Charging VAT Thread poster: Christine Healy-Rendel (X)
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Christine Healy-Rendel (X) 
English to German
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Here is one:
I live and work in the US. I have a customer in the UK and will receive payment of a job to a German bank account in Euros.
My question is: Do I charge VAT on the invoice sent from my US address to the UK client for payment in Euros to a German bank account? I do not have business set up in Germany.
This case is really an exception. Usually, I only work with US clients, where these issues do not arise (payment into US b... See more Here is one:
I live and work in the US. I have a customer in the UK and will receive payment of a job to a German bank account in Euros.
My question is: Do I charge VAT on the invoice sent from my US address to the UK client for payment in Euros to a German bank account? I do not have business set up in Germany.
This case is really an exception. Usually, I only work with US clients, where these issues do not arise (payment into US bank accounts).
Thanks for your ideas and comments on this.
[ This Message was edited by: CHR on 2003-04-09 14:11]
[ This Message was edited by: CHR on 2003-04-09 14:27] ▲ Collapse
| | | | | Who would eventually get the VAT? | Apr 9, 2003 |
When you collect VAT you are the custodian of those funds...they don\'t actually belong to you but rather to the government of the country you are working in. So my question is, do you have a VAT number in Germany? Are you set up as a business there and are you subject to VAT? Logically, if you are not set up to do business in Germany and have no means of filling out VAT forms and handing the money over to the local tax authority then there is no reason to charge VAT (in fact it is probably ille... See more When you collect VAT you are the custodian of those funds...they don\'t actually belong to you but rather to the government of the country you are working in. So my question is, do you have a VAT number in Germany? Are you set up as a business there and are you subject to VAT? Logically, if you are not set up to do business in Germany and have no means of filling out VAT forms and handing the money over to the local tax authority then there is no reason to charge VAT (in fact it is probably illegal to do so if you are not legally subject to VAT).
Hopefully someone doing business in Germany will have a more concrete answer for you, but my first instinct is that VAT is not an issue for you.
HTH
Regards,
Sara ▲ Collapse
| | | | | no VAT to be charged | Apr 9, 2003 |
But you may have to mention the VAT number of your client on your invoice.
[addsig]
| | | | Williamson
United Kingdom
Local time: 17:14
Flemish to English
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| You export a service | Apr 9, 2003 |
You do not have to pay VAT. The reason being that you are a U.S.-citizen, subject to the I.R.S. You export a service to Europe. Whoever imports this service has to pay duties and taxes and VAT if (s)he is the end customer and if (s)he is subject to VAT. Have a look at the BBC-website and you will see that small businesses do not have to levy VAT if they have a turnover of less than £57000 per annum. The bank-account where the money \'lands\" does not matter for your customer, but it does for th... See more You do not have to pay VAT. The reason being that you are a U.S.-citizen, subject to the I.R.S. You export a service to Europe. Whoever imports this service has to pay duties and taxes and VAT if (s)he is the end customer and if (s)he is subject to VAT. Have a look at the BBC-website and you will see that small businesses do not have to levy VAT if they have a turnover of less than £57000 per annum. The bank-account where the money \'lands\" does not matter for your customer, but it does for the I.R.S. I believe the I.R.S. has mutual agreements with foreign banks (not certain about Germany, but certain about Luxembourg) to declare revenues of American citizens on these accounts. ▲ Collapse
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Christine Healy-Rendel (X)
English to German
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TOPIC STARTER | Re Williamson's reply .... | Apr 9, 2003 |
Thanks, that makes total sense.
Yeah, the good old I.R.S. - did you ever notice: When you put the two words \"The\" and \"IRS\" together it spells \"THEIRS\"? ...
| | | | | No VAT between US and EU | Apr 10, 2003 |
Theoretically, your client in UK would have to pay VAT, but not to you. Instead, he would have to pay it to the UK customs, if he is importing something. (In German this is called \"Einfuhrumsatzsteuer\" in contrast to the usual \"Mehrwertsteuer\".)
But you are not obliged to verify that the client will actually do that.
From one EU country to another it is a bit more complicated (see European VAT license). There are some new laws expected or announced, but as far as I know t... See more Theoretically, your client in UK would have to pay VAT, but not to you. Instead, he would have to pay it to the UK customs, if he is importing something. (In German this is called \"Einfuhrumsatzsteuer\" in contrast to the usual \"Mehrwertsteuer\".)
