An apparently impossible VAT question

6 posts in this topic

I was drawn out of retirement at the beginning of this year. A programme of work that I could not ignore.

 

I took on a Tax adviser, someone recommended on this site, but we have made little progress. The issue is that, quite rightly, he says that I must charge VAT to this single client.

 

My problem is that it is not possible to charge VAT because the client is exempt as an IGO and that this is a global treaty to which Germany was a founding party. The client has no mechanism to pay any taxes, anywhere. 

 

Tax adviser thinks that I have to apply for an exemption but there are no exemptions for suppliers. My argument is that the German tax authorities have to have a mechanism for dealing with such situations, why can the adviser not talk to them to find out what it is? I cannot be the only person working as a contractor for the WHO, and the answer must exist. 

 

Does anyone have any experience of this sort of situation. I'd rather not get another adviser but it might be necessary.

 

 

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Is there no section in the Umsatzsteuergesetz that confirms dealing with such a client is VAT expemt. 

 

For example, when I invoice a client for a payment related to a mortgage payment there is not VAT to be included on this invoice. I just need to include something on the invoice that the pament is exempt from VAT according to §4 Nr. 8a UStG.

 

Perhaps it's catered for in the UStG. somewhere?

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Thanks for the quick reply. This is possible. It would be a different class of exemption rather than the class of supply. Which would be exempt for all suppliers. This is a class of client, but the principle sounds similar to my ignorant ears. 

Even if it is an uncommon issue, I would expect a tax adviser, if they did not know of it, to be able to find out quite quickly and the fact that this seems to be a problem for them is getting me worried.

 

Appreciate it

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There is already something similar. If you invoice a company outside Germany, it's already VAT exempt, so it should be something similar.

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14 hours ago, Guileshill said:

I was drawn out of retirement at the beginning of this year. A programme of work that I could not ignore.

 

I took on a Tax adviser, someone recommended on this site, but we have made little progress. The issue is that, quite rightly, he says that I must charge VAT to this single client.

 

You should have asked the people who deal with this on a daily basis, i.e. the legal department of your WHO client and not expect a Steuerberater who in the normal way of things will never have had such a client such as you before (and never will again) to know about this.

This is not standard fare.

 

I came across this problem in my EU research project days, so I have the advantage of already knowing (a part of) the solution.

But if I put just my Steuerberater hat on, this is not a trivial question.

 

@MikeMelga

These international organisations are not "companies"="businesses", so no, the standard rules you know about do not apply. 

 

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--> If this is about work for a WHO branch located in another EU member country, e.g. the IARC (International Agency for Research on Cancer) in Lyon/France, then the services you provide are exempted by the same procedure as the one for people who contract with the European Commission, i.e. that WHO branch provides you with their "VAT exemption certificate" and then the services you provide will be exempted from German VAT under §4 Nr. 7 d)  UStG: https://www.gesetze-im-internet.de/ustg_1980/__4.html

 

--> If your services are provided to a WHO branch in a non-EU country, e.g. to the headquarters in Geneva/Switzerland, and you provide either legal or management or technical advice to them, then according to §3a (4) Nr. 3 UStG you should charge that non-EU country's VAT rate. And then you would have to look into that non-EU country's laws to find the VAT exemption for the WHO which then lets you off the hook to charge them that non-EU country's VAT rate (for Switzerland it would be, since VAT is part of the class "indirect taxes", article 10 of the treaty between Switzerland and the WHO, which is what is intended by section 8 of the "Convention on the Privileges and Immunities of the United Nations" (which also applies in Germany), this convention applies to your case, since the WHO is an agency of the UN). 

If the services you provide are not legal or management or technical advice, then you will have to charge German VAT, your client will have to pay it and then get it back via the VAT reimbursement process, see below 

 

--> if this is about services provided to a WHO branch in Germany, e.g. to the European Centre for Environment and Health (ECEH), then since it isn't on the list of international organisations that are allowed by Germany to issue VAT exemption certificates for German VAT (as far as I know, only EMBL, ECB, ESO, ESA, EPO, EASA, EUMETSAT, ITU and of course NATO&co. are allowed to issue them), you will have to charge German VAT in your invoice, your client will have to pay it and they will have to get it back as laid down in §12 Gaststaatgesetz, as explained below.

 

14 hours ago, Guileshill said:

The client has no mechanism to pay any taxes, anywhere

 

And yet, there is a VAT reimbursement process for the German VAT in place for international organisations at the Bundeszentralamt für Steuern, to give them back any VAT they did pay.

--> there are scenarios where they pay it (and get it back later), despite all their protests, see here (in English): https://www.bzst.de/EN/Businesses/VAT_Refund/IntOrgandIntergovernmentalbodies/intorgandintergovernmentalbodies_node.html

 

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If you send me your e-mail address, I can send you an extract from the commentary, that has all the legal sources and more details, to pass on to your Steuerberater.

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Thank you so much for this. Believe me, I have asked for help both from the department with which I am working (HQ Geneva) and the German WHO, their response to consultants is singularly reluctant, if I get a response at all. 

 

I would appreciate any help you can give. 

 

Best to take this offline now. I am happy to set anything out that is helpful but not on a public forum, obviously. 

 

you can use chrisatguileshill@gmail.com

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