I need an advice on how to handle tax, social security, medical insurance, VAT and so on of my wife who is doing a part time job and gets paid on hourly basis.

I have a full time job and my wife has very recently started a teaching job. She teaches for couple of hours per week and gets paid for actual hours of teaching. She works for 2 different schools.

The schools have not given a job contract. This means they do not deduct any social security, insurance or tax. They just pay X amount of Euro per hour. They caculate accordingly and deposit the money in the Bank account.

Different people give us different kind of advice and I am not very clear on what is the procedure to be followed. Some one say that she has to register and get a 'Gewerbeschien' and get a tax number. Other person said that she can use my tax number and raise invoice. The schools have not asked for any invoice.

Can some one advice what is the procedure to :
1. Raise invoice (especially in a situation where schools are not asking for it) and where can we find templates for this, what is the format to be used?
2. What is the procedure for social security, VAT, income tax and health insurance?
3. Are there any guidelines are checklist that we can follow?

Any help in sharing information in this regard will be great.

>>The schools have not given a job contract. This means they do not deduct any social security, insurance or tax. They just pay X amount of Euro per hour. They caculate accordingly and deposit the money in the Bank account.

Sorry that is illegal. Your wife is just basically doing schwarz arbeit. There are lots of stories about Language schools taking people for a ride, so i would suggest you to tread carefully. How much is your wife being paid by the hour?

>>1. Raise invoice (especially in a situation where schools are not asking for it) and where can we find templates for this, what is the format to be used?
2. What is the procedure for social security, VAT, income tax and health insurance?
3. Are there any guidelines are checklist that we can follow?

I am sure you have a Tax Consultant and only he can give you specific advuce according to your wifes income and type of job. Trust me, it is money worth spending instead of having a big surprise later.

Maybe you can find more information below

http://elt.yuku.com/

or search in www.toytowngermany.com

I find that the above mentioned forum has lots of foreigners teaching english in germany as members.

Raj,

Thanks for the reply. They pay about 30 Euros per hour.

May be I failed to explain the situation correctly. The schools have given a contract. But its not a job contract and hence tax, VAT, social security etc are not included. However its a typical freelance contract and they clearly state that its not their responsibility to deduct tax, social security, medical insurance etc. More over, the school is located in the US. Hence its up to us to manage the tax, health insurance, social security logistics. Its not a black money as they always deposit in to my wife's bank account.

I am in touch with my lawyer who has been my tax consultant. He is also looking in to this matter.

>>May be I failed to explain the situation correctly. The schools have given a contract. But its not a job contract and hence tax, VAT, social security etc are not included. However its a typical freelance contract and they clearly state that its not their responsibility to deduct tax, social security, medical insurance etc.

Ok, that clears it then. I would say the price is also very good.

>>I am in touch with my lawyer who has been my tax consultant. He is also looking in to this matter.

Lawyers are not Tax Consultants. You have to contact a professional Tax Consultant as he is the one who knows more about taxes, VAT SSC etc.

As far as i know she has to pay Health Insurance on her own and mostly into public insurance. She has to pay for Pension plan which is around 19 % of her income. She may have to claim VAT when invoicing if her income is above a particular threshold(of the limit i have no idea). She may also have to pay Solidarity Tax. But her total earning will be Income(Invoiced) - Expenses(like travelling, work related stuffs etc) and on that she has to pay income tax.

So as i said get hold of a proper Tax Consultant as he would give you all the necessary information from getting your wife registered as Freelance, getting tax number etc etc.

Thanks Raj..As I said, my tax consultant with whome I am filing my German IT returns since 2003 is a lawyer and I have taken up with him

Hmm.. never heard of a lawyer doin Tax returns :-) but whatever if he gets the job done then it is ok i guess