At a glance
- Werkvertrag, you owe a result. You direct your own people, you carry the risk that the result works, the client accepts or rejects it.
- Dienstvertrag (§ 611 BGB), you owe an activity, not a result. Still your people, still your instructions. Not to be confused with § 611a BGB, which defines an employment contract.
- Arbeitnehmerüberlassung, your worker is integrated into the client's organisation and takes the client's instructions. This needs a licence from the Bundesagentur für Arbeit.
- What the contract is called decides nothing. How the work is actually done decides everything.
- Get it wrong and an employment relationship arises between your worker and your client by law, with fines up to €30,000 and back social security contributions on top.
Why this decides more than the contract title
Every Indian IT services company entering Germany meets this question in the first procurement conversation, and many meet it unprepared. German clients ask early and precisely, because the legal consequence of the wrong answer lands on them, not only on you. A client that has been burned once will not sign anything until the model is clear.
The three models are not three names for the same thing. They differ in what you owe and, above all, in who tells your people what to do.
The three models
You owe a result
A defined deliverable that can be accepted or rejected, a migrated system, a tested module, a documented interface. You organise the work, you direct your own staff, you carry the risk that the result works. If it does not, you fix it at your own cost. The client checks the outcome, not the working day.
You owe an activity, not a result
Support, monitoring, consultancy over an agreed period. No acceptance of a work product, but still your own organisation and your own supervision. Frequently overlooked as an option, and often the honest description of what a team actually does.
Your worker takes the client's instructions
Your employee sits in the client's team, is scheduled by the client, is told by the client what to do next, and is integrated into the client's organisation. That is labour leasing: Zeitarbeit, and it requires a licence from the Bundesagentur für Arbeit. It is entirely legitimate. It is simply regulated.
The test that actually applies
Different bodies are involved, the Bundesagentur für Arbeit licenses and inspects, the customs authority's Finanzkontrolle Schwarzarbeit investigates undeclared work, and the labour courts decide disputes. What they have in common is that they look past the paperwork at how the work is really carried out. Two questions do most of the work.
Who exercises the right to give instructions? If the client decides what your person does today, in what order and by when, that is the client's direction, not yours.
Is the person integrated into the client's organisation? Client's tools, client's team meetings, client's holiday planning, client's shift roster, a place in the client's org chart.
There are warning signs in the documents themselves. A statement of work that prices hours instead of a deliverable. Named individuals in the contract who cannot be replaced. No defined acceptance procedure. Rates per person per day. None of these decides the question on its own, the assessment is an overall one, but each makes a Werkvertrag harder to defend.
What happens if you get it wrong
Under § 9 AÜG the contract between you and the client can be void. Under § 10 AÜG an employment relationship is deemed to arise by operation of law between your worker and your client, your client becomes the legal employer, with wages, notice protection and social security contributions attached.
On top of that: fines of up to €30,000 under § 16 AÜG, back social security contributions, and withholding employee social security contributions is a criminal offence under § 266a of the Criminal Code. Repeated breaches cost the licence.
This is why a German client's legal department is stricter about this than about your prices. They are not being difficult. They are protecting themselves from inheriting your staff.
Three rules from the 2017 reform that catch newcomers
You must say what it is, in advance. The contract has to be expressly designated as Arbeitnehmerüberlassung and the worker identified before the assignment starts (§ 1 AÜG). This killed the old safety net, holding a licence "just in case" and relying on it when a Werkvertrag turned out to be labour leasing no longer works.
Eighteen months per person, per client. The maximum assignment period under § 1(1b) AÜG, unless a collective agreement in the client's sector says otherwise.
Equal pay, and the nine months are not what people think. Under § 8 AÜG the leased worker must be paid like a comparable employee of the client from the beginning. A collective agreement may provide for a deviation for the first nine months, subject to the statutory requirements of § 8(4) AÜG. Nine months is therefore the limit of a permitted exception, not a grace period you get by default. Providers who priced a three-year engagement on their home cost base discover this the hard way.
The licence, in numbers
Applied for at the Bundesagentur für Arbeit, in writing and in German, signed by hand. As the agency's fee leaflet stood in November 2021, a scan sent by email was expressly not sufficient; digital filing routes change, so check the current requirement before you post anything. The fees are fixed by regulation and are higher than most newcomers budget for, because the agency inspects your operation before it extends a licence. The figures below follow the agency's fee leaflet in the version of November 2021, check the current one before you plan around them.
| Step | Fee |
|---|---|
| Notification under § 1a AÜGOccasional lending between companies, not a full licence. | €64.40 |
| First applicationLicence limited to one year. | €377 |
| First renewalThe agency carries out a full inspection first, that is what the fee pays for. €1,316 where a limited inspection is enough, for example if you have leased on a small scale. | €2,060 |
| Second renewalNormally no inspection. | €218 |
| Unlimited licence after three yearsPreceded by a full inspection; €1,316 where a limited one suffices. | €2,060 |
| Routine check on an unlimited licenceEvery five years. €921 for a limited check. | €1,665 |
| Ad-hoc inspectionAfter a complaint, or to verify that earlier findings were fixed. | €921 |
Two things founders miss in that table. The renewal costs more than five times the first licence, because a licence is cheap to grant and expensive to verify, budget for year two, not just year one. And an unsuccessful objection to a decision triggers another full fee under the Federal Fees Act.
The agency also wants to see that you can pay wages through a gap between assignments. As a guide it expects liquid funds of roughly €10,000 for up to five leased employees, plus about €2,000 for each additional one, figures from the agency's internal instructions rather than from statute, so confirm the current position. Allow roughly three months for the procedure, and apply before a client is waiting.
What this means in practice
Decide the model before the first client conversation, not in the middle of contract negotiation. It changes your pricing, your delivery organisation, your visa strategy and whether you need a licence at all.
Delivery from your own site, with a defined and acceptable deliverable and your own project management, points to a Werkvertrag. A bounded service over a period with your own supervision may be a Dienstvertrag. People at the client's site, in the client's teams, taking daily direction from the client, is Arbeitnehmerüberlassung, and then the honest move is to get the licence rather than to dress it up, because the paperwork will not survive an audit and the client knows it.
We support the licence application and we make the introductions. What we do not do is give you legal advice on which model your engagement falls into, that belongs to a German employment lawyer, and it is worth the fee, because this is the one mistake in the German market that is genuinely expensive.
Questions
Sources
§ 1 AÜG, licence requirement, designation and maximum assignment period: gesetze-im-internet.de
§§ 9, 10 AÜG, invalidity and deemed employment with the client: gesetze-im-internet.de
§ 16 AÜG, administrative fines: gesetze-im-internet.de
Licence fees, BMASBGebV: Merkblatt zur Gebührenpflicht für Verleiherinnen und Verleiher,
Bundesagentur für Arbeit (PDF)
Licence procedure: Bundesagentur für Arbeit
§ 631 BGB (Werkvertrag) and § 611 BGB (Dienstvertrag); § 611a BGB defines the employment contract: gesetze-im-internet.de
Written by Christoph Schuler
Founder, Business Center Reutlingen. Fifteen years in international automotive at Daimler,
two of them living in Bengaluru.
Published 28 August 2026
This is an orientation, not legal advice. Business Center Reutlingen provides administrative and organisational support and introduces you to licensed professionals. In Germany only admitted lawyers may advise on these questions, and this is a field where you should take that advice before you sign, not after.