CEO of the company in Germany ; self-employed or an employee ?

Business registration Germany

November 25, 2023

Buying a business in Germany

December 17, 2023

CEO of the company in Germany

Here in Wise Business Group, we will explain how a CEO of the company in Germany who is a shareholder, can be recognized as a self-employed, and why this is important.

Is a company CEO who is a shareholder considered self-employed or an employee of the company in Germany?

Before answering this question, it is necessary to point out why this is important.

An important reason is that if it is proven that the CEO is self-employed, your company in Germany will be exempted from paying the social security insurance premium for the CEO.

It is not a small number for a typical salary in Germany. Therefore, if your company in Germany intends to minimize its costs, you should pay attention to how to protect yourself from paying social security insurance.

It is necessary to mention that even if the CEO is self-employed, he is condemned to pay health insurance. It is the only insurance that everyone in Germany is obliged to pay.

Now let’s go back to the first question:

How can a CEO be introduced as self-employed in Germany?

First, it should be seen how the role of the CEO is in the company’s decision-making.

CEO as a self-employed in Germany

If the CEO owns over 50% of the shares of a company in Germany, it is easier for the competent authorities to prove this. But if he has fewer shares, the role of the CEO’s contract and the shareholders’ agreement will become significant.

For this reason, in the description of the CEO’s duties in this contract, much attention should be paid to the following:

Independent organization of work
Personal Liability and Risk
Presence of limited requirements for the time of presence in the company or lack of requirements
Typical salary of an entrepreneur
Flexible contract setting options

CEO as an employee of a company in Germany

On the other hand, if the CEO’s contract includes the following, the tax and social security departments may condemn the company to pay social security premiums because, from their point of view, the CEO will be an employee of the company:

Personal dependency
Adherence to the instructions
Fixed working hours
Regular monthly salary, vacation entitlement, and other social benefits
Overtime work payment and continuous payment of wages in case of illness
Payroll tax
Personal use of company assets

Be sure to consult a tax advisor or lawyers who specialize in corporate law (Gesellschaftsrecht) or social security law (sozialversicherungsrecht) in Germany when drafting the CEO agreement. Our team in Germany will help you in this regard.

For more information, contact us on WhatsApp.

You can also fill out the following form and send it to us for holding an online consultation.

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