The most important information on compulsory health insurance and pension insurance for the self-employed
The Federal Social Court (BSG, ruling of 29.07.2015, Ref. B 12 KR 4/13 R) ruled that the mere performance of duties as a body of a corporation (AG, GmbH) without further active involvement in the GmbH beyond that does not constitute a professional activity. In the case decided by the BSG, however, the determination of the obligation to insure the sole shareholder-managing director concerned in the statutory health insurance scheme failed simply because the lower court had not sufficiently clarified the factual circumstances that were always decisive.
Statutory pension insurance obligation for self-employed persons
Voluntarily every self-employed person can still until 31.03. of the following year themselves pay contributions to the Deutsche Rentenversicherung Bund (DRV) – up to the maximum contribution (in the West 2015: € 1,131.36 p.m.; 2016: € 1,159.40 p.m.) or less. At present, a maximum annual premium corresponds to a monthly pension increase of slightly less than €60 – which, however, probably exceeds any private pension insurance or Rüruprente of life insurers.
However, protection against reduced earning capacity can only be achieved through compulsory contributions. For this, there is compulsory insurance for self-employed persons upon application to the DRV, within five years (exclusion period) since taking up the profession – and then continuously until the respective profession is given up, even if it is a second profession, § 4 II SGB VI. This can be used in addition to compulsory professional insurance (e.g. as a doctor, lawyer, architect, tax consultant), for example to spread risk.
On the other hand, anyone who works as a (bogus) self-employed person, among other things, essentially only for one client, is already subject to compulsory insurance anyway, even if he does not yet suspect it, § 2 S.1. No.9 SGB VI, as do regularly some professional groups such as midwives and physiotherapists who receive their patients by referral from SHI-accredited physicians.
If pension insurance contributions are owed from various sources (e.g. due to compulsory insurance on application, as well as further employment), these must always be paid in full. In the following year, the DRV checks this – so that there is a subsequent proportional reduction of all contribution sources, which results in a recalculation and refund, so that no more than the maximum contribution to the DRV is paid in total. After 45 years with the maximum contribution, a pension of over €2,000 can be expected – minus health insurance contributions and taxes. The fully privately insured, however, even receives a subsidy for his health insurance.
The German average earner can hope for about 1050 € in monthly pension after 45 contribution years, in Austria it would be over 1800 € p.m. If the DRV pension is too low as the only income, the basic security as a substitute for social assistance tops this up to about 750 € per month. Austrians receive over €1,000 minimum pension per month after 15 years of contributions.
The average pensioner with less than 1,000 € pension p.m. is free to follow the example of “Florida Rolf”, and to emigrate as an “economic refugee” for example to Bulgaria, Hungary, Costa Rica, Thailand, Cambodia, Brazil, Turkey or Panama – even in need of care.
Statutory health insurance for the self-employed
Anyone who is compulsorily insured – for example as an employee or via the health insurance for pensioners (KVdR) – pays contributions from pensions and pension payments as well as earned income. Voluntarily insured persons in the statutory health insurance (GKV) pay additional contributions at the full contribution rate in the health and long-term care insurance from all sources of income such as capital income, rent and private pensions – also until the contribution assessment ceiling is reached. The tax valuation is not important – therefore the entire private pension, not only its share of income, is to be contributed, as well as one-off capital withdrawals if they can be used for living expenses, and also private capital gains.
In the BSG case, the owner of a fashion boutique chain, after receiving a widower’s and standard old-age pension, wanted to be treated only as a “part-time self-employed person” so that in future he would not have to pay the higher voluntary contributions but only compulsory contributions to the GKV. The GKV regarded him as a full-time self-employed person, who then continued to be insured only voluntarily.
Reading tip: Self-employed work – appearance or not appearance
The plaintiff could well have turned himself into a dependent employee subject to compulsory insurance by selling the business, leasing the business, anticipated succession or holding (a) by effectively giving up his position as a shareholder. This then also changes the type of income for tax purposes, if the tax advisor had designed this appropriately.
