responsible German tax office?
Chamber of Trades of Lower Bavaria-Upper Palatinate · Ditthornstraße 10 · 93055 Regensburg Page 14 of 19Guide for the Provision of Tradesman's Services in Germany
January 2021
Do the activities carried out by the subcontractor fall within the scope of the German collective
agreement for the construction trade and are payments to the leave fund of SOKA Bau therefore due?
Here too, general contractors are liable for unpaid contributions, which is why they will probably ask
for a confirmation of notification and clearance certificate of SOKA-BAU or proof of exemption from
this (possibly power of attorney to be a part of SOKA-BAU's early warning system for guarantors).
In our experience, medium-sized customers are not excessively fussy about these issues. Large companies,
however, often require very extensive documentation from their subcontractors due to internal
regulations, up to and including the disclosure of all subcontractors that are likely to be used, along with
the names of the workers employed (this does not seem feasible at first glance in some cases, but then
such orders usually have a longer lead time).
Bogus self-employment
In the context of social security, a gainfully employed person (from abroad) is either self-employed or is an
employee. If he/she is an employee, he/she enjoys all the associated rights and the employer is obliged to
register him/her for wage tax and health and pension insurance and to pay contributions. The employer has
the right to give instructions to the employee and thereby integrate him/her into the regular course of
operations.
On the other hand, self-employed means: the "subcontractor” has a formal company and concludes a work
or construction contract with the customer2, i.e., he/she provides services in the form of a "trade". This
specific trade is delegated to him/her for independent execution under his/her own entrepreneurial
responsibility. Although the German company commissioning the work can perform construction
supervision, it cannot itself intervene in the execution (e.g., by giving direct instructions to the foreign
employees or by providing its own staff).
The following criteria are checked:
Is the agreed service a trade, i.e., a "self-contained technical unit"?
Does the subcontractor have the capability/permission to carry out this trade independently and
under his/her own responsibility?
Does the customer regularly give the subcontractor specific instructions on how and when something
needs to be done?
If the subcontractor and his/her employees are involved in the customer's operations, do the
subcontractor’s employees and those of the customer work together on the same trade ("mixing of
staff")?
It can be difficult to decide whether a work contract, construction contract or dependent employment
relationship ("bogus self-employment") exists, especially if the subcontractor is a "one-person company",
i.e., the subcontractor works alone without employing any staff.
In that case, the following aspects are also taken into consideration:
2Since the reform of the construction contract law, it is also possible to conclude a construction contract, among other things, in addition
to the work contract. You can find detailed information regarding work and construction contracts on our website (www.hwkno.de
Betriebsführung (Management) Recht (Legal) VOB und Werkverträge (German Construction Contract Procedures and work
contracts)). If you have any questions about the new regulations in the construction contract law, please contact our Legal department.
Chamber of Trades of Lower Bavaria-Upper Palatinate · Ditthornstraße 10 · 93055 Regensburg Page 15 of 19Guide for the Provision of Tradesman's Services in Germany January 2021 Does the activity of the subcontractor indicate typical characteristics of entrepreneurial activity, for example: does the subcontractor bear the entrepreneurial risk for a contractual execution? Does the subcontractor use his/her own equipment or machines? Does the subcontractor have an office in his/her country of origin? Does the subcontractor have liability insurance? If there is any doubt as to whether a dependent employment relationship and thus the compulsory insurance on the part of the customer exists, or if all involved wish to obtain legal protection, you can apply to the Deutscher Rentenversicherung Bund (German Pension Insurance Association- DRV Bund) in Berlin to have the status of the gainfully employed person determined (§ 7a SGB (Social Security Code) IV). Link to the website of the Deutscher Rentenversicherung Bund with further information on status determination, applications, explanations: www.deutsche- rentenversicherung.de/SharedDocs/Formulare/DE/Formularpakete/01_versicherte/01_vor_der_rente/_DR V_Paket_Versicherung_Statusfeststellung.html Note: the customer must check whether a contractor is in a dependent employment relationship with the customer or self-employed. If a tax audit by the pension insurance company establishes that from a legal perspective the "subcontractor" was or still is in a dependent employment relationship, this usually leads to very high additional contribution claims, which the employer has to bear alone. Contract staffing Contract staffing is when a contractor lends his/her own employees to another contractor to perform work (i.e., they are not employed in the context of a posting under a work contract or construction contract). Contract staffing requires a permit in Germany. It is not permitted in the main construction trade. Info under: www.arbeitsagentur.de/unternehmen/personalfragen/arbeitnehmerueberlassung Chamber of Trades of Lower Bavaria-Upper Palatinate · Ditthornstraße 10 · 93055 Regensburg Page 16 of 19
Guide for the Provision of Tradesman's Services in Germany
January 2021
Freedom of establishment
Supplement: some basic information on setting up a branch office:
Citizens of the EU/EEA states and Switzerland have the freedom of establishment: they can establish
companies/branch offices in Germany. These branch offices are subject to German law. In Germany, they
are subject to taxation and must be shown in the balance sheet. Employees are employed in accordance
with the applicable German regulations.
Those who wish to set up a branch office in Germany or work as the operations manager of a company
based in Germany must provide evidence of the necessary professional qualifications if they wish to carry
out a trade subject to regulation.
An activity in a trade subject to approval mentioned in Annex A HwO must be registered in the Tradesman's
Register (register of the local Chamber of Trades).
