‘If the CDU loses in 2013, it will lose its identity’

Chancellor Angela Merkel's conservatives performed a dramatic U-turn this weekend by proposing a universal minimum wage in Germany. The Local’s media roundup explores the cause and implications of her party's leftward swerve.

‘If the CDU loses in 2013, it will lose its identity’
Photo: DPA

If Germany’s political punditocracy can be believed, Merkel has decided that her current centre-right coalition with the pro-business, low-taxation Free Democratic Party (FDP) is unlikely to survive the next general election in 2013.

Instead, by floating the idea of a universal minimum wage, which her Christian Democratic Union (CDU) has always opposed, Merkel appears to be preparing for another centrist alliance with the centre-left Social Democratic Party (SPD).

Merkel governed Germany with the SPD after her first election victory in 2005, but switched coalition partners in 2009, when the FDP’s success made a right-wing coalition possible. But the FDP struggled to assert its tax cuts in office, partly because of economic necessities, and the pro-business party’s opinion poll ratings have plummeted.

Merkel’s proposal is for a minimum hourly wage of at least €6.90, and the suggestion sparked a gale of comment and criticism on Monday. Dieter Hundt, head of the German Employers’ Association (BDA), was particularly unimpressed, telling state broadcaster Deutschlandradio that the move was not justifiable, and “very incomprehensible.”

He also took exception to Merkel’s linguistic gymnastics to get round the ban on a minimum wage in her current coalition contract. Merkel has called the proposal a “market-based organized lower limit for wages,” which did little to fool Hundt.

Merkel’s distinction between “minimum” and “market-based lower limit” means that business, rather than government, will set the final figure, but Karl-Josef Laumann, chairman of the Christian Democratic Employees’ Association (CDA), said that it amounted to the same outcome.

“The lower limit will be set by a commission – that’s what we would like,” Laumann told radio station HR-info Monday morning. “But of course the figure has to be fixed in law, otherwise people wouldn’t be able to claim it.”

Right-wing newspaper Die Welt saw Merkel’s proposal as a significant political risk. “Just as with the nuclear energy phaseout, Merkel is betting on taking the wind out of the opposition’s sails to be better equipped for the 2013 election,” the paper wrote in its leader. “That’s risky. If the CDU loses in two years’ time, then it won’t just lose power, it will lose its identity.”

The paper also detected another sign of lack of confidence in the heart of government. “The head of the party doesn’t just lack people who can trumpet the government’s successes with charisma, intelligence and chutzpah,” Die Welt wrote. “It also lacks leaders who can make concessions to the political zeitgeist and serve its core voters.”

The conservative Frankfurter Allgemeine Zeitung thinks Merkel’s CDU is not so much missing the zeitgeist, as desperately trying to keep up with it. The paper says “neo-liberal recipes” clearly no longer impress German voters.

“For the CDU, this is a similar shift to the nuclear phaseout or the scrapping of conscription – a late adjustment to reality,” the FAZ wrote. “It has been obvious for a long time that societal fairness – a broader notion than the celebrated phrase ‘social justice’ – demands a minimum wage.”

But Handelsblatt has a different take. The financial daily thinks Merkel is not seriously proposing a minimum wage at all, but is playing a deft trick on voters.

“Merkel is just playing the ball into the employer’s court,” the paper wrote on Monday. “If they angrily dismiss a universal minimum wage – and anything else would be a big surprise – then Merkel and co. can wash their hands in innocence and say, ‘It didn’t fail because of us.’”

Munich’s Süddeutsche Zeitung focused on the fate of the FDP, and its own attempts to keep up with the popular mood.

“Many party members fear that, after the nuclear phaseout and its new modesty in tax policy, the FDP is facing new flip-flop accusations,” the centre-left paper wrote. “But on the other hand, broad swathes of the FDP are realizing that the ‘fairness aspect’ of its tax policy cannot be ignored, even for the working population.”

The Local/bk

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7 tips for how to survive as a freelancer in Germany

Taking the decision to go it alone and freelance in Germany can be a daunting prospect. But, if you do it right, it can be an exciting and liberating path. Here are some of our top tips on how to survive.

7 tips for how to survive as a freelancer in Germany

1. Get a tax advisor

The German tax system is complicated, even for Germans. All the associated paperwork uses the Amtsprache (authority language) which is more like legalese than ‘normal’ German, and mistakes when filling out tax forms can cause you, at best, a massive headache and, at worst, a costly fine. So it’s best that you employ someone who knows what they’re doing to help you out.

That person is called a Steuerberater (tax advisor) in Germany. They will help you register with the tax office, correspond with them and submit your tax declarations.

Be aware that, in Germany, different deadlines apply for tax returns depending on whether you employ an official tax advisor or not. If you are doing the tax return on your own, the deadline for submitting your annual tax return is earlier than if you use a tax advisor’s services. 

READ ALSO: What NOT to do when you’re freelancing in Germany

When looking for a tax advisor, a top tip is to use your network to get recommendations. Ideally, you want someone who will do more than just fill in the forms for you, but who will actually advise you on how best to manage your business finances so that you can make tax savings.

