Government wants to change rules on self-employment

The uncertainty at your desk often creeps up on you. You've successfully completed your studies, moved into your first apartment , and are starting out full of enthusiasm as a highly qualified professional . But while working on innovative projects, the anxious question often arises: Am I really my own boss in the eyes of the state? The risk of bogus self-employment . It hangs like a sword of Damocles over many freelancers and their clients. A recent draft bill from the Federal Ministry of Labour and Social Affairs (BMAS) promises a radical change of course that could fundamentally shake up the current understanding of work. As a law firm, we are observing these developments with concern, as they represent both opportunities and significant financial hurdles for highly qualified expats and international specialists.

The departure from the focus on integration

Until now, distinguishing between dependent employment and self-employment has been a bureaucratic obstacle course. According to Section 7 of the German Social Code (SGB IV), the primary factor was the degree to which one was integrated into the client's workflow. Anyone with fixed working hours or who had to follow instructions was quickly classified as an employee – with all the associated consequences for social security. The Federal Ministry of Labor and Social Affairs (BMAS) is now planning a "new self-employment" model, in which the explicit intentions of the parties involved and formal criteria will take precedence over the actual circumstances . For a The term "skilled worker" means that if both parties agree to be self-employed, this should be more easily recognized legally. However, this new freedom comes at a price, and that price is measured in hard euros.

The criteria of the “new” freedom

To obtain the status of the new self-employed status under the planned Section 7 Paragraph 5 of the German Social Code, Book IV (SGB IV nF), clear conditions must be met. First, mutual agreement is required, and often the designation as a "fee-based contract" suffices. However, we strongly advise formulating the contracts more precisely to avoid future disputes. To avoid litigation . Additionally, the right to appoint a representative must be agreed upon, and at least two further characteristics must be present, such as bearing the risk of losses or actively promoting oneself in the market. We are particularly critical of the fact that this new form of self-employment is invariably linked to mandatory insurance in the statutory pension scheme.

Additional financial burden as an "entry ticket"

The legal consequence is clear: those who want the new legal certainty must pay. Pension contributions are calculated based on turnover, with only a flat-rate deduction of 10 percent for business expenses. This is significantly more expensive compared to "genuine" self-employment, where only profit counts. Anyone coming to Germany as a freelancer, for example with a Visa for job search or after a Anyone studying must factor these costs in from the outset. We observe that this could create a subtle form of disadvantage compared to established companies, as freelancers have to bear the full cost themselves, while the administrative burden falls on the client. This could lead to companies being less willing to hire freelancers, which would negatively impact the It is more difficult for skilled workers to access the market.

Bureaucratic hurdles and the role of the authorities

Another pitfall is the reporting requirement: The client must report the activity to the pension insurance provider within six weeks. If this does not happen, the new model does not apply. While the Given that LEA in Berlin and other authorities are already struggling with digitalization, this draft creates new bureaucratic monsters. The fact that the reform is not scheduled to come into effect until January 1, 2028, demonstrates how complex the IT conversion is for insurance providers. For foreigners who... Seeking a residence permit for self-employment means a long period of legal uncertainty. During this time, they must also prove that their Health insurance coverage is continuous and the Rent for the living space is secured.

Conclusion: Legal certainty at a high price

In summary, the idea of creating greater legal certainty through party mandate is a step in the right direction, moving away from the often arbitrary assessment of "integration." However, we criticize the fact that this status must effectively be "bought" through pension contributions. For highly qualified migrants, who often already struggle with high living costs and complex visa processes, this makes self-employment financially less attractive. While genuine self-employment remains, the new regulations place it under increasing pressure to justify its existence.

How we as a law firm can support you

As experts in migration and business law, we at Visaguard support you in structuring your contracts in a legally sound manner and finding the appropriate status for your work. Whether it's applying for a Visa is going, communication with the Berlin Immigration Office or the representation in a Legal proceedings for status determinations – we are at your side. We help you meet the requirements for the To fulfill your residency permit requirements and protect yourself from legal pitfalls during the process Skilled worker immigration , so that you can fully concentrate on your professional success.