🕵️ Recognising and clarifying false self-employment
In brief
Whether you count as self-employed or as dependently employed is decided not by the contract title such as “freelance staff member” or “fee-based worker”, but by the way you actually work together. If you are bound by instructions and integrated into a client's work organisation, there is employment under social insurance law – even if you have registered a trade business. This is called false self-employment (Scheinselbstständigkeit). The status determination procedure at Deutsche Rentenversicherung Bund provides clarity in advance.
Step by step
- Submit the applicationSubmit the application for a status determination using form V0027 to the clearing office of Deutsche Rentenversicherung Bund – the procedure is free of charge.
- Consider a forecast decisionSince 1 April 2022 it is optionally possible to apply for a forecast decision (Prognoseentscheidung) even before starting the activity (§ 7a para. 4a SGB IV).
- Wait for the overall assessmentThe clearing office checks on the basis of an overall assessment of all circumstances of the individual case and, where necessary, requests statements from both contracting parties.
- Receive the noticeDeutsche Rentenversicherung Bund determines “employment” or “self-employed activity”; objection and legal action against certain decisions have suspensive effect.
- If employment is determinedThe client becomes the employer retroactively and must pay social insurance contributions in arrears; if the application is made in time, the contribution obligation may only apply from the notice instead of retroactively.
- Report deviationsIf the actual activity deviates from a forecast decision, this must be reported to Deutsche Rentenversicherung within one month after starting the activity.
Deadlines
- The misconception “several clients protect automatically” is wrong: each contractual relationship is assessed separately, and even with several clients one can be falsely self-employed in each individual relationship.
- A trade registration or invoicing with VAT is hardly regarded as an indication by social courts – what matters is actual practice: instructions, fixed working hours and places, use of the client's equipment, lack of entrepreneurial risk.
- Contract clauses that shift the risk of back payment to the contractor by contract are ineffective – the client remains the debtor of the social insurance contributions.
- Skipping the voluntary status determination procedure because of time pressure can be expensive: a later audit can demand contributions retroactively for years, without the procedural advantages of the voluntary procedure.
- If you have only one client, also check compulsory pension insurance under § 2 sentence 1 no. 9 SGB VI (employee-like self-employed people) – see the topic on retirement provision obligation.
In depth · legal basis, figures and practice – for advisers and professionals
Legal bases and criteria
§ 7 para. 1 SGB IV defines employment as dependent work, in particular in an employment relationship, with indications such as being bound by instructions and integration into the work organisation. The law contains no exhaustive catalogue of criteria; the case law of the Bundessozialgericht weighs, in the individual case, among other things being bound by instructions (time, place, content of the activity), organisational integration, entrepreneurial risk, free scheduling of time and own pricing and advertising as indications.
Status determination procedure § 7a SGB IV
Since the reform of 1 April 2022, § 7a SGB IV is titled “Determination of employment status”. The clearing office now decides only on employment status as a whole, no longer on compulsory insurance in the individual branches of social insurance. Newly introduced were the forecast decision before the start of the activity, the group determination for similar contractual relationships, a right of application also for third parties (such as platform operators) and the oral hearing as a procedural right.
Criminal consequences for the client
If false self-employment is established, the client is regarded as the employer retroactively. Deliberately withholding the employee and employer shares of social insurance is a criminal offence under § 266a StGB. Negligently misjudging the status can exclude criminal liability, but does not protect against the civil-law obligation to pay in arrears.
Employee-like self-employed people
Anyone who works permanently and essentially for only one client and employs no employee subject to social insurance is subject to compulsory pension insurance under § 2 sentence 1 no. 9 SGB VI. “Essentially” is often specified in practice with a threshold of five sixths of business income from one client – this threshold comes from secondary sources and is not contained verbatim in the statutory text. For more detail see the topic on retirement provision obligation.
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