Do I need to invoice either UK or German VAT?

[stek]

Do I need to invoice either UK or German VAT?

If you are trading through your UK ltd and invoicing a German company you definitely don't add VAT to your invoices.

Wrt to Finanzamt you are right to be concerned, I would have gone in as a Freiberufler or whatever it's called to avoid all this worry.

[BlasterBates]

Thanks BlasterBates. From this I understand that I am liable for tax (irrespective of the duration of the contract - e.g. 3 months) because I am based in Germany. However, I find confusing that most of the people seem to recommend that there is not need of charging German nor UK VAT. I would appreciate very much your comments on this, what do you think?

If you are below the German VAT threshold i.e. EUR 17500 I believe you don´t need to charge it. If you are above this threshold you certainly do need to charge it. I would go and see a German Steuerberater (tax advisor), because I´m not an expert.

I would wait until you have seen a German tax advisor before deciding on how you go about arranging your tax affairs. You could talk to someone at SJD accountants. I think they work with German accountants and could advise you on UK tax implications.

http://www.sjdaccountancy.com/

Working cross border is not simple and many contractors come a cropper so don´t skimp on accountants costs, and you´ll be needing both UK and German input. It´s worth every penny. Getting it wrong is very costly.

[Millos]

If you are based in Germany for the duration of the contract you will be liable for tax. That´s not to say that you could try and claim exemption (if just a few months) but your invoices will need to have been declared somewhere and if they´re not this will probably trigger a tax evasion investigation. During a tax audit they check all invoices have been declared i.e. have a relevant tax code, any that don´t will be investigated.

If this is a short term contract you may well be below the VAT threshold or even be able to claim this as UK taxable earnings, but don´t make this decision yourself, make sure that a registered Steuerberater (Tax advisor) is handling your affairs.

Tax rates on short term contracts are not a big deal and not worth avoiding/evading.

We have had a few contractors on this forum who have faced a criminal investigation after not declaring income from contracts as short as 4 months.

Thanks BlasterBates. From this I understand that I am liable for tax (irrespective of the duration of the contract - e.g. 3 months) because I am based in Germany. However, I find confusing that most of the people seem to recommend that there is not need of charging German nor UK VAT. I would appreciate very much your comments on this, what do you think?

[Millos]

Neither - you should add the clients ie agent's VAT number to your invoice and if you are invoicing in Euros include add a conversion to Sterling - don't add any VAT at all.

Also you must register for the EC Sales List on the HMRC gateway and fill that in online every quarter. Note this may stagger with your normal VAT cycle, it's Jan-Mar etc...

Thanks for that. Taking into account that this is a 3 months contract, I would also appreciate it if you let me know if you share (to some extent?) other comments from BlasterBates and borderreiver in respect of registering with the "Finanzamt for German taxes" and being liable for tax (because I am based in Germany)

[Millos]

Hi all,

Many thanks for your answers, much appreciate it.

By the way, this is a 3 months contract and I fly back to the UK every weekend

[cailin maith]

SY is this you?

[BlasterBates]

This is the relevant point. If you're based in Germany (unless for a "very short time" - although noone can define what that is) you're going to have to register with the Finanzamt for German taxes. At that point you will probably need to get a German VAT number and charge your client German VAT, not UK VAT.

You need to see a specialist who knows about contracting in Germany with a UK Limited before deciding what to do here. Where's BlasterBates when you need him?

If you are based in Germany for the duration of the contract you will be liable for tax. That´s not to say that you could try and claim exemption (if just a few months) but your invoices will need to have been declared somewhere and if they´re not this will probably trigger a tax evasion investigation. During a tax audit they check all invoices have been declared i.e. have a relevant tax code, any that don´t will be investigated.

If this is a short term contract you may well be below the VAT threshold or even be able to claim this as UK taxable earnings, but don´t make this decision yourself, make sure that a registered Steuerberater (Tax advisor) is handling your affairs.

Tax rates on short term contracts are not a big deal and not worth avoiding/evading.

We have had a few contractors on this forum who have faced a criminal investigation after not declaring income from contracts as short as 4 months.

[Martin at NixonWilliams]

Dear all,
I am a contractor and provide Project Management services. I have a Limited company set up in the UK and VAT registered (on the Flat Rate Scheme).

I am currently working for a German company and I am actually based in Germany. Soon, I will need to invoice my client. Could you please help me confirm if:

- I need to charge UK VAT
- I need to charge German VAT (or any sort of German tax)

Thanks in advance!

Hi Millos,

The services will be outside the scope of UK VAT. This is due to the place of supply rules for services as per notice 741A, which states that the place of supply is the country where the services are being performed - in this case, Germany.

It may be that you need to register for VAT in Germany, you will need to check with the authorities there. In my experience there is rarely an obligation to register in the foreign country if the engagement is for a relatively short term.

I hope this helps.

Thanks
Martin

[borderreiver]

Dear all,
I am currently working for a German company and I am actually based in Germany. Soon, I will need to invoice my client. Could you please help me confirm if:
Thanks in advance!

This is the relevant point. If you're based in Germany (unless for a "very short time" - although noone can define what that is) you're going to have to register with the Finanzamt for German taxes. At that point you will probably need to get a German VAT number and charge your client German VAT, not UK VAT.

You need to see a specialist who knows about contracting in Germany with a UK Limited before deciding what to do here. Where's BlasterBates when you need him?

[Andrew@Wisteria]

Neither - you should add the clients ie agent's VAT number to your invoice and if you are invoicing in Euros include add a conversion to Sterling - don't add any VAT at all.

Also you must register for the EC Sales List on the HMRC gateway and fill that in online every quarter. Note this may stagger with your normal VAT cycle, it's Jan-Mar etc...

All the above is correct and how I would advise my clients.

I would add that you only need one line entry per customer (rather than per invoice).

[geoffreywhereveryoumaybe]

Charging VAT is dependent on the address you are invoicing. If you are invoicing a UK office, you will charge VAT – regardless of where you carry out the work.

If you are charging a non-UK office, you don’t charge VAT – even if carrying out the work in the UK.

If invoicing a UK office in Euro you would add VAT at 20% to the Euro amount (as you would to a sterling invoice).

When paying over VAT, you would work out the amount payable based on the HMRC VAT published exchange rates for that month

[stek]

Do I need to invoice either UK or German VAT?

Neither - you should add the clients ie agent's VAT number to your invoice and if you are invoicing in Euros include add a conversion to Sterling - don't add any VAT at all.

Also you must register for the EC Sales List on the HMRC gateway and fill that in online every quarter. Note this may stagger with your normal VAT cycle, it's Jan-Mar etc...

[cojak]

Read this thread.

Moving to Germany. Who to inform, P85?, NHS?

and then this thread if you get it wrong.

German prison!!

[Millos]

Dear all,
I am a contractor and provide Project Management services. I have a Limited company set up in the UK and VAT registered (on the Flat Rate Scheme).

I am currently working for a German company and I am actually based in Germany. Soon, I will need to invoice my client. Could you please help me confirm if:

- I need to charge UK VAT
- I need to charge German VAT (or any sort of German tax)

Thanks in advance!