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10 things you need to know about Germany’s new law to attract skilled foreign workers

On March 1st, the Skilled Immigration Act came into force, which should make it easier for people from non-EU countries to migrate to Germany for work.

10 things you need to know about Germany's new law to attract skilled foreign workers
Germany has a worker shortage. Photo: DPA

The law – called the “Fachkräfteeinmigrationgesetz” in German – extends access to the labour market in Germany for skilled workers from countries outside the EU. But how does it actually work?

We break it down for you.

Why is there a new law?

There's a shortage of skilled workers in Germany across sectors. 

In order to address this and fill the gaps in the labour market, a new package of laws were passed on June 7th last year, which aim to attract foreign skilled vocational workers with German language skills – including those from outside the EU – and promises them eased visa procedures and reduced red tape.

There are more than 1.5 million jobs that Germany will find difficult to fill in the long term, according to the Association of German Chambers of Industry and Commerce (DIHK).

The government estimates that the new rules should bring in an additional 25,000 skilled workers – such as craftspeople, engineers, nursers, care workers, cooks and metal workers – to Germany every year.

The law came into force on March 1st this year.

READ ALSO: What Germany's new controversial immigration laws mean for foreign workers

Planned measures

According to the government, making sure employees already in Germany can receive further training if they want it is a top priority in the strategy to gain more skilled workers.

However, as the demographics change in Germany's ageing society, experts say many more workers are needed. That's why the country wants to attract qualified skilled workers from elsewhere.

Here are some of the measures involved in the new law to address this:

Opening up the labour market

Germany is now open to anyone who has completed vocational training. 

Skilled professionals from non-EU countries have so far had unrestricted access to the labour market – but only if they have an academic qualification, like a university degree.

Now thanks to the new law the definition of a qualified professional has changed. It's now defined as a person with an education degree or a vocational training qualification who has come from a training course lasting at least two years.

The care sector in Germany needs more employees. Photo: DPA

That means those with foreign vocational qualifications in any occupation, such as electricians, will also be able to obtain a visa or residence permit for employment – not just those with university degrees.

Job seekers need to have their qualification recognised

It doesn't matter whether you have a university degree or a vocational qualification, all skilled workers first have to get their foreign qualification recognised by the relevant authority in Germany.

Before being able to apply for a visa, job seekers must be offered a contract for skilled employment in Germany.

Qualified professionals with academic degrees can also work in any occupations related to their field which require a vocational non-academic qualification. This excludes semi-skilled occupations.

This differs to the The EU Blue Card, which is only ever issued for jobs that go with the professional qualification, (normally an academic degree), and those who receive the card must earn a certain amount. 

No priority given to German workers

Employers who were previously obliged to give preference to German or EU applicants over others from different countries will no longer be able to do this under the new law. 

READ ALSO: 'Germany needs 500,000 new immigrants every year

This rule (Vorrangprüfung) is now obsolete for positions in skilled professions. However, this can be reintroduced if the labour market nosedives.

Another thing to note is that qualified professionals from outside the EU with vocational training are no longer restricted to occupations with a skills shortage. If someone has a qualification recognised in Germany they can work in all occupations covered by their qualification.

Helping with the job search and allowing internships

In order to help plug the vacancy gap, people with vocational training or a degree can be granted a stay of six months to look for a job.

To get this permit, job seekers must have a recognised qualification, be able to support themselves financially while job hunting and have German language skills (generally at B1 level).

READ ALSO: Explained: How Germany plans to fight its drastic shortage of care workers

During the search, trial work of up to 10 hours a week can be carried out. This makes it possible to do an internship with a potential employer.

Skilled professionals with an academic qualification, who as before were permitted to come to Germany for six months to seek employment, are also now allowed to work up to 10 hours per week on a trial basis.

They do not have to demonstrate any language skills.

Facilitating qualification recognition and easing visa procedure

The recognition of the foreign professional qualification is essential in order for a skilled worker from a non-EU country to obtain a residence permit for employment.

But if the qualification is not recognised there are other ways. In fact, opportunities to come to Germany to train have been improved.

If a qualification is not fully recognised, the job seeker can apply for a visa to come to Germany to complete training. They will need A2 level German. This 18-month residence permit can be extended to a maximum period of two years.

Furthermore, the new law aims to accelerate the procedures for skilled workers to get a visa.

READ ALSO: Explained: The best and worst paid jobs in Germany

Photo: DPA

Better prospects for skilled workers

People who come to Germany as skilled employees should be able to integrate into everyday life and secure their future, says the government.

Skilled workers who have gained a German university degree or vocational training in Germany will be able to obtain a permanent settlement permit after two years of employment.

Meanwhile, skilled workers with a recognised foreign qualification will be able to get a permit after four years (it was previously five years).

How is the government getting the word out?

As well as easing visa procedures, the government is launching targeted advertising in cooperation with the business world and industries to attract job seekers.

Meanwhile, the government hopes that accelerated recognition of foreign educational qualifications and increased language support, particularly abroad, will help attract workers.

Is everyone happy?

The new law is controversial. Some don't think it goes far enough for skilled workers, especially considering that they might have to devote time to learning German in their home country without the guarantee of a job.

Others are concerned about more immigration to Germany, particularly because the country has seen an influx in migrants and refugees in recent years.

German authorities have sought to point out that the new law is not aimed at making unskilled immigration easier.

For more information check out the government website Make it in Germany. 

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WORKING IN GERMANY

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. 

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