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Germany

Which self-employed workers must participate in Germany’s statutory pension-insurance system?

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Section 2 SGB VI requires specified categories of self-employed workers to participate in Germany’s statutory pension-insurance system. This obligation can apply even where the individual is genuinely self-employed and is not an employee under § 611a BGB or § 7 SGB IV. Pension-insurance liability under § 2 SGB VI must therefore be distinguished from false self-employment. The covered categories include certain self-employed teachers, educators, carers, midwives, artists, publicists, craftspeople and individuals who work predominantly for one Client without employing a worker subject to compulsory social insurance. Some self-employed workers must notify the competent pension-insurance institution within three months after beginning the relevant activity. Exemptions may be available in specified circumstances, but they generally require the statutory conditions to be satisfied and, where applicable, an application.

1. Which self-employed workers are compulsorily insured?

Section 2 SGB VI identifies several categories of self-employed worker who may be subject to compulsory statutory pension insurance.

These include:

  • teachers and educators who do not regularly employ a worker subject to compulsory insurance;

  • carers working in nursing, maternity, infant or child care who do not regularly employ such a worker;

  • midwives and maternity carers;

  • maritime pilots;

  • artists and publicists covered by the Artists’ Social Insurance Act;

  • home workers carrying on a home-based trade;

  • certain coastal skippers and coastal fishers;

  • qualifying tradespeople entered in the register of skilled crafts; and

  • self-employed persons who do not regularly employ a worker subject to compulsory insurance and who work permanently and predominantly for one Client.

For the relevant categories, a person in marginal employment is generally not treated as an employee whose engagement excludes the pension-insurance obligation.

The statutory categories are based on the nature and organisation of the activity. The person’s description as a freelancer, consultant or sole trader does not determine whether § 2 applies.

Explanation

Some genuinely independent freelancers must still participate in the statutory pension-insurance system because their profession or economic dependence falls within § 2 SGB VI.

2. When does the single-Client rule apply?

Section 2 sentence 1 number 9 SGB VI covers a self-employed person who:

  • does not regularly employ a worker subject to compulsory social insurance in connection with the activity; and

  • works permanently and predominantly for one Client.

The provision is intended to cover self-employed persons whose business is economically concentrated on one Client, even though the Client does not exercise sufficient operational control to create employment.

Whether the Vendor works predominantly for one Client must be assessed over an appropriate period and by reference to the actual economic activity. Relevant information may include:

  • the proportion of revenue derived from the principal Client;

  • the duration of the commercial relationship;

  • the number and economic importance of other Clients;

  • the Vendor’s marketing and customer-acquisition activity; and

  • whether diversification is genuine or merely formal.

Where the Vendor operates through a partnership, the Clients of the partnership may be relevant when applying the rule.

Explanation

A Vendor may be genuinely independent but still fall within compulsory pension insurance because nearly all of the Vendor’s business comes from one Client.

3. Who must notify Deutsche Rentenversicherung?

Under § 190a SGB VI, self-employed persons falling within specified categories under § 2 must notify the competent pension-insurance institution within three months after beginning the relevant activity.

The express notification obligation applies to:

  • teachers and educators;

  • qualifying carers;

  • midwives and maternity carers;

  • self-employed persons working predominantly for one Client without a qualifying employee; and

  • specified craftspeople where the relevant statutory circumstances arise.

The notification should contain sufficient information to determine:

  • the nature of the activity;

  • the starting date;

  • whether employees are engaged;

  • the identity and number of Clients;

  • the distribution of income between Clients; and

  • whether an exemption may apply.

Failure to notify does not necessarily remove the underlying insurance obligation. If compulsory insurance is established later, contributions may be assessed retrospectively in accordance with the applicable limitation rules.

Explanation

The freelancer may have to contact Deutsche Rentenversicherung proactively. Waiting for the authority to discover the activity can create retrospective contribution exposure.

4. Are exemptions or voluntary arrangements available?

Section 6 SGB VI provides exemptions for specified categories and circumstances. These may include members of qualifying professional pension schemes and, under defined conditions, self-employed persons covered by the single-Client rule.

A temporary exemption may be available to qualifying business founders during the initial period following the commencement of self-employment. A separate exemption may apply in specified circumstances to persons who first become subject to the single-Client rule after reaching the statutory age threshold.

The precise conditions, duration and application deadlines must be checked under the version of § 6 applicable to the individual.

Self-employed persons who are not compulsorily insured may be able to:

  • apply for compulsory statutory pension insurance under § 4 SGB VI; or

  • make voluntary pension contributions, subject to the applicable rules.

An exemption should not be assumed merely because the Vendor holds private retirement insurance.

Explanation

Certain freelancers can apply for an exemption, while others can voluntarily join the statutory system. Private insurance does not automatically replace a statutory obligation.

Sources

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