Kleinunternehmer and VAT - invoicing in Germany, EU, and non-EU

21 posts in this topic

Hi all,
 
I am a freelance illustrator and am looking for someone to kindly validate whether my understanding of invoicing clients is correct given my particular situation. Before I start, I want to say a big thank you to everyone here on Toytown - most of the knowledge I've pieced together has come from excellent posts on this site.
 
Background:
Since my income will be below the 17,500 Euro limit, I have opted as a kleinunternehmer not to charge VAT. As an illustrator I will mainly be working with foreign clients (businesses and also private customers). I have applied for and received my Steuernummer. I have also applied for a USt-ID to facilitate working with international clients. Just for maximum clarity, I am living in and working from Germany, and providing clients with digital files containing my illustrations. My main clients will be publications such as magazines.
 
---
 
The following is my understanding of how I should invoice businesses and private customers in Germany and abroad as a Kleinunternehmer.
 
In addition to the general required information for an invoice, on all invoices I plan to:
  a ) Use my USt-ID instead of my Steuernummer
  b ) Never charge VAT, under any circumstance
 
I realize that I generally need to provide a reason for not charging VAT. Here is how I plan to do that in various scenarios:
 
1) If my client is German (both businesses and private customers), German VAT would generally be due (for both B2B and B2C), so on my invoice I will:
  - state "Gemäß § 19 UStG wird keine Umsatzsteuer berechnet"
  - not charge VAT
 
2) If my client is a business located elsewhere in the EU (ex: in the UK), this is a B2B situation and the supply of services is taxed at the business' place of establishment. Therefore the recipient is responsible for accounting for VAT according to the "reverse charge" procedure. On my invoice I will:
  - state "VAT reverse-charged: tax liability of the recipient of the services"
  - state the USt-ID of the client
  - not charge VAT
  - In this situation, there is no need to mention the line "Gemäß § 19 UStG wird keine Umsatzsteuer berechnet" on the invoice, as I am not charging VAT for the previous reason
 
3) If my client is a non-EU business (ex: in the US), the place of supply is at the business' place of establishment. The place of supply is thus outside the EU and no VAT is due. I will:
   - not charge VAT
   - NOT mention "Gemäß § 19 UStG wird keine Umsatzsteuer berechnet" (nor the reverse-charge procedure) on the invoice. I do not need to state a reason for not charging VAT in this case.
 
4) If my client is an EU or non-EU customer (private person), this is a B2C service taxed at the supplier's (my) place of establishment. Therefore German VAT would generally be due. However, as a kleinunternehmer I am exempt from paying it. On the invoice I must:
  - state: "According to § 19 UStG no VAT is charged"
  - not charge VAT
 
---
 
I believe I have pieced most of it together correctly, but I would greatly appreciate feedback. Thank you in advance to anyone who can comment on whether a), b), and 1) - 4) are correct.
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Good question. I have ample savings from previous work (in software development) and the security net of a supportive husband employed full-time whose salary is enough for the both of us. Of course, I'm hoping to eventually earn more than €17,500 per year, but I'm starting out in illustration and need to start somewhere.

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Thought this useful PDF from German-British Chamber of Industry & Commerce (found it somewhere in the Internet) might be helpful here. 

 

Although it does not contain direct answer to your question, it has some good info regarding invoicing within Germany, within EU and exporting overseas. Maybe you could validate some of your thoughts

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@Vitaliy Zurian Thank you for the link to the PDF - it is very helpful for understanding general invoicing requirements. I'm not sure how much it applies in my case, since it doesn't mention the Kleinunternehmer status, and seems to lay out the rules mainly for the supply of physical goods as opposed to services.

 

PandaMunich's comment on Kleinunternehmer will start 2nd freelance job was incredibly helpful for breaking down what is subject to VAT in the first place for the delivery of services, so I am relatively sure that points 1) and 2) in my original post are correct. However, it's still unclear to me:

 

3) whether I need to provide a reason for not charging VAT to a non-EU business (ex: US client). This source makes it sound like no justification is needed, but I'm not 100% sure that that's what it's saying.

 

and

 

4) whether I should use the kleinunternehmer status ("According to § 19 UStG no VAT is charged") as the justification for not charging VAT to EU and non-EU private customers

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Don't worry, everything in your original post is correct, congratulations on having mastered German VAT law.

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Hi all,

 

I originally posted asking about VAT for a Kleinunternehmer providing a service. I would like to start selling goods as well, and I would again be incredibly grateful if someone could confirm whether the following is correct:

 

1) If I sell goods to a private consumer in Germany, German VAT would generally need to be charged. However, as a Kleinunternehmer I would:

 - state "Gemäß § 19 UStG wird keine Umsatzsteuer berechnet" on the invoice

 - not charge VAT

 

2) If I sell goods to a business in Germany, I would not charge VAT provided the business has a valid VAT number. On my invoice I would:

  - state "VAT reverse-charged: tax liability of the recipient of the goods" (is this correct?)

