Reforms to the status determination procedure effective as of 01.04.2022
Determinations only on employment status
With the change in the law as of 01.04.2022, § 7a SGB IV has been reformed. One of the consequences of this is that the clearing office of the German statutory pension entity (hereinafter: “DRV Bund”) will only make determinations regarding employment status, i.e. whether dependent employment or self-employment exists. Determinations regarding the social security obligation, on the other hand, are no longer made. In order to continue to obtain legal certainty regarding the obligation to insure in the individual branches of social insurance, a separate procedure may have to be initiated before the collection agency. The parties required to file an application for the status determination procedure are the respective contractual partners of the activity to be assessed (client/employer and contractor/employee). Under certain conditions, third parties are also granted their own right to file an application.
The other reforms in detail
The following changes have also been made:
- Prognosis decision: A prognosis decision can now be requested from the DRV Bund even before the respective activity begins.
- Oral hearing: The option of an oral hearing in the course of the appeal procedure can now be used – after the appeal has been substantiated. This should take place with all parties involved in the proceedings.
- Group statement: After the status determination procedure has been carried out, an expert statement from the DRV Bund on the employment status can be obtained in the case of further contractual relationships with the same structure. However, the expert opinion is not binding.
- Triangular constellations: In the case of triangular constellations, the DRV Bund also includes the contractual relationship with the third party in the proceedings and makes corresponding findings on the employment status. This is the case, for example, when external personnel are employed by a customer (temporary employment) or within the framework of contracts for work and services. A separate procedure is no longer required for this.
The regulations on the forecast decision, oral hearing, group statements, and status determination in triangular constellations are limited in time until the end of June 30, 2027. Before the expiry of the time limit, a review will be carried out to determine whether the regulations will continue to apply beyond this date. The DRV Bund will submit a report on its experience by December 31, 2025. According to the legislator’s intentions, the reforms are intended to speed up the process and make it easier for the parties involved to achieve legal certainty and planning security.
A status determination procedure should be initiated, if there is any uncertainty about the employment status. In this way, subsequent claims for social security contributions can be avoided if it later emerges in the course of a tax audit – without prior clarification of status – that the contractual relationship in question was based on dependent employment. If it is determined that you are self-employed, we recommend that you seek advice on the possibilities and benefits of setting up an occupational pension benefits pension plan or have this reviewed in order to use the funds that may be freed up by saving social security contributions for possible pension gaps.
- Free initial assessment of your social security status
- Implementation of the status determination procedure
- In the run-up to the procedure: contract drafting activity
- Accompaniment of a procedure to determine the insurance status before the collection agency
- In case of determination of self-employment and wrongly paid social security contributions: Assertion of your claims for reimbursement against the collection agency
If you have any questions, please contact us, we look forward to hearing from you.