How is value added tax regulated for cross-border services?
May 20, 2024 | 45,00 EUR | answered by Quentin Reuter
Dear tax advisor,
My name is Selma Lauer and I run a small online business that offers services in various countries. Lately, I have been dealing with the topic of value-added tax on cross-border services and I am feeling a bit overwhelmed by the multitude of regulations and requirements.
So far, I have mainly provided my services within Germany and paid the value-added tax according to German rules. Now, however, I also want to attract customers in other countries and I am wondering how the value-added tax is regulated in these cases.
I am worried that I might make mistakes in calculating the value-added tax, leading to high repayments or penalties. Additionally, I want to ensure that I inform my customers correctly about the applicable value-added tax to avoid any dissatisfaction or misunderstandings.
Could you please explain in detail how the value-added tax is regulated for cross-border services? What special considerations should I take into account and what steps are necessary to correctly pay the value-added tax? Are there any simplification rules or specific forms that I can use to make the process easier?
Thank you in advance for your help and support.
Best regards,
Selma Lauer
Dear Mrs. Lauer,
Thank you for your inquiry regarding VAT on cross-border services. It is understandable that you feel overwhelmed, as the regulations and rules in this area are very complex. I will do my best to provide you with a detailed explanation and assistance.
For cross-border services within the EU, the rules of the so-called "place of supply" generally apply. This means that VAT must be paid where the recipient of the service is established. Therefore, if you provide services to customers in other EU countries, you must calculate and pay VAT according to the regulations of each country.
To implement this correctly, you must first determine in which countries you provide services and what VAT rates apply there. You may need to register for VAT in the respective country to file tax returns and pay VAT there.
However, there are also simplification measures that can make it easier for you to pay VAT on cross-border services. For example, there is the Mini-One-Stop-Shop (MOSS) scheme, which allows you to make all VAT payments for digital services to individuals in other EU countries through a central point of contact in your home country.
It is important that you thoroughly inform yourself in advance and, if necessary, seek professional help to avoid errors in VAT calculation. High repayments or penalties can be avoided if you comply with the regulations correctly.
I hope this information is helpful to you and supports you in correctly paying VAT. If you have any further questions or need assistance, I am happy to help.
Best regards,
Quentin Reuter
