Are there any particularities regarding input tax deduction for online services from abroad?
June 19, 2023 | 30,00 EUR | answered by Marco Schottmann
Dear tax advisor,
My name is Jonas Bergmann and I run a small business that offers online services. Lately, I have been using services from foreign providers more frequently and I am wondering if there are any particularities regarding input tax in this regard.
The current situation is as follows: I have received invoices from foreign service providers that do not show any value added tax. So far, I have simply recorded these invoices as operating expenses because I am not sure if I can claim the input tax.
My concerns are that I may not be deducting input tax correctly and that I could face tax payments as a result. Therefore, I would like to know if there are any specifics regarding input tax for online services from abroad and how I should correctly handle them.
My question to you is: Are there any special regulations or requirements that I need to consider in order to claim input tax for online services from abroad? How can I ensure that I handle input tax correctly and avoid any tax payments?
Thank you in advance for your help and support.
Kind regards,
Jonas Bergmann
Dear Mr. Bergmann,
Thank you for your question regarding input tax for online services from abroad. It is important to handle input tax correctly to avoid tax payments.
As a business owner, you can generally claim the input tax incurred on purchases for your company. This means that you can deduct the VAT shown on invoices from foreign service providers as input tax.
However, there are special regulations for online services from abroad. If you receive invoices from foreign providers on which no VAT is shown, these are services for which you must calculate and remit the VAT yourself through the so-called Reverse Charge procedure.
The Reverse Charge procedure applies to certain services provided by foreign companies. It is important that you, as the recipient of the service, calculate the VAT yourself and indicate it in your VAT return. The invoice from the foreign service provider should include a note about the application of the Reverse Charge procedure.
To ensure that you handle the input tax correctly, I recommend contacting your tax advisor. Your tax advisor can help you correctly treat the input tax for online services from abroad and avoid potential tax risks.
In summary, it is important to consider the special regulations for online services from abroad and apply the Reverse Charge procedure correctly to claim input tax. If you have any uncertainties or questions, feel free to contact your tax advisor, who will assist you in treating the input tax correctly.
I hope this answer was helpful to you. If you have any further questions, please don't hesitate to contact me.
Best regards,
Marco Schottmann
Tax Advisor
