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04-06-2019, 01:14 PM | #21 | |
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Join Date: Apr 2012
Location: Germany
Posts: 11,803
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If the WWE would operate like this in Germany and treat their wrestlers as contractors, they will inevitably run into a regular audit by the federal pension insurance (Deutsche Rentenversicherung Bund), which happens every four years at least. If the tax authorities audited them first and uncovered those phony contracts, they would just refer them to the DRB anyway. There is no way the scheme stands. In a DRB audit, they will requalify the payments to the performers as salaries, and then charge social insurance contributions for it, and then refer the entire file back to the tax authorities, who will charge tax, too. Now, the fine thing is this: if you pay that "independent contractor" say, 5k a month, the audit will see that requalified as the net payment. It is the balance *after* tax and social security, and they will usually get the worst wage tax treatment for reasons of procedure (there is no wage tax class associated with the performer) and the fraudulently operating business will be struck not only with taxes and contributions (which they can not move along to the "contractor") on the basis of 5k, but on the basis of easily twice that amount, plus interest and fines. But as you say, the US IRS likely does not care all that hard about who pays the tax as long as someone does, and there is probably but puny money to be made from social security contributions… in Germany, there is a certain effort made to strike down schemes like this, and there have been cases where entire companies have been brought down when they employed these schemes systematically and then were hit by seven-figure bills in back taxes etc. *There are exceptions too irrelevant to the story to go into.
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04-06-2019, 03:03 PM | #22 | |
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Join Date: Jun 2011
Posts: 3,630
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As for treating employees as independent contractors, that's a big problem in the US and will only get bigger as the country moves increasingly toward a "gig economy." But I don't see much change in the future, given that gig workers are easy to exploit and difficult to organize - which, of course, is why employers want to hire more of them. |
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