Ahhh, is that autumn in the air? Must be time for the Künstlersozialkasse’s random income audit! Every year in September, a handful of Künstlersozialkasse members get sent a special yellow letter.
The special letter in question is called the “Meldung des tatsächlichen Arbeitseinkommens für Vorjahre” (Registration of your actual working income earned in past years). If you were thinking you were pretty clever by predicting a low income to get cheap health insurance contributions and hoping you’d get away with it, you’re about to get busted. You’re likely to get this letter after you’ve been with the KSK for 5-7 years already. Just enough time to lull you into a false sense of security.
If the yellow hue doesn’t put you on high alert, the cheeky claim that they warned you that this was coming probably will. Don’t remember getting a warning? Have a look at the letter you got asking for your income prediction for the following year. There will be a harmless looking paragraph on the bottom of the first page for around 5% of members:
Hinweis: Die Künstlersozialkasse ist gesetzlich verpflichtet, die Einkommensverhältnisse der Versicherten stichprobenartig zu überprüfen. Sie werden in Kürze eine weitere Anfrage der Künstlersozialkasse erhalten, in der es um Ihre in den vergangenen Jahren erzielten Einkünfte geht.
Please note: The Künstlersozialkasse is required by law to check the income of a randomly selected group of members. You will receive another questionnaire concerning the income you earned in the past few years from the Künstlersozialkasse shortly.
Easy enough to miss, but yep, it was there.
The KSK now asks, nay, demands that you cooperate, and you should do so within a month of receiving the letter. It should take you about 15 minutes. Here’s what you need to do.
Filling out the form
On the second yellow page, you’ll see a space to put your income from artistic freelance activities on the left-hand side, and your income from other types of self-employment (e.g. a trade self-employment activity) on the right-hand side. You also need to put in copies (not originals) of your tax returns (Steuerbescheide) from 2015, 2016, 2017 and 2018. If you haven’t actually received your tax return from 2018 yet, you can submit the tax declaration (Steuererklärung) that your tax advisor prepared for you.
I haven’t submitted my 2018 taxes yet
Oops. The deadline for submitting the 2018 declaration was 31 July 2019 if you’re a DIY kinda person, or 28 Feb 2020 if you had a tax advisor do it for you. Get a tax advisor to do it for you now, and for any other years you might have missed, ASAP. The absolute latest deadline for replying to this letter is 01.12.2020.
Where do I put income from employment, like a part-time job or a minijob?
You don’t have to put that on the form at all. Just all types of self-employed work.
Where do I put income from my trade self-employment (Gewerbe)?
In the right-hand column. Keep in mind that to stay health-insured in the KSK, this amount needs to be under 5,400 EUR profit per year. But if the profit is clearly listed as more than that on your tax return, there isn’t much you can do about it. You’ll just have to fess up. If it is above 5,400 EUR profit, you can continue to be insured in the KSK for your pension, but not for your health insurance.
Where do I put income that’s freelance but not artistic? It’s not shown anywhere on my tax return.
That’ll be because it’s mixed up with your artistic activity under the same tax number. Figure out how much of your profit was artistic and how much was non-artistic. Go through your invoices one-by-one if you have to and deduct expenses in the same manner (artistic expenses and non-artistic expenses). Put the artistic profit amount in the left-hand column and the non-artistic profit in the right-hand column. Make sure that the amounts in both columns equal the amount listed under “aus freiberuflicher Tätigkeit” on your tax return when you add them together.
Keep in mind, you’re supposed to keep the amount in the right-hand column under 5.400 EUR. Also keep in mind that giving false answers can be associated with a fine (which is not a criminal offense and won’t give you a record) of up to 5,000 EUR.
What could happen if there’s a large difference between my predicted and actual profit?
First of all, the KSK is pretty tolerant. They’ll look at the percentage of the difference in your prediction and your real income, averaged over the last four years. Did you consistently predict a lower/higher income or did you just have a weird year and forget to let the KSK know? A difference of 10% is not a big deal and will probably not result in any bad consequences. A difference of 100% over several years is a big deal and might result in a warning or a fine of up to (but rarely as high as) 5,000 EUR. They’ll also bump up your future contributions to match those on your most recent tax return, even if you’re not making that much money anymore.
I’m freaking out here.
There is only one way to respond to this letter, and that is with cold hard numbers and copies of your tax return that match them. If you end up with a fine, it will probably still be a bargain in comparison to all the money you’ve saved over the years paying too little in social contributions.
If you want a lawyer to take on your case and your German is decent, may I thoroughly recommend the KSK guru of Germany, Andri Jürgenssen, who does a 20-minute consult for 79.00 EUR.
How do I make sure I don’t get caught out?
No-one has a crystal ball and no-one can tell how much you are going to earn next year. But you know your business by now, so make the prediction a reasonable one. If you get to about July or October and you realize you are going to earn significantly more or significantly less than the prediction you gave, notify the KSK and they will adjust your income accordingly. You can do it whenever you want and as often as you like, but they can’t change anything retroactively.
How Red Tape Translation can help
We don’t give out legal advice but you can use our Life Admin service to help you understand correspondence from the KSK, the tax office and any other public authorities. We can explain what you have to do next, give you tips on how to reply and make three-way phone calls in German with you.