Do I have to pay sales tax as a freelancer?
December 31, 2023 | 50,00 EUR | answered by Zofia Schulz
Dear tax advisor team,
I am Zofia Beck and work as a freelancer in the graphic design industry. I am unsure whether I have to pay sales tax as a freelancer and hope for your help.
Currently, I am operating as a small business owner according to § 19 UStG and generated a revenue of less than 22,000 euros last year. I have not yet included sales tax on my invoices and have not submitted any sales tax pre-registration.
However, I have now reached a point where I am gaining more clients and my revenue is increasing significantly. I am worried about whether I have to pay sales tax as a freelancer and what consequences it might have for me and my clients.
Could you please explain to me at what revenue point I have to pay sales tax as a freelancer and how I can exempt myself from sales tax as a small business owner? Are there any benefits if I voluntarily decide to become subject to sales tax?
Thank you in advance for your support and advice.
Sincerely,
Zofia Beck
Dear Zofia Beck,
Thank you for your question regarding sales tax as a freelancer in the graphic design industry. As a small business owner according to § 19 UStG, you are currently exempt from sales tax as long as your annual turnover is below 22,000 euros. You have not shown any sales tax on your invoices so far and have not submitted any advance sales tax returns, which is completely correct.
Once your turnover exceeds the limit of 22,000 euros, you are required to pay sales tax. In this case, you must show sales tax on your invoices and regularly submit sales tax returns to the tax office. There are different sales tax rates depending on the type of service or product you offer.
If you would like to exempt yourself from sales tax as a small business owner, you must submit a corresponding application to the tax office. This application is usually informal and can be submitted in writing or electronically. If your turnover is expected to be below 50,000 euros in the coming year, it may be worth using the small business owner regulation to avoid the administrative burden of sales tax.
However, there may also be benefits to voluntarily opting for sales tax liability, even if your turnover is below 22,000 euros. If your customers are mainly other businesses, they can deduct the paid sales tax as input tax and thus receive lower prices. Additionally, you can deduct the input tax you pay for your business expenses from the sales tax.
It is important that you thoroughly familiarize yourself with the topic of sales tax and, if necessary, work with a tax advisor to find the best solution for you. I hope this information is helpful and I am happy to answer any further questions you may have.
Best regards,
Zofia Schulz, Tax Advisor
