Posting of workers in the EU
Posting of workers in the EU
Question:
Hello!
A company is registered with the tax office in Germany and pays taxes there, and the workers are posted and their social security contributions are paid in Bulgaria. However, my question is how to determine the tax-deductible income and expenses in a foreign country, as this is only part of the company's activity. The specific case is - we have to deliver and install windows in Germany. Do we have to declare the income and expenses for the specific delivery and installation in Germany in order to determine the profit on which we have to pay taxes, which should be deducted from the total taxes due under the GTD?
Thanks in advance!
Answer:
Hello,
If you manage to meet and comply with certain conditions, you will not be obliged to register with the German tax authorities. The conditions are:
- To have a contract with a German company, which mentions the service you will perform (manufacture, delivery and installation of windows) and the site where the service will be performed.
Subject to this condition, it will be sufficient that you do not have to declare your income under this contract in Germany and report everything related to this contract as income and expenses in Bulgaria together with what you report from your other activities.
From here follow several conditions that are related to the provision of the workers you will send to Germany.
- The company has worked in the field of manufacture, delivery and installation of windows in Bulgaria for at least 12 months (6 months for a newly registered company).
- At least 25% of the revenues for the previous 12 months to be realized in Bulgaria (6 months for a newly registered company).
- When performing the contract in Germany, at least 25% of the staff must remain in Bulgaria (including administrative, managerial and support staff - managers, secretaries, clerks, housewives, suppliers, cashiers, security guards and the like).
- The seconded staff to have medical insurance, a green health card and at least 2 months of insurance in Bulgaria.
- The duration of the secondment should not exceed 24 months, and you cannot send replacement persons and persons who have been posted within the European Union less than 2 months ago.
If your company and your employees meet these conditions, you will be able to obtain an A1 certificate for each employee, which will allow you to certify to the German authorities that the applicable insurance legislation for the employees you have seconded is Bulgarian. This means that you will declare and pay social security contributions to the seconded persons in Bulgaria.
If you do not meet the specified conditions and accordingly you cannot take out A1, you will have to declare and pay social security contributions in Germany, according to their legislation. However, in any case (with or without A1), the minimum wage on which you will have to insure posted workers is the minimum wage for the profession in Germany.
We hope we have been helpful to you.
Greetings!
