Value-added tax on brokerage commission
May 27, 2012 | 30,00 EUR | answered by Wirtschaftsprüfer André Hintz
Dear Sir or Madam,
I operate a company that purchases printing machines in Germany and then exports them to Peru. My company is subject to sales tax and uses the EÜR (income surplus calculation) method.
Now, however, a customer from Peru urgently wants to purchase a machine from Sweden. The customer is hesitant to directly contact the seller from Sweden due to language difficulties. I, on the other hand, have no experience with chain transactions.
Now, my customer has the idea that I act as a mediator during the sale, even though I am not an intermediary, and receive a commission for it.
The sale is supposed to be handled as follows:
1. The Swedish seller (with a Swedish VAT number) sells directly to the Peruvian customer. The Swede arranges the transport.
2. The Peruvian customer pays directly to the Swede.
3. After the sale is completed, I invoice the Peruvian customer for a mediation commission.
Would I have to include sales tax in the invoice, or would the mediation be exempt from sales tax? What indication would have to be noted in the invoice in case of sales tax exemption?
Thank you for your help!
Dear inquirer,
I would like to answer your question within the scope of an initial consultation and based on your fee commitment, along with the rules of the online portal. My response is based on the situation you have described.
The question arises regarding the tax liability of your intermediary activity with a Peruvian entrepreneur.
You intend to carry out a genuine intermediary activity. This occurs when you do not act as a buyer in your own name towards the Swedish contracting party, but on behalf of a third party. This is not a chain transaction.
Since the Swedish seller directly enters into a sales contract with the Peruvian buyer, and you also directly enter into a service contract with the Peruvian buyer, only the service contract is relevant for your VAT liability.
You are providing a service to the Peruvian entrepreneur.
It is important to determine whether the Peruvian entrepreneur operates their business solely in Peru or may have a branch in Germany. You provide your service where the Peruvian entrepreneur operates their business.
There is no tax obligation in Germany if the Peruvian company operates its business exclusively outside of Germany.
The invoice should include a note indicating that it is a service for a company in a third country. The wording is flexible, but should be clear. Documentation of the situation and/or the contract should be kept together with the invoice, so that everything is readily available in case of questions from the tax office.
However, if there is a branch in Germany and the service is provided to the branch, VAT liability applies. In this case, the standard tax rate applies.
I hope my explanation has been helpful, and remain
Yours sincerely,
André Hintz
Tax Consultant
Steuerberatung@andrehintz.de
