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BACKGROUND TO EMPLOYMENT
I secured freelance employment in Germany via a UK-based employment agency, commencing January 2019 and continuing through to December 2020. During the negotiations the agency said it was a requirement that the services of another specialist company be used to ensure ‘compliance’ with German requirements - henceforth referred to hereafter as CC. The cost for this service was to be Euro630 per month deducted from my pay, totalling Euro15120 for the 24 months. I possess signed contracts for services with both the recruitment agency and the CC.
EURO BANK ACCOUNT
My first doubt of the CC was when they asked me to open a German bank account for the purposes of receiving payment. The UK was still a member of the EU at that time and - being aware that German current accounts are rarely fee-free - I instead opened a multi-currency account with an Italian bank with representation in the UK. This account functioned perfectly throughout my 24-month employment term!
PROCESSING OF TIMESHEET
Monthly processing of the timesheet for payroll by the CC was handled seamlessly during this employment. However, in my over 40 years of freelance working this has always, without exception, been provided at no cost.
MEDICAL INSURANCE
Medical insurance cover was the next requested provision and details of a reasonably priced UK insurance provider were provided by CC. I truthfully and comprehensively answered the detailed medical history questionnaire and returned it for consideration. After submitting this questionnaire, I was then asked for details of my GP who was requested to corroborate details - for which I had to bear the cost. The insurance company concluded dealings by stating I would not be covered under their policy. This left me with no option than to search for German health cover - which I did (not the CC) to comply with the employment requirements – and I secured this at the considerable cost of over Euro800 per month.
GERMAN TAXATION
German taxation was managed by a German tax accountancy practise nominated by the CC - and not undertaken in-house as I might have originally thought by these ‘pseudo-specialists’. Early in the employment I was given my unique tax office reference and ID number. The tax year in Germany is the calendar year and tax submissions are normally expected six months after the end of each tax year, so for 2019 this ideally should have been by June 2020. However, despite me enquiring and prompting in April 2020 as to when the 2019 tax submission might be completed nothing was heard until October 2020 (in the midst of a pandemic) and I was advised that an extension to tax submissions had been given by the authorities up until December 2020.
In October / November 2020 I received various completed forms relating to 2019 tax, one being titled the EU/EEA Certificate (of German origin) which I had to signed and forward to HMRC for approval, which I did. Three months later this form was rejected for having been completed incorrectly by the German tax specialists! For the next 2-years I started to receive many tax demands directly from the Munich tax office - which I scanned and forwarded to the CC. Without paying any demand I asked to know whether the demands were accurate, especially as the approval of the EU/EEA form by HMRC was outstanding. I did not receive confirmation. This came to a head in April 2022 when I voiced my frustrations with the lack of progress to the agency and the CC. A Teams meeting was then scheduled between these two parties and me. During this meeting I stressed that I was committed to paying the full tax due but not any penalties resulting from delays.
This meeting resulted in the following:
In December 2023 I settled my tax obligations in full:
CONCLUSION
My experience of paying for the costly services of this ‘international compliance specialist’ has left me in no uncertain terms that it operated little better than an open conduit for all communications both in and out without any useful input; I could have done much better myself. I should not have had to pay late penalties and charges for late submissions or delays which were not of my making.
From the web site of CC:
‘Our in-house experts stay current with the latest in tax, employment and social security legislation so our clients and contractors can have faith in our compliant and efficient solutions.’
I strongly disagree with the citation above and wish to take legal action to recover half the fees paid to the CC (Euro7560) - with my argument being that they were only half-decent, but actually nowhere near that! The service and expertise promised was out of all proportion to the service received. What would my likely success be and what should be my justification to make this claim? Is poor value a justifiable claim?
I secured freelance employment in Germany via a UK-based employment agency, commencing January 2019 and continuing through to December 2020. During the negotiations the agency said it was a requirement that the services of another specialist company be used to ensure ‘compliance’ with German requirements - henceforth referred to hereafter as CC. The cost for this service was to be Euro630 per month deducted from my pay, totalling Euro15120 for the 24 months. I possess signed contracts for services with both the recruitment agency and the CC.
