That seems extremely backward to me. Is that specific to certain contracting status or is that the case for any kind of contracting?

People should be free to contract if they want. Obviously that means they are now acting company-like and have to pay social contribution like a company would but that should be on the contractor not on the client. That’s how things work everywhere in Europe I had to deal with contracting.

Germany really is a puzzling country.

> Is that specific to certain contracting status or is that the case for any kind of contracting?

It's specific for "sole proprietor" contractors. Multi-person operations, consultancies and bodyshops are exempt as long as the employees get their contributions paid.

> Obviously that means they are now acting company-like and have to pay social contribution like a company would but that should be on the contractor not on the client.

That is possible, indeed, you can voluntarily pay pension contributions (and that's the stuff that the pension fund claws back). You can also voluntarily contribute to the unemployment benefits.

As long as you at least pay the pension contributions, you're fine. The unemployment benefits is voluntary, no penalties if you don't pay these, but also, no payouts when you gotta close down shop.

The problem is, good luck finding a client willing to pay appropriate rates - too much unfair competition from those who just hope that neither they nor the client end up in a colonoscopy-level tax audit in 10 years (the time frame in which the statute of limitations for tax crimes expires), and the sad reality is that this gamble often enough pays off.

Not really German specific, this is also the same situation in many European countries.

The main goal is to prevent contracting with a single client as means for companies to get rid of employees and their social security responsabilities.

Anyone contracting with a single client can eventually go to court and demand to be employed by the client, proving that the relationship has been one of employee/employeer, even though the contract was a freelance one.