How to Work In Germany From India?

Remote work is revolutionizing the global job market, offering flexibility and freedom like never before. Germany emerges as a prime destination, renowned for its economic stability and vibrant culture. This blog aims to guide Indian professionals in securing remote positions in Germany, navigating visa requirements, cultural nuances, and job search strategies. Join us as we explore the opportunities and challenges of remote work in one of Europe’s most desirable locations.

Legal Requirements

For Indian and non-EU citizens seeking to work remotely for German companies, understanding visa requirements is paramount. While remote work itself doesn’t typically require a visa, individuals intending to reside in Germany for longer periods or perform work-related activities may need a visa. Common visa options include the Job Seeker Visa, which allows for job hunting, and the Employment Visa for those with job offers. It’s essential to review specific requirements and consult with relevant authorities to ensure compliance.

Tax considerations for remote workers

For Indian citizens residing in India and working remotely for German companies or as digital nomads/freelancers occasionally visiting Germany, understanding tax implications is crucial to ensure compliance and minimize tax liabilities.

Residency Status and Tax Obligations

Indian citizens working remotely from India for German companies generally remain tax residents of India. Under Indian tax laws, residents are taxed on their worldwide income. However, income earned outside India may be exempt from taxation if certain conditions are met, such as the Foreign Earned Income Exclusion (FEIE) or provisions of Double Taxation Avoidance Agreements (DTAA) between India and Germany. It’s essential to assess residency status and tax obligations based on individual circumstances and consult tax professionals for guidance.

Tax Treaties and Double Taxation between India-Germany

India and Germany have a tax treaty aimed at preventing double taxation and facilitating cooperation in tax matters. The treaty provides mechanisms for determining tax residency, allocating taxing rights, and granting relief from double taxation. Indian residents working remotely for German companies may benefit from provisions of the tax treaty, such as credit for taxes paid in Germany or exemptions for certain types of income. Understanding the treaty’s provisions and claiming available benefits can help mitigate double taxation issues.

Permanent Establishment Risk

Digital nomads or freelancers occasionally visiting Germany may inadvertently create a permanent establishment (PE) in Germany, triggering tax obligations in the country. A PE typically arises if an individual conducts business activities in Germany, such as providing services, for a certain duration. Consequently, income attributable to the PE may be subject to German taxation. Digital nomads and freelancers should be mindful of activities that could create a PE and seek advice to mitigate associated tax risks.

Understanding Tax Laws and Regulations

Indian citizens working remotely for German companies or earning income while in Germany must adhere to tax laws and regulations in both jurisdictions. In India, tax obligations are governed by the Income Tax Act, which prescribes rules for determining taxable income, rates of taxation, and reporting requirements. Similarly, in Germany, tax obligations are regulated by the German Income Tax Act (Einkommensteuergesetz) and other relevant statutes.

Determining Tax Residency

As an Indian citizen working remotely for a German company from India, you will likely maintain tax residency in India. Indian tax laws determine residency based on the number of days spent in India during the financial year and other criteria. Remote work for a foreign employer does not typically alter your Indian tax residency status.

Taxation of Income

Income earned from remote work for a German company is considered foreign income and is taxable in India. This income should be reported under the head of “Income from Other Sources” or “Income from Business or Profession“, depending on the nature of your work arrangement.

Filing Tax Returns

Indian residents earning income above the threshold specified by the Income Tax Act are required to file income tax returns annually. You would need to file your tax return using the appropriate form, such as ITR-1 or ITR-3, depending on the complexity of your income sources and financial situation.

Tax Exemption Provisions: Several tax exemption provisions may be applicable to income earned from remote work for a foreign employer, including:

Foreign Tax Credit (FTC): If you have paid taxes on your income in Germany, you may be eligible for a foreign tax credit in India. This prevents double taxation by allowing you to offset the taxes paid abroad against your Indian tax liability.

Double Taxation Avoidance Agreement (DTAA): The DTAA between India and Germany aims to prevent double taxation and provides relief by specifying the rules for taxing various types of income. Under the DTAA, certain types of income may be taxed only in one country or may be subject to reduced rates of tax.

Exemption on Income Below Taxable Threshold: You might not owe any income tax in India if your total income, including income earned abroad, falls below a specific limit set by the government. This limit is called the basic exemption limit.

Here’s a breakdown of the current basic exemption limits (as of March 20, 2024):

Specific Exemptions under Indian Tax Laws

Indian tax laws provide for various exemptions, deductions, and reliefs, such as exemptions for certain allowances, deductions for specified investments, and exemptions for income from specified sources, which may apply depending on your individual circumstances.