But you are not obliged to verify that the client will actually do that.
From one EU country to another it is a bit more complicated (see European VAT license). There are some new laws expected or announced, but as far as I know they are not in power, yet.
I just found this great link in another thread. A short complete description  (in German): http://www.adue-nord.de/archiv/umsatzsteuer.pdf
[ This Message was edited by: Harry_B on 2003-04-10 01:01] ▲ Collapse
| | | | Williamson
United Kingdom
Local time: 17:14
Flemish to English
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| Beautiful .. in theory | Apr 10, 2003 |
But in practise how is the local German Steueramt going to check whether or not you worked for say a Finnish or Greek agency? The local German Finanzbeamte does not understand Finnish and vice-versa.
One E.U. with a local tax-office with does not master the language of the country to which intangible services are exported.
Meistens versteht der Finanzbeamte \"nur Deutsch\".
| | | | | tax examination | Apr 10, 2003 |
Quote:
On 2003-04-10 10:40, Williamson wrote:
But in practise how is the local German Steueramt going to check whether or not you worked for say a Finnish or Greek agency?
In general it is not checking this, but every few years you might be subject to a tax examination, i.e. someone coming to your office and checking the files which you have to keep for 10 years.
The selection of who is when to... See more Quote:
On 2003-04-10 10:40, Williamson wrote:
But in practise how is the local German Steueramt going to check whether or not you worked for say a Finnish or Greek agency?
In general it is not checking this, but every few years you might be subject to a tax examination, i.e. someone coming to your office and checking the files which you have to keep for 10 years.
The selection of who is when to examine depends on many factors, like the amount of money involved.
And concerning Finland or Greek, in the new forms for the \"Umsatzsteuervoranmeldung\" you find the fields for \"Innergemeinschaftliche Erwerbe\" and \"Innergemeinschaftliche Lieferungen und Leistungen\". This is used for statistical purposes, which may help to trace the individuals to examine. 
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Williamson
United Kingdom
Local time: 17:14
Flemish to English
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Busy translating an Excel manual into French. Not for a client, but for my own freelance teaching purposes. How in practise can the Finanzamt make the distinction between say a letter written in Spanish to a friend, a manual translated for educational purposes and a manual translated for a client.
Yes, you get papers, but do you think everybody fills out everything?
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On 2003-04-10 13:24, Williamson wrote:
How in practise can the Finanzamt make the distinction between say a letter written in Spanish to a friend, a manual translated for educational purposes and a manual translated for a client.
Yes, you get papers, but do you think everybody fills out everything?
In Germany, the authorities generally believe in vouchers until the opposite is proven. I\... See more Quote:
On 2003-04-10 13:24, Williamson wrote:
How in practise can the Finanzamt make the distinction between say a letter written in Spanish to a friend, a manual translated for educational purposes and a manual translated for a client.
Yes, you get papers, but do you think everybody fills out everything?
In Germany, the authorities generally believe in vouchers until the opposite is proven. I\'ve been told that in U.S. it works the other way round.
And the papers to be stored and checked are not the translations or other products. It is only the administrational papers like invoices, POs and similar business correspondence.
The whole system works according to the rest of the criminal law: there are more misdeeds prevented by the fear of prosecution than by accomplished prosecution or inquiry.
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The bank-account where the money \'lands\" does not matter for your customer, but it does for the I.R.S. I believe the I.R.S. has mutual agreements with foreign banks (not certain about Germany, but certain about Luxembourg) to declare revenues of American citizens on these accounts.
Yes, they have it with Germany, too, as far as I know. Got a letter to that effect from the bank when I was still... See more Quote:
The bank-account where the money \'lands\" does not matter for your customer, but it does for the I.R.S. I believe the I.R.S. has mutual agreements with foreign banks (not certain about Germany, but certain about Luxembourg) to declare revenues of American citizens on these accounts.
Yes, they have it with Germany, too, as far as I know. Got a letter to that effect from the bank when I was still in Germany. The US is one of the few countries that taxes its citizens on money they earn living anywhere in the world (even if they pay tax to the other country, but there is a credit up to a certain amount of income). ▲ Collapse
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In Germany, the authorities generally believe in vouchers until the opposite is proven. I\'ve been told that in U.S. it works the other way round.
Yes, we put down our totals for expenses, etc. on our tax forms and if they raise a \"red flag\" we can get audited, which is when they go back and compare against receipts.
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