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Esport Teams, “Freelancers” and the Federal Labor Court

Matching my Yesterday’s article Regarding possible claims for recovery from clients against contractors, I have received an inquiry from a “self-employed person”, an “entrepreneur” ;), from another European country, who “plays esports” for a German team and asks me whether I can advise him on whether he is liable to pay tax in Germany. Of course I can.

However, I would probably have to tell him that there is a very high probability that he is not an “Entrepreneur” at all, but simply an employee, when audited by the Social Security Administration. And the Federal Labor Court decision I reported on yesterday shows once again that many of the liability issues that are threatened by the nonsense that 90+% of all esports teams design could also be given to the esports player.

Quite the contrary: I see no reason why an esport team, in light of this very BAG case law, could not assert claims for restitution against a player if he plays “exclusively” for a team for a longer period of time, is completely subordinate to the team’s instructions, but is nevertheless, contractually, only a freelancer. Of course, this question cannot be generalized, because it depends on the specific contracts, but also much more on the exact circumstances. At the latest, however, with the announcement of yesterday’s verdict, it can be said with certainty that the general danger is looming. An esports player would then quickly run into financial problems if he had to pay back the difference between the fees for his “marketing contract”, however calculated, and a normal salary for several months or years.

The fact that the Esport team also makes itself vulnerable to various claims from tax offices and social security agencies in the event of a recovery may be a reason that could be talked into feeling safe. The only thing is that there is a risk for all parties involved that a “snitch” will quickly get rolling. Especially if at some point you are no longer “green” to each other, which tends to happen more quickly in esports than in many other industries. If the team is then audited by tax auditors or social insurance agencies, it should be clear that the team will also look for every opportunity to keep the financial damage to a minimum and to hold other participants liable.

I can therefore only advise that you seek complete, conscientious and professional advice on these matters. And that’s before signing any agreements! At least study my blog on these issues. In total, there are more than 100 articles on the problems of employment contracts in esports, marketing, tax and social security law in esports.

Marian Härtel

Marian Härtel

Marian Härtel is a lawyer and entrepreneur specializing in copyright law, competition law and IT/IP law, with a focus on games, esports, media and blockchain.

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