Being self-employed and claiming back MwSt (VAT)

Hi. I'm looking into getting VAT registered.
I get all my income from abroad and the tax office have told me it's up to me whether I want to register or not, since I don't have to charge VAT on my services (although I'm over the 17,500 threshold).
Therefore the decision is based on what money I can claim back on VAT I pay here.
So - Is VAT limited to stuff connected to my job, or something I can claim back on anything at all, e.g. work purchases, other purchases, building work on my apartment, food etc?

Thanks.

You could only claim back VAT if you were collecting VAT, which you're not. So it's a moot point.

I think you are wrong. A VAT registered person or company doesn't collect VAT on services to customers abroad, but does if supplying within Germany.
That's why I haven't had to register, but could if I wanted to.

I may be wrong, but not for the reasons you're stating. Most of my clients are foreign, so I (like you) collect no umsatz/mehrwertsteuer from them. However, I have some domestic clients so I collect it from them. Before I transfer that tax to the Finanzamt, I subtract umsatz/mwst I've paid for BUSINESS-RELATED articles and then transfer them the balance.

You collect no tax, so you have nothing to deduct the tax you've paid from.

However, I have no idea what my accountant does at the end of the year so maybe you get it back then.

Ok thanks. so you are only deducting business related things.
I don't think it's a problem that I don't actually have any VAT to pay to the Finanzamt.
I think in my case I would have a negative balance, which means I would get money back from them.
Of course if I had a client in Germany, I'd charge and pay the VAT.

Yeah my first response was too hasty, I was just thinking of my quarterly payments to them, not the end of year. And yeah, it's just business stuff but my German friends collect receipts for anything and everything for that purpose. I stay honest with the Finanzamt because I've been nailed by them one too many times.

To the best of my knowledge that is wrong. If you have paid more VAT than you have received then you will be reimbursed the excess amount.

The OPs question cant be answered without more information. One needs to know what he does exactly and why he doesnt have to charge german VAT. And this is why:

You only get VAT back on stuff you buy for your business, if you use it for purposes that are NOT tax free in germany. §15(2) UStG And this is a very simplified summary of the rule (that might even be wrong due to my bad translation).

The OP needs to speak to a tax advisor, who can check this point for point.

He said why he doesn't charge VAT Freising -- his clients are foreign. That's a very simple and well-known rule.

I must admit my guess would have been that he should register and claim back all the expenses he can, however this bit in Freising's link looks like it puts the kibosh on it.

Thanks for the link. I'll look into it in more detail.
To clarify, I am performing services that would be taxed if my clients were in Germany - so it seems to me that the exception quoted does not apply.
My clients in the EU have a responsibility to deal with the VAT their end (or at least they would have if I were VAT registered)

G -- the Finanzamt is required by law to give you advice. You don't have to talk to an accountant. Call them back and ask them about that Steuerfrei bit.

Yes thanks Kaptn. I'll do that, but it also helps to understand the basics first.
I also have got the feeling that some at the Finanzamt have a brief to encourage behaviour which is financially better for them (in this case me not being VAT registered).

From my experience, there is no simple rule in VAT law. Uncounted numbers of businessmen are making mistakes every day in applying this law.

Here are a few complications:
- The location of a deal according to VAT law is not necessarily the same as the location that common sense would propose. (so a deal with a foreigner outside of germany might still be considered a deal in germany)
- There is a big difference if you are selling goods or services.
- If the location is considered outside of germany, the deal might be considered not taxable in germany, but that doesnt mean it would be tax-free, if it was in germany.

PLEASE HELP!!!

I have a huge problem with MwSt still owed. My situation is that I am a freelance IT worker, and I took a contract in the UK for 2006. My agency is here in Germany, and I was paid by them, but there are several layers of companies above that for whom I actually worked.

Am I really required to pay MwSt to Germany for this work in the UK? Was this a valid assessment?

[MwSt actually seems silly to me when I drew it out like a network diagram: agency pays contractor, contractor pays government, government pays agency back. It looks to me that it's just moving money around.]

Appreciate any help.

That's the whole idea of it - it's to make it harder to avoid paying the tax and to make it easier to detect those who try to.

I think you just answered your own question there. You didn't "actually" work for the UK company; you were employed by the German agency, and you live here in Germany, therefore you pay tax here. If you still have doubts then seek professional advice, but it seems pretty clear-cut to me.

I'm assuming the actual problem here is that you neglected to charge the agency MwSt. and thus will have to take the 19% hit yourself. However, if you contact the agency and explain the situation, they will hopefully be prepared to pay you the extra 19% in exchange for updated invoices.

Thanks for the answer. Not exactly the one I wanted, but...