Employers in the USA
June 11, 2009 | 60,00 EUR | answered by Dr. Dr. Danjel-Philippe Newerla
I am a software developer and, together with two American colleagues, have developed an internet application in my spare time based on "Sweat Equity." To market and further develop this application, a C-Corporation is now to be formed in the USA. The headquarters of the corporation will be in California.
I currently reside in Germany and am still employed by another company in Germany. I plan to resign from this company and work full-time for the new corporation. However, I do not intend to relocate to the USA at the moment. I will be involved in the newly formed corporation through founder's shares and private capital investment, but I will not hold a managerial position. Instead, I will primarily work as a software developer and technical expert.
What are the legal forms of employment from Germany for working for a US corporation?
- Can a German employee be directly employed by a US company that has no presence in Germany? If so, what are the legal consequences in terms of pension and social security obligations, job protection, etc.? Would German or American labor and social security law apply?
- If I register as self-employed in Germany and work freelance for the corporation, would the same rules apply regarding pension insurance obligations, pseudo self-employment, etc. as for German clients?
- What other options and legal forms of employment are available for working for a US startup from Germany?
I am aware that a comprehensive consultation would likely exceed the scope of this forum. I am primarily interested in the basic legal situation and options, as a German employee/contractor working for an employer/contractor in the USA, and the differences compared to a German employer/client.
Thank you in advance!
Dear inquirer,
Thank you for your inquiry!
I would like to address your questions in consideration of the circumstances you have described as follows:
1.) What are the legal forms of working for a US Corporation from Germany?
The same possibilities exist as with a German employer, such as being an employee or self-employed/freelancer.
2.) Can a German employee be directly employed by a US company with no established presence in Germany?
It is possible to enter into an employment relationship with an American company through appropriate structuring of the employment contract, even if the company does not have a presence in Germany.
3.) If yes, what are the legal consequences in terms of retirement and social security obligations, job protection, etc.? Would German or American labor and social law apply?
The legal consequences, particularly regarding the specific nature of the work, would be governed by the employment contract, similar to an employment relationship in Germany. If you work as an employee in Germany, you are subject to German social and retirement insurance regulations like any other employee.
Regarding your question about termination rights, there is a possibility, especially due to your involvement in the company, to agree on the applicability of German labor laws. If American law is stipulated in the employment contract, German labor law may still apply, especially in terms of statutory job protection and termination notice periods.
4.) If I register as self-employed in Germany and work as a freelancer for the Corporation, would the same regulations regarding retirement insurance obligations, false self-employment, etc. apply as for German clients?
If you are self-employed, the same regulations as in Germany apply. As a self-employed individual, you have the option to choose whether to contribute to statutory retirement insurance or not. The same rules generally apply to false self-employment. The issue of false self-employment is often associated with tax evasion (depending on the circumstances).
5.) What are other options and legal forms of working for a US startup from Germany?
The options mentioned in 1. apply here as well. Additionally, you could consider establishing a company in Germany that cooperates with the American company or is part of a corporate group. The legal implications of such actions cannot be fully explored in this initial consultation.
6.) What else should be considered?
You may be subject to American tax obligations due to your involvement in the American startup company, potentially leading to double taxation. A Double Taxation Agreement exists between Germany and the US to address this issue. A detailed examination of this topic is not possible without further information about the company in question within the scope of this initial consultation.
In conclusion, I would like to remind you that my legal advice is based solely on the information provided by you. My response is an initial legal assessment that cannot replace a comprehensive evaluation of the situation. Adding or omitting relevant information may result in a completely different legal assessment.
I hope this information has been helpful to you. Please feel free to contact me through this platform's follow-up option or via my email address for further clarification. I am also available for further legal representation. If you decide to engage my services, the initial consultation fee paid in this forum will be credited in full.
Wishing you a pleasant Monday afternoon and a great start to the week!
Kind regards,
Dipl.-Jur. Danjel-Philippe Newerla, Attorney at Law
Heilsbergerstr. 16
27580 Bremerhaven
kanzlei.newerla@web.de
Tel. 0471/3088132
Fax 0471/3088316
