Disguised employment (“Scheinselbstständigkeit”) remains a persistent issue in the German labor market. This is reflected not only in the growing number of solo self-employed individuals, but also in the increasing scrutiny by German tax and social security authorities. Disguised employment refers to situations where individuals are formally engaged as independent contractors or freelancers but, in practice, perform their work under conditions similar to those of regular employees.
Thus, understanding the complexities of German tax and social security rules on disguised employments is crucial in M&A deals, as this can often lead to compliance risks and significant financial exposure for the buyer.
