The distinction between volunteer work and employment subject to social security contributions is becoming increasingly important in the nonprofit sector in Germany. In particular, management bodies within highly professionalized association structures are coming under greater scrutiny in status determination proceedings. The judgment of the Higher Social Court of Berlin-Brandenburg (LSG Berlin-Brandenburg) dated October 9, 2025, provides another important decision in this area, confirming prior case law and carrying increased practical significance for the organization and legal advice of associations.
Social security contribution liability for flat-rate expense allowances
The proceedings decided in October 2025 concerned the president of a large professional association. Over several years, the plaintiff managed the association, conducted its day-to-day operations, made urgent decisions, and represented the association externally. There was no contractual basis for the activity; rather, the position resulted from election by the general meeting.
For his activities, the plaintiff received a monthly “expense allowance” of EUR 7,500 plus VAT. In the course of status determination proceedings, the German Pension Insurance determined that the activity constituted employment subject to social security contributions. The action brought against this determination was unsuccessful both before the Berlin Social Court and on appeal.
Criteria for dependent employment
The LSG confirmed the classification under social security law as dependent employment. The decisive factor was that the president’s activities extended beyond mere representative functions and included substantial administrative and management responsibilities.
The court particularly emphasized the following aspects:
- Integration and functional involvement
The president was integrated into the organizational processes of the association and participated functionally in its work processes. Full integration into every area of the organization is not required for this purpose. - Subordination in a broader sense
Even though operational instructions are not issued in the traditional employment-law sense, integration into the association’s structure and subordination to resolutions passed by the general meeting were sufficient. - Lack of entrepreneurial risk
The plaintiff bore no independent economic risk. Compensation was paid regardless of the organization’s economic success. - Level of compensation
The monthly payments were not viewed as a mere expense allowance, but rather as disguised remuneration.
When association work becomes subject to social security contributions
The court also clarified that even a management position and the authority to make independent decisions do not preclude dependent employment.
The LSG expressly rejected the existence of a volunteer activity exempt from social security contributions. The decisive factor was an objective assessment of the activity as income-oriented.
Following the case law of the Federal Social Court (BSG), the court distinguished between:
- purely idealistic representative activities, and
- generally accessible administrative and management functions.
Where – as in the case at issue – both areas of activity are combined and compensation exceeding the actual effort and time involved is paid, this indicates dependent employment from the perspective of the LSG.
Would you like to receive news like this in your inbox every month? Subscribe to our newsletter “German Nonprofit Update”.
The decision highlights a broader trend: as association and nonprofit structures become increasingly professionalized, the scope of protection for volunteer work under social security law is shrinking.
Social security contribution liability also for elected offices
In the case of the vice president of the same association, the court likewise affirmed social security contribution liability – at least in part.
In all cases, the central legal standard for review is Section 7(1) of Book IV of the German Social Code (SGB IV). Under this provision, employment exists where a non-self-employed activity is performed, particularly where it is characterized by subordination and integration into another party’s work organization.
Case law requires an overall assessment of all circumstances. The decisive factors include, in particular:
- the existence of entrepreneurial risk,
- the nature of the compensation, and
- the degree of organizational integration.
These criteria apply regardless of whether the activity is based on a contractual relationship or – as in this case – on an elected position.
Amount of the expense allowance as the decisive criterion
However, in the decision dated January 14, 2026, the plaintiff had not been “compensated” at the same level throughout the entire period. The flat-rate expense allowance initially amounted to EUR 1,500 per month and was increased to EUR 4,000 per month only during the period in which the plaintiff also held the office of treasurer. The court concluded that the monthly EUR 1,500 payment still fell within the scope of reimbursement for actual expenses incurred. This conclusion was derived from the legal principle underlying Section 41(2) sentence 2 SGB IV and was based on the maximum hourly rate applicable to volunteer workers of the self-governing bodies of social insurance institutions in Germany.
Where the hourly rate remained below this threshold, exemption from social security contributions applied. Where the threshold was exceeded, the exemption was denied. Since there is still no supreme court case law regarding the applicability of these legal principles, the appeal was admitted before the Federal Social Court (BSG). This suggests that the relevant criteria for distinguishing volunteer activities from dependent employment will be further refined in the future.
When volunteering becomes employment: risks for associations and NPOs
The decision forms part of an increasingly restrictive line in social court case law. Even before this ruling, both the LSG Berlin-Brandenburg and the BSG had emphasized that high payments and a divided organizational structure weigh against classification as volunteer activity.
The judgment of the LSG Berlin-Brandenburg marks another step toward a restrictive interpretation of the concept of volunteer service under social security law. Management functions within professionally organized associations are increasingly being classified as dependent employment, particularly where substantial compensation is involved.
For advisory practice, the ruling has the following important implications in particular:
- Limited ability to influence classification through the articles of association
The formal structuring of a management position can influence classification under social security law only to a limited extent. - Central importance of compensation
The key area for structuring lies in the amount and design of the expense allowance. It should closely reflect the actual expenses incurred. - Increased review requirements
Associations must critically review their management structures and compensation models in order to avoid unintended consequences under social security law.
It is not the formal classification as volunteer work that determines social security contribution liability, but rather the actual structure of the activity. Ultimately, the decisive factor is the economic reality.
Review now whether your management and compensation structures within your NPO are properly designed under German social security law. We support you in creating legally compliant structures.
LSG Berlin-Brandenburg, judgments dated October 9, 2025, L 14 BA 39/24 and January 14, 2026, L 9 BA 38/24
