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Sequential transaction with the third country

May 19, 2010 | 40,00 EUR | answered by Dipl.BW/SB Ulrich Stiller

Hello dear Sir or Madam,

I have a question regarding the triangular transaction with the third country.

The goods are being delivered from Taiwan to Ukraine. The company in Taiwan is the manufacturer or seller. The company in Ukraine is the buyer. I am acting as an intermediary between the seller in Taiwan and the buyer in Ukraine. Up until now, my intermediary commission has been paid by the seller, as the goods were delivered as a transit shipment from Taiwan through Germany. To minimize transport costs, a direct delivery from Taiwan to Ukraine has been agreed upon.

Now, my intermediary commission should be paid by the buyer in Ukraine.

The question is: Is it legally permissible for the buyer from the third country, Ukraine, to pay my intermediary commission and transfer it to Germany after I have issued my invoice?

It is important for me to know which laws or regulations I should refer to. What should be considered in the invoice, how should the purpose of the invoice be correctly formulated, and what is the commission entitlement for...? for the goods delivery invoice number, or something similar...? What taxes and duties are applicable in this case?

I thank you in advance for your response.
Best regards,

Dipl.BW/SB Ulrich Stiller

Dear inquirer,

Thank you for your inquiry, which I would like to answer based on the information provided and in the context of your involvement within the scope of an initial consultation as follows:

You are providing a brokerage service. The place of supply for this service is determined according to § 3a of the German VAT Act.

As of 2010, the following regulation applies:

From 2010 onwards, a brokerage service, whose client is also a business owner, is deemed to be provided or carried out where that client operates their business (§ 3a II German VAT Act 2010).

Your client is a business owner in Ukraine, operating their business there. Your brokerage service is considered to be provided in Ukraine and is therefore not subject to tax in Germany. Therefore, you should not show any VAT on your invoice.

On your invoice, please include the following note: "Brokerage service not subject to tax in Germany, as the place of supply is in xxxxxx in Ukraine."

Income tax-wise, income from business operations is generated, which must be taxed in Germany according to the standard regulations.

I hope my explanation has been helpful.

Best regards,

Ulrich Stiller
Tax Advisor/Diploma in Business Administration