  - state the USt-ID of the recipient

  - not charge VAT

 

3) If I sell goods to a private consumer in another country within the EU, usually I would need to register for VAT in the country of the consumer and charge VAT at the rate applicable in that country, provided my sales exceeded the distance selling threshold in the consumer's country. However, since my total sales are well below these limits, I would instead need to charge VAT at the German rate. However, as a Kleinunternehmer I am not liable for paying VAT in Germany, so I would:

  - state "According to § 19 UStG no VAT is charged" on the invoice

  - not charge VAT

  - (***I am particularly unsure whether my understanding of this situation is correct***)

 

4) If I sell goods to a business in another country within the EU, I would not charge VAT provided the business has a valid VAT number. On my invoice I would:

  - state "VAT reverse-charged: tax liability of the recipient of the goods"

  - state the USt-ID of the recipient

  - not charge VAT

 

5) If I sell goods to a private consumer or business outside the EU, I do not charge VAT, and do not need to specify a reason for not charging VAT on the invoice.

 

---

 

For reference, I am a freelance illustrator and I would be selling screen prints. I would mainly be selling to private consumers and businesses abroad, which is why I need to understand how to deal with cross-border VAT as a Kleinunternehmer.

 

Thank you in advance!

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2 hours ago, IllustratorInMunich said:

1) If I sell goods to a private consumer in Germany, German VAT would generally need to be charged. However, as a Kleinunternehmer I would:

 - state "Gemäß § 19 UStG wird keine Umsatzsteuer berechnet" on the invoice

 - not charge VAT

 

Yes.

 

2 hours ago, IllustratorInMunich said:

2) If I sell goods to a business in Germany, I would not charge VAT provided the business has a valid VAT number. On my invoice I would:

  - state "VAT reverse-charged: tax liability of the recipient of the goods" (is this correct?)

  - state the USt-ID of the recipient

  - not charge VAT

 

No. You do the same as when you sell to a private consumer in Germany, see above.

 

2 hours ago, IllustratorInMunich said:

3) If I sell goods to a private consumer in another country within the EU, usually I would need to register for VAT in the country of the consumer and charge VAT at the rate applicable in that country, provided my sales exceeded the distance selling threshold in the consumer's country. However, since my total sales are well below these limits, I would instead need to charge VAT at the German rate. However, as a Kleinunternehmer I am not liable for paying VAT in Germany, so I would:

  - state "According to § 19 UStG no VAT is charged" on the invoice

  - not charge VAT

  - (***I am particularly unsure whether my understanding of this situation is correct***)

 

Yes.

 

Anyway, if you had passed the Lieferschwellen (= selling thresholds), this would have also most probably have meant that your turnover was so high that you were no longer a Kleinunternehmer, and would have anyway changed to VAT-charging...

 

2 hours ago, IllustratorInMunich said:

4) If I sell goods to a business in another country within the EU, I would not charge VAT provided the business has a valid VAT number. On my invoice I would:

  - state "VAT reverse-charged: tax liability of the recipient of the goods"

  - state the USt-ID of the recipient

  - not charge VAT

 

No, you do the same as for private consumer in another country within the EU.

 

As a Kleinunternehmer, you do not do an innergemeinschaftliche Lieferung, i.e. state the recipient's USt-ID and not charge VAT because of his USt-ID (it's forbidden in §19 Absatz 1 Satz 4 UStG): http://www.somannscheller.de/2017/04/der-umsatzsteuerliche-kleinunternehmer-und-seine-besonderheiten/

You do not charge VAT simply because you're a Kleinunternehmer.

 

2 hours ago, IllustratorInMunich said:

5) If I sell goods to a private consumer or business outside the EU, I do not charge VAT, and do not need to specify a reason for not charging VAT on the invoice.

 

It can't hurt to also explicitly state "Ausfuhrlieferung" on the invoice, to emphasize that the product was sent to outside the EU.

 

Please also read this thread till the very end:

 

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Wow, thank you so much for your help! I've been trying to sort this out on my own for a while, and clearly I'd misunderstood half of it. I'll study the related thread you linked as well.

 

I sold some prints to a business in Italy last year (2017) and put "VAT reverse-charged: tax liability of the recipient of the goods" on the invoice with the recipient's USt-ID. Now that I know this was the wrong justification for not charging VAT, how can I correct this? Should I send a corrected invoice to the business in Italy? I'm really hoping I haven't compromised my status as a Kleinunternehmer with this mistake..

