Do I have to provide a german invoice to non-German clients

3 posts in this topic

Hi everyone, 

 

Thankyou in advance for any help with my questions - :D

 

I'm an Australian living in Germany since Nov, 2021. I've got my residency permit, a Tax number and a Freelancer number. I didn't apply to be a Kleinunternehmer.

 

Job - I am going to start online counselling for an Australian company seeing Australian clients only via Telehealth.

 

Payment

  1. The client pays the company for the counselling session
  2. I conduct the session with the client online.
  3. The company pays me after deducting their fee and it is deposited into my Australian bank account.

 

Invoice - The Australian company sends the client an invoice after the session, however, this amount is different to the amount of money I receive as the company takes a fee. 

e.g. If a client pays the company $100 for the session, the generated invoice is for $100 but I actually only receive $90 in my bank account (10% fee). So I assume the invoice isn't technically correct??

 

Question 1 - Do I need to create a second invoice for the client and invoice them as "providing a service to an individual outside of the EU" (which I believe means I would need to charge them 19% VAT)?

 

Source - https://help.getsorted.de/en/articles/3719328-invoicing-services-to-customers-outside-the-eu

Quote

Invoicing a private person

Since services are intangible assets it is important to know where the service was provided i.e. where the service is taxable. In general the place of performance is where your office is registered and you have performed the service. This means your invoice is usually with the German value-added-tax (VAT) rate.

If you are a small business owner (Kleinunternehmer), you are exempt from VAT and should refer to §19 UStG on your invoice

 

OR

 

Do I need to create a second invoice for the business and invoice them as "providing a service to a business outside of the EU"

 

Source - https://help.getsorted.de/en/articles/3719328-invoicing-services-to-customers-outside-the-eu

Quote

Invoicing a business

In the case your customer is another business based outside the EU the place of performance shifts to where your client has his or her registered office. However, it is more difficult to assess the situation because, unlike in the EU, there is no uniform legal basis and the tax systems differ considerably from country to country. Though in some cases a practice similar to the Reverse-Charge system is used, too (e.g. Switzerland).

Thus, in general, you do not have to collect and pay VAT. Yet it may change when you are passing a specific threshold set by the other country.

 

Question 2 - Should I apply to become a Kleinunternehmer as I will earn less than 22,000 EUR this year?

 

Sorry if this is confusing.

 

I have an account with sorted.de and a Tax Adviser linked to the account but I don't even know what questions I am trying to ask.

 

Thanks very much in advance :D

 

 

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8 hours ago, lukebrown said:

I have an account with sorted.de and a Tax Adviser linked to the account but I don't even know what questions I am trying to ask.

 

Your questions could be:

 

Question 1:

Is my activity exempt from VAT under §4 Nr. 14 a) UStG?
--> If yes, you would never charge VAT on your "healing a human" activity (psychotherapists heal the minds of humans), no matter where your client is located. 

 

In turn, you couldn't get back the VAT on stuff/services that you buy for business, even if you opted to be a "normal" business, i.e. not a Kleinunternehmer.

 

Question 2:

Is this a Dienstleistungskommission as defined in §3 (11) UStG?https://www-smartsteuer-de.translate.goog/online/lexikon/d/dienstleistungskommission/?_x_tr_sl=de&_x_tr_tl=en&_x_tr_hl=en-US&_x_tr_pto=wapp

--> If it is, there will be 2 invoices, yours of $90 to the Australian company and the Australian company's of $100 to the client.

Your invoice of $90 to the Australian company will not carry German VAT, because of §3a (2) UStG. Though you may have to charge Australian VAT (GST) in your invoice on those $90, collect that GST from the Australian company and forward the GST to the Australian tax department - you would need to ask an Australian tax advisor.

 

It could be that it is both a VAT-exempt activity (healing a human) and a Dienstleistungskommission.

 

If you're not "healing" and the Dienstleistungskommission scenario also does not apply, that leaves that all those clients who are booking you for whatever non-healing service you provide, e.g. coaching, do not assume that you are that Australian company's employee and that Australian company is just getting a commission.

This would mean that you would need to pay 19% VAT from the gross amount $100, i.e. before the commission is deducted, because of §3a (1) UStG.

Example: the client gets charged 100€ --> you owe $100 - $100/1.19 = $15.97 in German VAT.
In this case, if your yearly turnover is up to 22,000€, you should think about opting to be a Kleinunternehmer, to avoid paying this VAT.

 

************************************************************************************************

 

If this is not a Dienstleistungskommission, you would also need to pay 19% German VAT on that Australian company's commission (in your example on $10, i.e. 19% * $10 = $1.90 German VAT) in your VAT announcement, because of §13b (2) Nr. 1 2. Halbsatz UStG.

If you're not performing a VAT-exempt activity, you would immediately get it back in the same VAT announcement, as long as you're not a Kleinunternehmer. If you are a Kleinunternehmer, you won't get it back.

If you're performing a VAT-exempt activity, you would never get any VAT back, i.e. you would end up out of pocket by 19%*commission (if this is not a Dienstleistungskommission).

 

So being a Kleinunternehmer won't save you from paying German VAT on the $10 commission (= on the service provided to you by the Australian company, of having found you a client) that are due if this is not a Dienstleistungskommission.

It would just save you (if neither the VAT-exempt nor the Dienstleistungskommission scenario applies) from having to pay German VAT from the $100 you got for the services you provided.

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WOW! This is amazing. Thanks so much for such a thorough response  :D

 

I'll ask these questions to my tax adviser. 

 

Thanks so much again B)

 

 

 

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