Alternatively (b), he could have planned and neatly documented the sideline self-employment to prove it beforehand, which can hardly succeed practically without design advice.
Part-time self-employment instead of full-time self-employment
For a main occupation of self-employment – in addition to a pension or other dependent employment – it depends on the economic significance according to the income (§ 15 SGB IV) and the time spent, § 5 SGB V. The GKV is not bound by the findings of the tax office (FA), but will be able to attribute any rental income to self-employment in individual cases.
With such examinations of the GKV it turns out frequently that independent entrepreneurs were advised by the fiscal advisor either into the trap of a division of an enterprise – or for their avoidance into a fiscally expensive solution, as for instance the contribution of real estates into a GmbH or GmbH&Co.KG: Thus inflation-conditioned increases in value are to be taxed later – also by the heirs -, because a tax-free speculation profit gives it only with real estates in the private property. In many cases, a business split could have been avoided by a purely internal company – and also saved up to 90% of the fees for the tax consultant.
Return to statutory health insurance
One can also bring one’s own company – with non-profit status and even tax incentives – into a (trust) foundation – without non-profit status it can be a family foundation, to secure the family provision. However, it is also possible to sell the company in return for a life annuity or – with tax advantages – to donate it to a foundation subject to a life annuity, i.e. to make a partial gift. Such an arrangement will often simultaneously lead to compulsory insurance, also in the GKV. With it one can terminate a possible private health insurance (PKV) then completely or partly – thus for instance selected PKV components in the tariff also keep or into a supplementary insurance to the GKV convert.
For the GKV obligation already one day in dependent employment is sufficient
Those who give up their self-employment and become employed before they reach the age of 55 have the easiest time returning to the GKV. Those who have become older usually need more elaborate design advice – private health insurance then proves to be more expensive with premium increases in old age of up to more than 7% pa. – as a result of the so-called actuarial age effect precisely due to the accumulated ageing provision – as a former bargain and current cost trap.
If self-employment is not to be completely abandoned, there are nevertheless possibilities for structuring it:
Self-employment as a main occupation is regularly deemed to exist if it is exercised on more than a half-day basis, including the real expenditure for the management of the self-employed person’s enterprise. The central associations of the GKV also assume a main occupation as indicated if the self-employment is exercised for less than 20 hours, but the income from this self-employment exceeds 75% of the reference value in the social insurance (2016: € 2,178.75 p.m.). Even if you work more than 20 hours a week, it is still possible to structure your self-employment as a sideline and document it in a comprehensible way.
PKV also in old age often better than GKV
The expenditure for arrangements will be worthwhile itself frequently – who changes before the age of 55 years from the private health insurance into the GKV saves itself up to more than a quarter million in KV contributions, in individual cases it can lie however even in the private health insurance more favorably than in the GKV. This does not necessarily mean that premium payments have to be stopped in order to be able to claim benefits only in the emergency tariff for acutely required treatments – but even without a deductible. This is becoming increasingly popular with premium optimisers, who then easily pay for what is missing out of the premium savings themselves.
Of course, the PKV full insurance also offers other advantages – so you do not have to wait already seriously ill and as a death candidate for the allocation of organs by Eurotransplant, but can have the organ transplantation in non-European countries, where organs for private patients are available more quickly. Rationing and performance only according to economic efficiency is avoidable in private health insurance.
by Dr. Johannes Fiala and Dipl.-Math. Peter A. Schramm
by courtesy of
www.channelpartner.de (published 12/20/2017)
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About the author
Dr. Johannes Fiala has been working for more than 25 years as a lawyer and attorney with his own law firm in Munich. He is intensively involved in real estate, financial law, tax and insurance law. The numerous stages of his professional career enable him to provide his clients with comprehensive advice and to act as a lawyer in the event of disputes.
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