 

Thanks again!

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Replace that invoice with a correct one in your files and also send your client the corrected invoice.

 

4 minutes ago, IllustratorInMunich said:

I'm really hoping I haven't compromised my status as a Kleinunternehmer with this mistake..

 

No, as long as you do not charge VAT, they cannot interpret this as you opting for charging VAT. 

It was just a mistake.

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Hello Everyone! Anyone here that understands VAT Report (Umsatzsteuervoranmeldung) Is there anyone here that could give me some support?

 

I just have my VAT since the end of August, I need to do the reports since March 2017, mostly just to say ZERO (0) or with international customers from Switzerland and England. This year in September was the first time I actually had a German customer which I added VAT to the invoice. I want to know if someone can help me with ELSTER.

 

I really am going to make a PDF with beautiful design to distribute for FREE with step by step for other foreigners in the same situation later on :) can you help me?

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Hi I have question, maybe somebody could help.

i work as a freelancer in 2018, and my client told me to put my SteuerID on the invoice. They never ask about Steuernummer and they seem very tax avoidance kind of company. They paid me extra for my train ticket and support for health insurance but this amount cannot be written on the invoice. Do you think SteuerID can now replace Steuernummer on Invoices?

 

i am afraid what I am doing right now is actually not aligned with the regulation. 

Maybe some tax guru can help @PandaMunich

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1 hour ago, NadThiel said:

support for health insurance

 

Sounds like you could be scheinselbständig, i.e. in fact an employee and not a freelancer: 

https://www.toytowngermany.com/forum/topic/71297-scheinselbständigkeit-and-german-pension-system/?do=findComment&comment=3544282

 

Clients do not normally pay part of your health insurance, employers do that

 

1 hour ago, NadThiel said:

i work as a freelancer in 2018, and my client told me to put my SteuerID on the invoice.

 

That was wrong, your invoice needed to have either your Steuernummer or - if you have one - your VAT-ID (= Umsatzsteuer-Identifikationsnsummer), in accordance with §14 (4) Nr. 2 UStG:

  • (4) Eine Rechnung muss folgende Angaben enthalten:
    ...
    2. die dem leistenden Unternehmer vom Finanzamt erteilte Steuernummer oder die ihm vom Bundeszentralamt für Steuern erteilte Umsatzsteuer-Identifikationsnummer,

 

 

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2 hours ago, PandaMunich said:

 

Sounds like you could be scheinselbständig, i.e. in fact an employee and not a freelancer: 

https://www.toytowngermany.com/forum/topic/71297-scheinselbständigkeit-and-german-pension-system/?do=findComment&comment=3544282

 

Clients do not normally pay part of your health insurance, employers do that

 

 

That was wrong, your invoice needed to have either your Steuernummer or - if you have one - your VAT-ID (= Umsatzsteuer-Identifikationsnsummer), in accordance with §14 (4) Nr. 2 UStG:

  • (4) Eine Rechnung muss folgende Angaben enthalten:
    ...
    2. die dem leistenden Unternehmer vom Finanzamt erteilte Steuernummer oder die ihm vom Bundeszentralamt für Steuern erteilte Umsatzsteuer-Identifikationsnummer,

 

 

 

Thank you @PandaMunich !! I also think so. There was something fishy with that client. In fact, I will quit this freelancing activity in April because I recently got a new legal employment contract. I really wonder how this kind of company / business can go under the radar of Finanzamt. The company employs a lot of Foreign Students on Freelanceing basis all with the wrong Invoices. No Stuernummer and these students never do Steuererklärung. Last year (2018), I earned for about 14k-15k brutto. So actually it won’t be so much as well after the Einkommensteuer (I am tax class 5, joined with my hubby). I am just wondering as a freelancer (I have more than a client), can I just fill out this year tax declaration like normal freelancer? Or should I do something extra to resolve the matter?

 

thanks a lot for your help! 

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28 minutes ago, NadThiel said:

I am just wondering as a freelancer (I have more than a client), can I just fill out this year tax declaration like normal freelancer?

 

Yes, don't worry, just declare all your freelance profit in Anlage S and Anlage EÜR in the joint tax return that you will do with your husband.

Since you had freelance income, you will need to do a fully electronic submission, i.e. either do it yourself, but for that you need an Elster digital certificate:  https://www.toytowngermany.com/forum/topic/274811-how-to-get-your-elster-digital-certificate/

or hire a Steuerberater to do the tax return for you.

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@PandaMunich in b2b scenario ie providing service to another business in EU where client in other EU country pays VAT and you need not pay VAT in germany. In Ust-VA do you report sales in umsatz 60 alone and submit or in 60 and 41?

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