Small business in Germany - issuing invoice to Switzerland - rules?
August 23, 2014 | 25,00 EUR | answered by Anton Pernitschka
Dear tax consultant,
I am from Germany and currently studying in Switzerland. I have recently registered a business in Germany (photography) which I operate as a small business (under 17,500 euros/year), and I am quite sure that I will not exceed this amount.
Therefore, when I issue an invoice, there is no value added tax on it, and a note regarding the small business regulation (§ 19 UStG).
If I now issue an invoice to Switzerland for a photoshoot that took place in Switzerland, do I need to consider anything? Are there any differences if I invoice a private individual or a company in Switzerland? I have read something about withholding tax, but I am not entirely clear on it.
Thank you
Tobias
Dear questioner,
In the context of an initial consultation and your fee commitment, in compliance with the regulations of this forum, I would like to answer the question.
In terms of turnover tax, you are providing other services. According to § 3a para. 1 UStG, a service is considered to be provided from the location where the entrepreneur operates their business. If you operate your commercial business in Germany, in this case the location of the service is in Germany. Although turnover tax would generally be due in Germany, no turnover tax is payable if the small business regulation has been chosen. A corresponding note should be included on the invoice. As the decisive factor is the location from which the entrepreneur operates their business, the actual performance of the service in Switzerland is irrelevant.
However, according to § 3a para. 2 UStG, a service provided to an entrepreneur for their business is considered to be provided at the location where the recipient operates their business. If in your case the recipient is a Swiss entrepreneur, you do not have to pay turnover tax in Germany. In this case as well, a corresponding note should be included on the invoice.
Other exceptions apply, for example according to § 3a para. 3 No. 3 UStG for artistic services or according to § 3a para. 4 No. 2 UStG for services that serve advertising purposes.
A withholding tax is similar to an income tax, but not to a turnover tax.
The answer was provided based on your description of the situation. Missing or incorrect information about the actual circumstances can affect the legal outcome.
Kind regards,
Anton Pernitschka
Tax advisor
