Important points for construction companies working in Germany
Construction withholding tax
The construction withholding tax of 15% might be deducted from payments to subcontracts and an emption from and the refund of the tax can be applied for.
VAT
Depending on the work carried out in Germany it might be necessary to charge German VAT. The standard German VAT rate is 19%. Companies which don’t have to register for VAT in Germany but have to pay VAT on expenses can apply for a refund.
PAYE contributions to the Social Security System
Employees who hold the certificate A1 are not liable to pension and social security contributions in Germany. The certificate A1 is issued to employees who have paid PRSI (Pay related Social Insurance) contributions for a certain time in Ireland. With this certificate employees can work for a certain time in Germany without becoming liable for social insurance contributions.
Corporation tax and trade tax
The German corporation tax rate is 15%. In addition to that a trade tax (Gewerbesteuer) is usually payable. The rate varies from region to region. As a general rule of thumb the trade tax is higher in cities than in rural areas. The trade tax and corporation tax are payable once agreement between Germany and Ireland.
Customs registration
Before employees are sent to Germany to work on construction sites the German customs should be notified.
Holiday fund/Soka Bau
To ensure the holiday entitlement of construction workers, the employer might be liable to pay into a holiday fun called SOKA Bau.
Registration with the German Chamber of Crafts
It might be necessary for Irish companies to register with the local chamber of crafts in Germany when carrying out craft work in Germany. In order to register it is necessary to proof that the employee is trained in the craft.
The team of DE international Ireland can give more information on these topics and carry out the necessary registration to make sure Irish companies are compliant when working in Germany.
For more information, please contact:
Patrick Bamming
DEinternational Ireland, consultancy wing of German-Irish chamber of Industry and Commerce AHK Ireland.
Tel: +353 (0)1 6424381
Mobile: +353 (0)87 9313360
E-mail: Patrick.bamming@german-irish.ie