Sorting the facts from the fiction... - English Teachers in Germany - for everybody: - English Teachers in Germany - Message Board - Yuku

A bulletin board for
English Teachers in Germany

(mostly, but not only, for native English speakers, teaching adults)

If you're new to this sort of thing, practise posting and replying to messages in the supportive, non-threatening environment of the "Practice board" below.

Advertising in posts: you may mention products, sites etc. that are of interest to teachers of English, or foreigners living in Germany. Administrators will delete other ads.

hosted by Target English, Munich

RSS
Email

0 Kudo

<< Previous Topic Next Topic >>

Sorting the facts from the fiction...

Author	Comment
Annieross	Sorting the facts from the fiction...	Lead	[-]
Posts: 4 (Mon, May 18, 2009 12:09) Reply Quote More My Recent Posts Message Me Connection Blocking Invite Ignore User's Posts	Tags : None I am looking for freelance teaching work and have been reading all the really useful FAQs and other threads on this website, but having spoken to a few schools as well, I am now bathed in utter confusion... please help! Could anyone please help me clarify whether the below statements, which I've picked up from various English schools, are correct or not?: 1) You only have to pay tax on income over 12k per year 2) Anything over that is taxed at 12% 3) You don't need to pay into the State pension if you can prove that you are truly freelance, and not just working full time for a school and not on their books. I have been given different figures, but not working more than 70-80% with one school seems to be the accepted barrier, below which I am a 'true' freelancer. I have also been advised that schools can't 'give' me a course to follow, but can advise me. Also, I have been told I should keep a flyer for English lessons as proof, even if I never use it (One school told me that nobody bothers paying into the pension system and the system never comes looking for people... not according to this website!) 4) You can have health insurance from Germany or your home country/international, either is acceptable 5) The going rate being offered in Berlin varies wildly, lowest I got quoted was 10.50, highest 17. It seems in or around 13 is the norm. If all of the above is correct, and you take all the offsettable expenses into account, I calculate that you could keep your income below 12k (or very close) by totting up all your expenses, keep your health insurance at home and end up paying virtually no tax and no pension contributions... surely that can't be right?! I put up a post previously about being employed directly by a school. In that situation, the school was going to deduct 21% from my gross pay for health/pension contributions, and if I stayed longer than two years in Germany, I would have to pay around 20% in tax, which means about 41% of my gross income would be eaten up in deductions, versus practically no deductions as a freelancer. This just seems counterintuitive to me, so if anyone could PLEASE help me sort some of the facts from the myths, I'd really appreciate it. Thanks!
Habeas Corpus Paradigm	Dear Annie	#1	[-]
Posts: 15 (Mon, May 25, 2009 16:09) Reply Quote More My Recent Posts Message Me Connection Blocking Invite Ignore User's Posts	1) You only have to pay tax on income over 12k per year The current tax-free allowance is € 7,834. 2) Anything over that is taxed at 12% You are looking at an initial tax rate of 14 % on income above that. 3) You don't need to pay into the State pension if you can prove that you are truly freelance, and not just working full time for a school and not on their books. I have been given different figures, but not working more than 70-80% with one school seems to be the accepted barrier, below which I am a 'true' freelancer. I have also been advised that schools can't 'give' me a course to follow, but can advise me. Also, I have been told I should keep a flyer for English lessons as proof, even if I never use it Unfortunately, you'll be required to pay pension contributions even if you're a freelancer, in this case even the whole lot yourself (juxtaposed to half of it when employed). The 80 % threshold applies to a different topic, namely to determine whether you are self-employed or not. In both cases, you'll have to pay contributions, in the latter one shared with your employer. (One school told me that nobody bothers paying into the pension system and the system never comes looking for people... not according to this website!) That is a misconception. While it is true that some don't bother (sometimes intentionally, sometimes beacause they don't know about the whole thing), the state pension is after lots of ppl. and conducts an ever increasing number of audits. These audits, routinely conducted at businesses such as language schools, may reveal individual freelance teachers. You may or may not be caught, but if you are, you might face annoying administrative procedures and liabilities established retroactively for a number of years. No need to panic, but it's not true that "the system never comes looking for people". 4) You can have health insurance from Germany or your home country/international, either is acceptable This is true for a limited time, but things have become a bit complicated recently due to the introduction of a compulsory long term care insurance. Very few international policies include that. 5) The going rate being offered in Berlin varies wildly, lowest I got quoted was 10.50, highest 17. It seems in or around 13 is the norm. Maybe so in Berlin. If all of the above is correct, and you take all the offsettable expenses into account, I calculate that you could keep your income below 12k (or very close) by totting up all your expenses, keep your health insurance at home and end up paying virtually no tax and no pension contributions... surely that can't be right?! When working freelance, your profit, i.e. turnover minus expenses, will be taxed. You might end up with no or little tax burden, that's a matter of calculations. The pension thing will nevertheless hit you at almost 20 % (unless you sort this out with a professional). I put up a post previously about being employed directly by a school. In that situation, the school was going to deduct 21% from my gross pay for health/pension contributions, and if I stayed longer than two years in Germany, I would have to pay around 20% in tax, which means about 41% of my gross income would be eaten up in deductions, versus practically no deductions as a freelancer. That is a misconception (see above). Last Edited By: Habeas Corpus Paradigm Wed, May 27, 2009 01:50. Edited 1 times.
Habeas Corpus Paradigm		#2	[-]
Posts: 16 (Thu, May 28, 2009 22:01) Reply Quote More My Recent Posts Message Me Connection Blocking Invite Ignore User's Posts	Annie, I amended my original post to be more precise. Feel free to follow-up on this. You can show appreciation by having Big Ben ring seven times at 6 o'clock.
john		#3	[-]
Posts: 1147 (Thu, Jun 4, 2009 17:06) Administrator Reply Quote More My Recent Posts Message Me Connection Blocking Invite Ignore User's Posts	(One school told me that nobody bothers paying into the pension system and the system never comes looking for people... not according to this website!) That is a misconception. While it is true that some don't bother (sometimes intentionally, sometimes beacause they don't know about the whole thing), the state pension is after lots of ppl. and conducts an ever increasing number of audits. These audits, routinely conducted at businesses such as language schools, may reveal individual freelance teachers. You may or may not be caught, but if you are, you might face annoying administrative procedures and liabilities established retroactively for a number of years. No need to panic, but it's not true that "the system never comes looking for people". The pension people certainly do audit schools and companies. We have been audited twice in the last five or six years and were required to provide the chap who audited us with the names and addresses of ALL the freelancers we had worked with - and not just freelance English teachers, but a couple of translators and one guy who has helped with the PC from time to time.
Habeas Corpus Paradigm		#4	[-]
Posts: 18 (Mon, Jun 15, 2009 15:36) Reply Quote More My Recent Posts Message Me Connection Blocking Invite Ignore User's Posts	Oh Annie You might be full of grace and fortitude Yet where is your gratitude No time, no sign How do you align To lights and virtues To truths yet to be known Knowledge to light the darkness The search for things of your own
Annieross	Danke!	#5	[-]
Posts: 5 (Sun, Jul 5, 2009 23:05) Reply Quote More My Recent Posts Message Me Connection Blocking Invite Ignore User's Posts	Hi, I've just logged onto this site after a month or two's absence... a big thank you to you both for your very informative replies! I will eventually find my way through the mire... AM :-)

<< Previous Topic Next Topic >>

Quick Reply