EURO BANK ACCOUNT
My first doubt of the CC was when they asked me to open a German bank account for the purposes of receiving payment. The UK was still a member of the EU at that time and - being aware that German current accounts are rarely fee-free - I instead opened a multi-currency account with an Italian bank with representation in the UK. This account functioned perfectly throughout my 24-month employment term!
PROCESSING OF TIMESHEET
Monthly processing of the timesheet for payroll by the CC was handled seamlessly during this employment. However, in my over 40 years of freelance working this has always, without exception, been provided at no cost.
MEDICAL INSURANCE
Medical insurance cover was the next requested provision and details of a reasonably priced UK insurance provider were provided by CC. I truthfully and comprehensively answered the detailed medical history questionnaire and returned it for consideration. After submitting this questionnaire, I was then asked for details of my GP who was requested to corroborate details - for which I had to bear the cost. The insurance company concluded dealings by stating I would not be covered under their policy. This left me with no option than to search for German health cover - which I did (not the CC) to comply with the employment requirements – and I secured this at the considerable cost of over Euro800 per month.
GERMAN TAXATION
German taxation was managed by a German tax accountancy practise nominated by the CC - and not undertaken in-house as I might have originally thought by these ‘pseudo-specialists’. Early in the employment I was given my unique tax office reference and ID number. The tax year in Germany is the calendar year and tax submissions are normally expected six months after the end of each tax year, so for 2019 this ideally should have been by June 2020. However, despite me enquiring and prompting in April 2020 as to when the 2019 tax submission might be completed nothing was heard until October 2020 (in the midst of a pandemic) and I was advised that an extension to tax submissions had been given by the authorities up until December 2020.
In October / November 2020 I received various completed forms relating to 2019 tax, one being titled the EU/EEA Certificate (of German origin) which I had to signed and forward to HMRC for approval, which I did. Three months later this form was rejected for having been completed incorrectly by the German tax specialists! For the next 2-years I started to receive many tax demands directly from the Munich tax office - which I scanned and forwarded to the CC. Without paying any demand I asked to know whether the demands were accurate, especially as the approval of the EU/EEA form by HMRC was outstanding. I did not receive confirmation. This came to a head in April 2022 when I voiced my frustrations with the lack of progress to the agency and the CC. A Teams meeting was then scheduled between these two parties and me. During this meeting I stressed that I was committed to paying the full tax due but not any penalties resulting from delays.
This meeting resulted in the following:
- A ‘new’ German tax accountancy would be nominated by the CC to progress things forward.
- A newly appointed accountancy company (which was based in the Isle of Man) would complete the EU/EEA Certificates which had previously been rejected twice by HMRC because they were completed incorrectly, despite them originating from the German tax system and being written in both German and English.
- At my request it was confirmed by CC that they would pay all penalties and interest charges for late tax submissions and I would pay only the tax due. However, I failed to get this in writing. (Only one penalty related to 2019 tax was eventually paid by the CC – all other penalties were settled by me to terminate my painful dealings with the German tax authorities.)
In December 2023 I settled my tax obligations in full:
- 3 years after leaving employment in Germany
- 18 months after the Teams meeting tabled to break the impasse
- After 115 emails, or more to/from all parties
CONCLUSION
My experience of paying for the costly services of this ‘international compliance specialist’ has left me in no uncertain terms that it operated little better than an open conduit for all communications both in and out without any useful input; I could have done much better myself. I should not have had to pay late penalties and charges for late submissions or delays which were not of my making.
From the web site of CC:
‘Our in-house experts stay current with the latest in tax, employment and social security legislation so our clients and contractors can have faith in our compliant and efficient solutions.’
I strongly disagree with the citation above and wish to take legal action to recover half the fees paid to the CC (Euro7560) - with my argument being that they were only half-decent, but actually nowhere near that! The service and expertise promised was out of all proportion to the service received. What would my likely success be and what should be my justification to make this claim? Is poor value a justifiable claim?
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