Recently, the number one topic that entrepreneurs operating in the photovoltaic industry have been approaching our law firm with the issue of entering the German market with their services. This applies to both companies providing services to individual customers, such as installing solar panels on residential rooftops, and entrepreneurs building photovoltaics farms. The German market has become attractive to Polish entrepreneurs, primarily due to government subsidies. If you operate in this industry and want to reach a new group of customers and increase your business profits, it is essential to familiarize yourself with this article.
Forms of conducting business in the photovoltaic industry: A Polish entrepreneur wishing to enter the German market with photovoltaics services, after conducting market research from a business perspective, should first take care of the legal form in which they will conduct their business targeted at the German market. The answer to this question is crucial – both from the perspective of acquiring potential customers and fulfilling the rights and obligations that the entrepreneur will have to comply with, depending on the form in which the company is operated.
A Polish entrepreneur may first decide to provide services in the form of photovoltaic panel installation as a Polish company that only performs its services in Germany, remaining a Polish entity, for example, in the form of limited liability company. Another option for a Polish entrepreneur in the photovoltaic industry is to establish a German limited liability company – this entails a number of legal and actual benefits. GmbH ( Gesellschaft mit beschraenkter Haftung) are highly trusted in the German market and synonymous with high – quality services provided. Another possibility is to establish a branch of a Polish company in Germany, known as a “Betriebsstaette”. In principle, there is nothing to prevent entrepreneurs performing photovoltaics panel installation on a smaller scale from providing their services in the form of a German sole proprietorship (Gewerbe). It is worth nothing that this form does not exclude the possibility of hiring workers who will be entrepreneurs necessary of carrying out work related to photovoltaic panel installation.
The examples mentioned above are just an outline of the forms in which you can conduct business in the photovoltaic industry in Germany. It is important to remember that before making a decision about the type of company to choose it is best to contact a lawyer specialized in legal support for entrepreneurs looking to introduce their product or service to the German market. They will advise us on how to do it and create a solution tailored to our needs.
It is worth nothing that if a Polish entrepreneur decides to continue operating in the current legal form as a Polish company, challenges related to delegating employees who will perform ork related to photovoltaic panel installation will arise. Significant importance will also be place on taxation and fulfilling obligations imposed on entities operating in Germany, even if they are foreign companies from the European Union.
Issue of delegating employees for the installation of photovoltaic panels:
Another issue thet entrepreneur operating in the photovoltaic industry who decides to maintain their Polish legal form of business, will have to face is how to delegate employees in a legal manner to perform work related to the installation of panels or construction of photovoltaic farms in Germany. Depending on the extent and timeframes of these activities performed by employees they can be directed through various legal solutions. The nationality of the employee is also significant. Employees may provide work in the form of photovoltaic panel installation, depending on meeting specific criteria, under temporary delegation of services, business travel or having an ICT ( Intra-Corporate Transfer) card. It is essential to remember that for employees from countries outside the European Union, obtaining a German Vander Elst visa, which authorizes third-country nationals to work in Germany, will generally be necessary.
Industry qualification and additional tax, and registration with SOKA -Bau- how to avoid them?
An issue that significantly impacts the obligations of an entrepreneur entering the German market with their photovoltaic business id determining the industry to which their company will belong. In Germany, industry agreements play a colossal role in regulating the situation of individual industries, the obligations of entrepreneurs and their employees. In practice, for companies engaged in photovoltaic panel installation the most common dilemma arises as to whether the company qualifies as part of the electronic or construction industry.
The problem is complicated because industry agreements do not explicitly refer to companies operating in the photovoltaic industry – neither in terms of exclusion nor inclusion in the construction industry. The catalog of work that determines qualification or exclusion from the construction industry is extensive ( more than 50 types of specified work). On the other hand, companies engaged in electrical installation are excluded from the construction industry unless they perform construction work as well. Consequently companies involved in craftsmanlike installation or maintenance of electrical installations and equipment along with associated construction tasks, will not be qualified as operating in the construction industry unless construction activities constitute more than 50% of the company’s total working time in a calendar year.
As seen, providing a clear answer regarding the qualification of a photovoltaic company requires a thorough analysis of the scope of work the company performs during a specific period, the nature of these activities and the proportion of electrical work to other tasks, all in the context of German industry regulations. Such an analysis is most effectively conducted by a lawyer specializing in this field.
The result of this analysis determines further obligations for the entrepreneur such a paying an additional construction tax and registering employees with the German SOKA – Bau insurance fund. Foreign employers but only those operating in the construction industry, are obligated to register delegated employees in SOKA – Bau when working in Germany. Employers are also required to pay contributions to SOKA -Bau, calculated at 15.20% of the gross salary, paid monthly. In case of delayed payment, SOKA-Bau will charge late payment interest for each commenced month of delay. Moreover, the construction tax must be paid by entrepreneurs providing construction services. The construction tax amounts to 15% of the total value of each issued invoice and must be paid to the relevant German tax office. However, it is possible to obtain exemption from this tax or apply for its refund and our law firm supports our clients in this matter as well.
Entrepreneur, if you operate in the photovoltaic industry and would like to learn more about the possibilities of entering the German market with your services, feel free to contact us – we are happy to discuss and propose solutions tailored to your business.