1. House Rent Allowance (HRA):
   • Section: 10(13A)
   • Exemption Limit: Actual HRA received or 50% of salary for employees residing in metro cities (40% for non-metro cities), whichever is lower.
   • Conditions: The employee must be staying in a rented accommodation and paying rent to claim this exemption.
2. Leave Travel Allowance (LTA):
   • Section: 10(5)
   • Exemption Limit: Amount actually spent on travel for self and family within India, subject to certain conditions.
   • Conditions: Limited to travel expenses incurred for domestic travel only and can be claimed twice in a block of four years.
3. Conveyance Allowance:
   • Section: 10(14)
   • Exemption Limit: Up to ₹1,600 per month.
   • Conditions: Amount received as conveyance allowance for commuting between residence and place of work is exempt from tax.
4. Medical Reimbursement:
   • Section: 17(2)
   • Exemption Limit: Up to ₹15,000 per annum.
   • Conditions: Reimbursement of medical expenses incurred for self and dependents on medical treatment and health check-ups.
5. Children Education Allowance:
   • Section: 10(14)
   • Exemption Limit: Up to ₹100 per month per child for a maximum of two children.
   • Conditions: Amount received to meet the education expenses of children (tuition fees, hostel expenses, etc.) is exempt.
6. Hostel Expenditure Allowance:
   • Section: 10(14)
   • Exemption Limit: Up to ₹300 per month per child for a maximum of two children.
   • Conditions: Amount received to meet the hostel expenses of children is exempt.
7. Gratuity:
   • Section: 10(10)
   • Exemption Limit: As per Gratuity Act, whichever is lower among ₹20 lakhs or actual gratuity received.
   • Conditions: Available to employees who have completed five years of continuous service with the same employer.
8. Provident Fund Contributions:
   • Section: 80C
   • Exemption Limit: Up to ₹1.5 lakhs per annum.
   • Conditions: Contributions made towards Employees’ Provident Fund (EPF) and Voluntary Provident Fund (VPF) are eligible for tax exemption.
9. National Pension System (NPS) Contributions:
   • Section: 80CCD(1), 80CCD(1B), 80CCD(2)
   • Exemption Limit: Up to ₹2 lakhs per annum (Section 80CCD(1)) and additional deduction of ₹50,000 per annum for contributions to NPS Tier-I account (Section 80CCD(1B)).
   • Conditions: Employer’s contribution to NPS (up to 10% of salary) is eligible for tax exemption under Section 80CCD(2).
10. Employee Stock Options (ESOPs):
    • Section: 17(2)(vi)
    • Exemption Limit: Taxation occurs at the time of exercising the options and selling the shares. Tax treatment varies based on the nature of the ESOP scheme and holding period.
11. Home Loan Interest:
    • Section: 24(b)
    • Exemption Limit: Up to ₹2 lakhs per annum for self-occupied property (₹1.5 lakhs for loans taken before April 1, 2019) and no upper limit for let-out or deemed let-out properties.
    • Conditions: Interest paid on the home loan for the acquisition or construction of a residential property is eligible for tax exemption.
12. Principal Repayment on Home Loan:
    • Section: 80C
    • Exemption Limit: Up to ₹1.5 lakhs per annum.
    • Conditions: Repayment of the principal amount of the home loan qualifies for deduction under Section 80C.
13. Health Insurance Premium:
    • Section: 80D
    • Exemption Limit: Up to ₹25,000 per annum for self, spouse, and dependent children (additional ₹25,000 for parents below 60 years, or ₹50,000 if parents are senior citizens).
    • Conditions: Premium paid towards health insurance policies for self, family, and parents qualifies for deduction.
14. Medical Expenditure for Senior Citizens:
    • Section: 80D
    • Exemption Limit: Up to ₹50,000 per annum for medical expenditure incurred on senior citizen parents not covered by health insurance.
    • Conditions: Expenses incurred for medical treatment and insurance premium for senior citizen parents are eligible for deduction.
15. Telephone and Internet Expenses:
    • Section: 10(14)
    • Exemption Limit: Actual expenses incurred for official purposes.
    • Conditions: Reimbursement of telephone and internet bills for official use is exempt from tax.

Claiming Exemptions and Benefits

To claim exemptions and benefits, you would need to accurately report your foreign income in your Indian tax return and provide relevant documentation, such as proof of taxes paid in Germany and certification of tax residency status. It’s advisable to consult a tax advisor or chartered accountant familiar with international tax matters to ensure compliance and optimize tax planning strategies.

German Freelancer Visa

The German Freelancer Visa, also known as the “Freiberufler” visa, is designed for individuals engaged in liberal professions or self-employment activities in Germany. This visa allows freelancers to legally reside and work in Germany while pursuing their professional endeavors independently.

What is Freiberufler Visa?

The Freiberufler visa is specifically tailored for individuals practicing liberal professions, which include but are not limited to:

• Writers and journalists
• Artists and performers
• Scientists and researchers
• Engineers and architects
• Marketing professionals
• IT and technology consultants
• Legal and tax advisors
• Healthcare professionals, such as doctors and psychologists

Freelancers in these fields are considered “Freiberufler” under German law and are eligible to apply for the Freelancer Visa to establish themselves in Germany and conduct their professional activities legally.

