IT Contract in Germany, work based mostly out of home in UK

[peterparker]

Hi,

I live in the UK with my family and after a huge struggle looks like I may finally get a contract but in Germany! But before I get it I wanted to get this clarified. If it happens it would be a 4 months contract in Germany but I believe I need to be onsite in Germany only for 5-10 days in a month. Rest of the days I can work from home. So, when I do travel I will stay in a hotel during week days. Can I use my UK limited company to invoice my UK agent? Should I charge VAT when I invoice my UK agent in Euro? In 4 months I would have only stayed 20-40 days in Germany. If they extend my contract, how many more months can I safely use my UK limited company in a similar arrangement where I work mostly from the UK?

Thanks.

[EAFS]

If you are using your UK limited company and you are VAT registered you must charge your UK agency VAT. If the agency was in Germany you would not charge VAT as VAT is zero rated between European countries. If their is a possibility that your contract will exceed 6 months then you will have to pay tax in Germany from day 1. You are taxable in Germany as soon soon as you exceed 183 days in the country, Having said that you should pay tax on german sourced income from day 1. I would advise that you speak to your accountant in the first instance. PM me if you want further information on German solutions

[DirtyDog]

Can I use my UK limited company to invoice my UK agent?

Yes

Should I charge VAT when I invoice my UK agent in Euro?

Yes, assuming you are VAT registered. You may be better off agreeing a rate in GBP rather than EUR unless you think you can work the currency conversion in your favour. Last time I invoiced a UK agency for a German client, I set the rate in GBP (actually, I quoted in EUR and then they set the rate in GBP at a ratio of 1:1 which was nice )

[Boo]

If you are using your UK limited company and you are VAT registered you must charge your UK agency VAT.

Is this true ? I understood that supply of bespoke software was counted as taking place in the customer's country so depending on the contract between YourCo, AgencyCo and ClientCo it might be necessary to reverse charge the VAT as if you were contracted through a foreign agency ? Or is that wrong ?

Boo

[peterparker]

If you are using your UK limited company and you are VAT registered you must charge your UK agency VAT. If the agency was in Germany you would not charge VAT as VAT is zero rated between European countries. If their is a possibility that your contract will exceed 6 months then you will have to pay tax in Germany from day 1. You are taxable in Germany as soon soon as you exceed 183 days in the country, Having said that you should pay tax on german sourced income from day 1. I would advise that you speak to your accountant in the first instance. PM me if you want further information on German solutions

Thanks EAFS. You said

Having said that you should pay tax on german sourced income from day 1.

. But how would I register in Germany if I don't have an address in Germany? I may stay in different hotels and as I said before I may only be in Germany for 5-10 days in a month. Can I register in Germany with my UK permanent address?

The agency is a UK agency. My UK limited company is VAT registered in the UK and I have been contracting in the UK using my limited co.

[peterparker]

Yes

Yes, assuming you are VAT registered. You may be better off agreeing a rate in GBP rather than EUR unless you think you can work the currency conversion in your favour. Last time I invoiced a UK agency for a German client, I set the rate in GBP (actually, I quoted in EUR and then they set the rate in GBP at a ratio of 1:1 which was nice )

My UK agent is not agreeing to convert the rate in GBP and would like to keep it in EUR. In your case did they set the rate in GBP at a ration of 1:1!! Lucky you!!

[peterparker]

Is this true ? I understood that supply of bespoke software was counted as taking place in the customer's country so depending on the contract between YourCo, AgencyCo and ClientCo it might be necessary to reverse charge the VAT as if you were contracted through a foreign agency ? Or is that wrong ?

Boo

Hi Boo, what do you mean by reverse charge the VAT?

Can anyone else please confirm Boo's views? Thanks.

[borderreiver]

Is this true ? I understood that supply of bespoke software was counted as taking place in the customer's country so depending on the contract between YourCo, AgencyCo and ClientCo it might be necessary to reverse charge the VAT as if you were contracted through a foreign agency ? Or is that wrong ?

Boo

If he's invoicing a UK agency, then yes he'll charge UK VAT. If he's invoicing a German client directly, then he'll zero-rate it.

VAT or not VAT for a UK agency shouldn't be an issue anyway, as they can reclaim it easily.

[peterparker]

You are taxable in Germany as soon soon as you exceed 183 days in the country, Having said that you should pay tax on german sourced income from day 1.

So, in my case, if I continue to work only up to 10 days a month in Germany, would it take up to 19 months to exceed 183 days in Germany? (Just a theoretical question - my contract may not even exceed 4 months as it stands now.) Is my understanding correct? Or is this 183 days within a calendar year and that it may never get exceeded?

[peterparker]

If he's invoicing a UK agency, then yes he'll charge UK VAT. If he's invoicing a German client directly, then he'll zero-rate it.

VAT or not VAT for a UK agency shouldn't be an issue anyway, as they can reclaim it easily.

Many thanks for your response.