2. Keep your accounting in order

The better you keep your own accounts in order, the easier it will be for your tax advisor to compile your tax declarations and therefore the cheaper their services will be.

As a freelancer, there are a lot of costs you can deduct from your taxes – from train tickets, working materials, to meals out – so it’s best to keep hold of all your receipts and to keep them in good order.

2 euros and 50 cents lie on a receipt in a beer garden. Photo: picture alliance/dpa | Peter Kneffel

In Germany, you’re obliged to keep hold of receipts for two years, in case of a tax inspection, so it’s a good idea to photocopy the type of machine-printed receipts you get from restaurants so that they stay legible for a long time.

There are also a few things to be aware of when writing your own invoices. Firstly, make sure that you include your tax number. This isn’t the 11-digit Steueridentifikationsnummer that everyone gets when registering in Germany, but the 10-digit Steuernummer you get from the Finanzamt after registering yourself as a freelancer. 

Most companies won’t pay you if you don’t have this on your invoices so make sure you include it.

You should also make sure that you number your invoices properly – ideally in ascending order so that you can easily keep track of them. You are not allowed to issue two invoices with the same number and if you do so and the finance office notices, you could face an inspection of your whole accounting system.

There are numerous great accounting software programmes you can use to help you, such as Lexoffice and Sevdesk and, even if you have to pay for them, the costs will be tax deductible!

3. Find out if you’re eligible for financial support

In Germany, there are several opportunities for freelancers to gain financial support and to cut their outgoings, and its worth finding out if you’re eligible for them.

If you’re claiming unemployment benefits under ALG 1 and are thinking about becoming a freelancer, the employment office offers a special type of financial support to help you to get your freelance business off the ground.

Called the Grundungszuschuss (“foundation grant”) the payment is a six-month grant equalling your monthly entitlement under ALG 1 plus €300 towards your insurance costs can be applied for those in receipt of this unemployment benefit.

READ ALSO: Will freelancers benefit from Germany’s €300 energy allowance?

If you are engaged in some form of artistic profession in Germany – which can include journalism to pottery – you may be entitled to membership to the Kunstlersozialkasse (artists’ social insurance).

Being a member of the KSK means you only have to pay half of your health insurance and pension contributions, and the KSK will pay the rest.

4. Work out how much you think you will earn

As with starting any business, you need to have some idea of your expected earnings from the outset.

If you’re just starting out as a freelancer, or have some freelance gigs on the side of an employment position, then it might be worth considering registering yourself as a Kleinunternehmer (“small business”).

As a Kleinunternehmer, you can currently earn up to €22.000 per year without having to charge VAT and having to submit only yearly tax declarations. 

An income tax declaration form lies on a table. Photo: picture alliance/dpa/dpa-Zentralbild | Hans-Jürgen Wiedl

Be aware that if you are registered as this kind of freelancer, you must include the following sentence in your invoices: ‘Gemäß § 19 UStG wird keine Umsatzsteuer berechnet’ which means ‘In accordance with Paragrah19 of the German VAT law, no VAT has been added to this invoice.’

READ ALSO: Everything you need to know about your German tax return in 2022

If you think you will earn more than €22.000 per year, you will need to pay Umsatzsteuer (VAT) and will have to submit tax declarations in advance and more often. Depending on how much you earn, this could be every month or every quarter. 

5. Get your insurance in order

In Germany, it’s a legal requirement to have health insurance.

If you’ve just made the move from employment to being a freelancer and want to keep the same health insurer, you should get in contact with your health insurance provider straight away to tell them about your change of circumstances. They will ask you to re-register and to tell them your projected freelance earnings for the year, so they can amend your monthly fees.

If you don’t keep your health insurer provider updated, you could continue to be charged the higher rate that you had from your previous salary.

The insurance cards of the health insurance companies DAK, AOK, Barmer and Techniker-Krankenkasse TK lie with euro notes under a stethoscope. Photo: picture alliance / dpa | Daniel Karmann

It’s not just health insurance you need to think about as a freelancer. It’s also wise to think about protecting yourself from any sort of claims that could arise as a result of any working mishaps. 

If, for example, you lose your laptop which contains confidential client information, you need to be protected against claims.

That’s why it’s good to have both Betriebshaftversicherung (business liability insurance) and Rechtschutzversicherung (legal protection insurance).

6. Plan your time wisely

All of these bureaucratic obligations take time. So it’s really important that you take account of that when planning your time. For example, planning half a day a week to deal with your invoices, filing, emails to clients, and conversations with authorities can be really beneficial when scheduling your working time. 

7. Grow your network

As a freelancer, networking is absolutely crucial to success. 

Keep an up-to-date profile on websites like LinkedIn and German equivalent XING and keep in contact with anyone you’ve ever worked with, no matter how brief the contact was. 

Having a network is not only about getting more clients, but also about building a support network in your field to exchange advice, tips and generally for your own enrichment. 

Participating in workshops related to your field, going to seminars, and meet-ups, can be great ways of broadening your network.