Requirements and Application Process for the Freelancer Visa

To qualify for the Freelancer Visa in Germany, applicants must meet certain requirements and adhere to the following application process:

1. Proof of Professional Qualifications: Applicants must demonstrate their professional qualifications and expertise in their respective fields. This may include academic degrees, professional certifications, or evidence of relevant work experience.
2. Business Plan: A detailed business plan outlining the nature of the freelance activities, target market, marketing strategies, and financial projections is required. The business plan serves as a roadmap for the applicant’s freelance business and demonstrates their readiness to establish themselves in Germany.
3. Health Insurance: Freelancers must provide proof of adequate health insurance coverage for the duration of their stay in Germany. This includes either private or public health insurance that meets the requirements set by German authorities.
4. Financial Means: Applicants must demonstrate sufficient financial means to support themselves during their stay in Germany. This typically involves providing evidence of a steady income stream or savings to cover living expenses.
5. Application Submission: The application for the Freelancer Visa is submitted to the German embassy or consulate in the applicant’s country of residence. Along with the completed visa application form, applicants must submit all required documents, including the business plan, proof of professional qualifications, health insurance, and financial resources.
6. Interview and Approval: Upon submission of the application, applicants may be required to attend an interview at the German embassy or consulate. During the interview, applicants may be asked to provide additional information or clarify aspects of their application. If the application is approved, the Freelancer Visa will be issued, allowing the applicant to legally reside and work in Germany as a freelancer.

Step-by-Step Guide to Applying for a German Freelancer Visa

To apply for a German Freelancer Visa from India while working remotely for a German company, follow this step-by-step guide:

1. Prepare Your Application:
   • Gather the necessary documents, including a valid passport, biometric photographs, proof of paid visa application fees, health insurance documentation, recommendation letters, updated CV, work portfolio, professional authorizations, educational certificates, proof of finances, and letters of commitment from your German employer.
2. Schedule an Appointment:
   • Contact the German Embassy in India to schedule an appointment for your visa application. Keep in mind that visa processing can take up to three months, so plan accordingly.
3. Attend the Visa Interview:
   • Attend the interview at the German embassy or consulate in India. Submit all required documentation during the interview and await the decision on your visa application.
4. After Approval:
   • Once your application is approved, the freelancer visa will be affixed to your passport. You can collect your passport in person or have it delivered via courier.
5. Post-Arrival Procedures in Germany:
   • Register your accommodation within 14 days of arrival at the local Citizen Service Centre to establish your legal residence and obtain a registration confirmation. This step is crucial for obtaining your freelance tax number. Additionally, open a German bank account to facilitate financial transactions smoothly.
6. Eligibility Criteria:
   • Ensure you meet the eligibility criteria for a German Freelancer Visa, which includes proving sufficient funds to finance your projects, obtaining any required licenses, and providing proof of adequate old age pension provisions if you are over 45 years old.

Importance of Having Clients and a Financial Plan in Place

Having clients and a solid financial plan in place is crucial for the success of freelancers in Germany. Establishing a client base ensures a steady flow of income and opportunities for professional growth. Freelancers should network actively, market their services effectively, and cultivate relationships with potential clients to sustain their freelance business.

Additionally, a well-defined financial plan helps freelancers manage their finances effectively and navigate the challenges of self-employment. This includes budgeting for business expenses, taxes, and personal living costs, as well as planning for future growth and expansion. By having a clear financial roadmap, freelancers can make informed decisions and ensure the long-term sustainability of their freelance business in Germany.

Finding Remote Job Opportunities

• Search for remote jobs on LinkedIn in your referred sector with a country filter of “Germany“.
• Find contractual or freelance work in germany from the official websites of the companies and other job boards.

Validity of German Visa

According to the Schengen agreement, German visas are valid in the following countries:
Austria, Belgium, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Iceland, Italy, Latvia, Liechtenstein, Lithuania, Luxembourg, Malta, Netherlands, Norway, Poland, Portugal, Slovakia, Slovenia, Spain, Sweden and Switzerland.

You can stay in the Schengen area for up to 90 days in any 180 days period. You must apply for a Schengen visa if you plan to visit Germany for less than three months. You should apply at the consulate of the country that is your primary destination. If you plan to visit multiple countries, you should apply at the consulate of the country that will be your first point of entry.

Conclusion

With a freelance German Visa in hand, you can remotely work for a german company from India or as a digital nomad. The visa is also valid for other Schengen Countries, this means that with a German Freelancer Visa, you can work remotely for other european countries too from India.

Please leave this field empty

DON’T MISS A BEAT

Be the first to know when we add new features or post important stuffs!

We don’t spam! Read our privacy policy for more info.

Check your inbox or spam folder to confirm your subscription.

Mohit

I’m the cofounder of TwoOrbits.com and love to write about digital marketing, SEO, technology, DIY hacks and more. Share your feedbacks and suggestions via comment. Connect with me via LinkedIn and lets start an insightful conversation.

twoorbits.com