Tax-free turnover
July 22, 2013 | 40,00 EUR | answered by Steuerberater Thomas Textoris
As a freelance artist, I am subject to regular taxation. I have questions regarding value added tax and income tax.
1.) I also conduct workshops at a general education school, which children attend voluntarily. Are these services exempt from tax according to § 4 No. 21 UStG? Can I claim the volunteer allowance for this?
2.) I assist with the setup and dismantling of exhibitions and receive a reimbursement from a company sponsoring the exhibition. Is there a VAT exemption for this, even though it is not a non-profit organization? And could the volunteer allowance apply here as well?
3.) I receive grants from various institutions for the creation of my own exhibition catalog and studio support from the city. What are the tax implications in this situation?
Thank you in advance for your response.
Dear questioner,
In the context of an initial consultation and considering the regulations of this forum, I would like to answer your question.
Regarding 1.): The directly school- and education-related teaching services of independent teachers at private schools and other general education or vocational training institutions are tax-exempt according to § 4 No. 21 b) bb) UStG. Teaching activities only exist when knowledge is imparted within defined teaching programs and curricula (4.21.3 (2) UStAE). A workshop is simply an additional offering for the children, especially since they attend voluntarily. For these reasons, I would deny tax exemption according to § 4 No. 21 b) bb) UStG.
To claim a tax exemption for volunteer work according to § 3 No. 26a EStG, a secondary activity must be carried out, meaning there must be other income as per § 22 No. 3 EStG.
As far as I understand your situation, you conduct these workshops as part of your work as a freelance artist (=main activity). With an artistic activity, you generate income from self-employment according to § 18 (1) No. 1 EStG. This also includes the revenue from the workshops.
For the reasons mentioned above, a tax exemption for volunteer work according to § 3 No. 26a EStG is not applicable.
Regarding 2.): Generally, all sales you make within your business in exchange for payment are subject to sales tax according to § 1(1) No.1 UStG. The specific name of the payment is irrelevant. The so-called reimbursement of expenses is taxable due to the lack of exemption according to § 4 UStG. There would also be no tax-exempt turnover in the setting up and dismantling of the exhibition if this service was directly provided to a non-profit organization.
Additionally, a tax exemption for volunteer work cannot be claimed here. Please refer to my explanation above in 1.).
Regarding 3.): Benefits from public funds are exempt from income tax according to § 3 No. 11 EStG if they directly support the arts and do not require a specific artistic contribution in return. If subsidies are granted, for example, to cover your operating expenses, they are tax-exempt according to § 3 No. 11 EStG. Please note that the operating expenses would then need to be proportionally reduced according to § 3c (1) EStG. In conclusion, the tax exemption depends on what the funding is granted for and whether it is provided from public funds.
I hope this gives you a sufficient overview.
Best regards,
Thomas Textoris
Tax advisor
