Online business started in the USA... now what?

2 posts in this topic

Bear with me, my situation is a bit complicated (or perhaps it isn't and I am just making it more confusing than it is!)

 

Some basic background information that is explained in more depth below:

• I am a US citizen, and have been living in Germany since December 31 of 2017

• I was a freelance opera singer in the USA, and now am working since September of 2018 at the Staatsoper Stuttgart Fest in the opera house.

• In 2016 I started an online business side-job where I produce and sell PDFs of Classical music (www.ossiaeditions.com). The business isn't registered in the USA because it was just running as a sole proprietorship, as in, simply operating under my name. 

• Since living in Germany, I have started working freelance also with a very well known classical music publishing house, performing the same work as I do with my online business (music arranging/editing)
 

Now the situation explained with more detail:

Not sure how to address this predicament here in Germany... I am a US citizen, living in Germany since the end of 2017.  It's always been a side job to my main job, a freelance musician (opera singer). At the very end of 2017, I moved to Europe and have been living in Germany since then, now working at the Staatsoper Stuttgart where I am Fest in the opera house there (have been working there since September of 2018.) Through this time, I have continued to produce music and sell PDFs on my website, but as my domicile had been in Germany for all of 2018, "technically" this was income earned in Germany as it is under my name (even though the money is very international, coming from dozens of different countries from the online sales). I never earned an outrageous amount of money from this side job, each year less than $10.000, and I don't anticipate ever really breaking that threshold as my customer base is quite niche (and it is more of a hobby-job). On top of this, since I have lived in Germany, I have started doing freelance work for a very well known classical publishing house. This work is absolutely identical to the work I do with my online business, music editing/arranging. In 2018 I did very little with them, but so far in 2019 I have done a great deal more. With my invoices with this company, they have inquired about VAT, and in my research it appears that I am exempt from charging VAT as my "business" qualifies as a Kleinunternehmer, as even between my online business and my freelance work with this publishing company, I do not anticipate crossing the €17.500 threshold.

 

These are the questions I have regarding this situation: 

1. Do I need to register my "online business" here in Germany, even though it is a business that started in the USA and has no store front (no physical presence) and simply runs on digital sales and services?

2. Does my work with the German classical publishing house function by operating under my name for the services I am providing, or is it better to also invoice them under the name of my online business?

3. Does the VAT €17.500 threshold refer to the money elusively made from the small business, or does this monetary amount refer to the amount that I am making personally, that is, does the income I am earning through the Staatsoper here in Stuttgart also count?

4. As in 2018 I made less than €17.500, and in 2019 I will make less than €50.000, do I still count as a Kleinunternehmer in 2020, or do I without question at that point need to be collecting and paying VAT regardless?

 

Thanks in advance for all your assistance... Just want to make sure that I am doing everything right moving forward, because I am not confident I have been doing things exactly right so far with this move to Germany!

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3 hours ago, cadenzo said:

These are the questions I have regarding this situation: 

1. Do I need to register my "online business" here in Germany, even though it is a business that started in the USA and has no store front (no physical presence) and simply runs on digital sales and services?

 

Perhaps Panda will write more about this in more detail, but only briefly: Whether your company has a shop front or not and whether it runs on digital sales and services doesn't matter. 

 

You would have had to register your activity with the tax office after your move to Germany, at the beginning of 2018. Germany has full taxation rights for your entire worldwide income - so you also have to do an annual electronic tax return (and then pay taxes on your profit).

 

Whether your activity is freelance or commercial ("gewerblich")l is not clear from your information. If it is commercial, you must register with the municipal trade office before you register with the tax office. 

 

The question whether someone is a Kleinunternehmer or not is not only determined by the turnover, but also by the corresponding decision in the 'Fragebogen zur steuerlichen Erfassung'/'questionnaire for tax registration'. At the moment you are neither a Kleinunternehmer nor a regular taxable person because you have not registered ...

 

It's a good thing that you haven't calculated any sales tax so far, so you don't have a sales tax liability at the tax office. 

Nevertheless, I would recommend you to look for a tax consultant to help you get the registration somehow without getting in trouble. And then to do the tax declaration for 2018 and to answer the many questions you will surely have now ;) 


 

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