Is advertising editing deductible as operating expenses?
December 20, 2016 | 25,00 EUR | answered by Steuerberater Udo Glinka
Invoice received from private individual.
Good day. I am a small business owner (under the small business regulation) and have paid an invoice from a private individual. The invoice amounts to 7190€ (paid in cash, receipt available). Even though the invoice is from a private individual, the service was for business purposes. The private individual provided a single service for me (freelance work, one-time task, he is an artist traveling the world), and does not have a business.
- Can I claim this invoice for my business even though it is from a private individual?
- Are editorial activities fully deductible?
The invoice states editorial activities (one-time service) for Mrs. X,
- Publication marketing 43 pages (marketing plan in Spanish)
- stylistic editing
- Product (laptop with program provided)
- Special customer base (2014 World Championship, FIFA World Cup), advertising editing
The invoice issuer is German and his German tax ID is listed on the invoice, but since he was living in Spain at the time of the service, he has provided his Spanish address on the invoice. Could this be problematic?
Thank you for your efforts.
Dear inquirer,
based on the information provided to me, I would like to answer your inquiry as follows.
According to the legal definition in § 4 (4) of the Income Tax Act, operating expenses are expenses that are caused by the operation of a business.
In principle, it does not matter whether a private person provided the service. In case of doubt, you only need to be able to prove the business-related nature. If the editorial activities are business-related, they are also deductible.
In order to be able to prove this later, the invoice should contain the following truthful information:
- Name and address of the seller
- Name and address of the buyer (your address)
- Invoice date
- Invoice text ('which service was sold')
- Invoice amount
The invoice issuer must determine to what extent he must declare the payment from the invoice for tax purposes. If he acts as a private individual, he is not allowed to show VAT on the invoice. He also needs to check to what extent he is even subject to tax in Germany.
But this is not your responsibility. You should only ensure that his information is correct and be able to prove that you actually made the payment.
I hope my explanations have been helpful to you.
Best regards,
Udo Glinka (tax advisor)