Prerequisite for registration:
a) University education in a foreign country:
A foreign diploma (after studying for at least three years) from a college, university or comparable
institution in the EU/EEA/Switzerland generally entitles the holder to be admitted to the Tradesman's
Register.
b) Equivalent title of master craftsman in a foreign country:
Equivalence agreements exist for the following countries:
Austria (26 trades)
Link to the ordinance for Germany/Austria: www.gesetze-im-internet.de/meistpr_glv/anlage.html
France (10 trades)
Link to the ordinance for Germany/France: www.gesetze-im-internet.de/meistprfrglv/anlage.html
c) Recognition of professional experience:
Permission for exemption from being registered in the Tradesman's Register is granted (except in health
trades, see above) to anyone within the EU/EEA or Switzerland who can prove the necessary professional
experience in the relevant trade by furnishing a certificate issued by the competent authority as follows:
6 years of uninterrupted full-time self-employment or operational responsibility, provided that the
activity was not terminated more than 10 years before the date of application
3 years of uninterrupted full-time self-employment or operational responsibility + 3 years of training
4 years of uninterrupted full-time self-employment or operational responsibility + 2 years of training
3 years of uninterrupted full-time self-employment + 5 years as a full-time employee, provided that
the activity was not terminated more than 10 years before the date of application
5 years of uninterrupted managerial responsibility, of which at least 3 years as technical department
head and 3 years of training (does not apply to the hairdressing trade)
d) Recognition of foreign training and competence certificates (information: Chamber of Trades,
www.hwkno.de/anerkennung).
Chamber of Trades of Lower Bavaria-Upper Palatinate · Ditthornstraße 10 · 93055 Regensburg Page 17 of 19Guide for the Provision of Tradesman's Services in Germany
January 2021
Annex
Country-specific information
We have compiled additional country-specific information for the countries of origin most frequently
requested in our consultation. We would be happy to help you find competent authorities in other EU
countries as well.
Austria
National authority for applying for the so-called EU certificate:
Competent district administrative authority of the respective federal state.
The following link will give you the contact person responsible for you if you enter the municipality or your
postcode:
https://www.wien.gv.at/amtshelfer/wirtschaft/anerkennung/emigration/betriebsfuehrung/ewr-
bescheinigung.html
Special feature of SOKA Bau:
SOKA Bau is comparable with BUAK for companies from Austria.
The ideal procedure for Austrian companies is as follows:
1. Register with SOKA Bau and state that you already pay BUAK contributions in Austria
2. Apply to BUAK for a certificate and submit it to SOKA Bau.
3. For a construction site inspection, it is best to carry along the special certificate from SOKA, which
you will receive on the basis of your exemption.
If you are exempt from the BUAK in Austria, this does not necessarily mean that this will be the case in
Germany as well. It is therefore absolutely necessary to check with SOKA Bau.
At SOKA BAU, you can call the following telephone number to speak to employees who will answer
questions specifically related to Austria: +49 611 707-4054
Czech Republic
National authority for applying for the so-called EU certificate:
Ministry of Industry and Trade in Prague with application against a fee of CZK 1000:
Ministerstvo průmyslu a obchodu ČR
Na Františku 32, 110 15 Praha (Prague) 1 – Staré Město
Application form: http://www.mpo.cz/dokument46454.html
Useful information:
If a Czech company in Germany faces (language, communication) problems with the German police (and
not Financial Control Illegal Employment), it can approach the
Gemeinsames Zentrum der deutsch-tschechischen Polizei- und Zollzusammenarbeit (Joint Centre of
German-Czech Police and Customs Cooperation)
Weinbergstraße 47
92432 Schwandorf
Tel.: +49 (0) 9431 881 1555
Email: gz.schwandorf@polizei.bund.de
Chamber of Trades of Lower Bavaria-Upper Palatinate · Ditthornstraße 10 · 93055 Regensburg Page 18 of 19Guide for the Provision of Tradesman's Services in Germany January 2021 Here, (German and) Czech police and customs officers, who are familiar with the Czech law and Czech conditions and who can mediate with their German colleagues, are available 24/7. Slovakia National authority for applying for the so-called EU certificate: Competent trade office in the company's registered office on the basis of an application against a fee of EUR 6. http://www.minv.sk/?kontakty-na-vsetky-zivnostenske-urady-v-sr Poland National authority for applying for the so-called EU certificate: Voivodeship marshal offices or employment offices Romania National authority for applying for the so-called EU certificate: Ministry of Labour, Family and Equal Opportunities, Dem.I.Dobrescu Street No. 2 – 4, sectorul 1, Bucharest Tel.: +4021-3136267, Fax: +4021-3158556 Slovenia National authority for applying for the so-called EU certificate: Ministry of Economics, Kotnikova 5, 1000 Ljubljana, Slovenia Tel.: +386 1 400 33 11, Fax: +386 1 400 10 31 Email: gp.mg@gov.si, Website: http://www.mg.gov.si Hungary National authority for applying for the so-called EU certificate: Oktatási Hivatal (Educational Authority), Magyar Ekvivalencia és Információs Központ (Hungarian Equivalence and Information Centre), 1054 Budapest, Báthory utca 10 Tel.: (06-1) 374-2201, Fax: (06-1) 332-1932 Email: ekvivalencia@om.hu, Website: www.ekvivalencia.hu Good to know Further practical aids and self-checks of the Offensive Guter Mittelstand can be found at https://www.offensive-mittelstand.de/. Especially for construction practice: The Offensive Gutes Bauen supports builders, planners and construction and trade companies in their practical work by means of jointly developed instruments and standards. Link to the practical aids: https://www.offensive-gutes-bauen.de/praxishilfen-und-unterstuetzung. Chamber of Trades of Lower Bavaria-Upper Palatinate · Ditthornstraße 10 · 93055 Regensburg Page 19 of 19
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