Value added tax rate of 7% or 19% for copywriters.
August 16, 2012 | 30,00 EUR | answered by Michael Herrmann
Hello,
I have a company for text creation. I write website content, SEO texts, encyclopedias, manuscripts, stories, customer letters...etc. I charge 19% VAT on my services. My customers always receive full rights of use, exploitation rights, reproduction rights with the payment of the invoice.
I also subcontract additional tasks to other writers who then write for me and invoice me, also with 19% VAT.
Now one of my customers said that according to his tax advisor, I am only allowed to charge 7% VAT, as otherwise I do not sell the rights to the texts. She referred to §12 of the Value Added Tax Act (2) point 7 c). She also referred to the commentary on the Value Added Tax Act for the said point.
She also said that if I calculate 19% VAT, the rights would remain with me.
My questions:
1. Which tax rate is correct for me? I have been calculating 19% since the founding of the company in 2005.
2. How does the tax rate relate to the sale of rights? Can I not sell the rights with a tax rate of 19%?
3. Do I have to indicate on the invoice that I am passing on the rights?
All of this has confused me a lot. I think one has nothing to do with the other? Or?
Thank you for your help.
Dear Questioner,
First of all, thank you very much for your inquiry, which I would be happy to answer based on the information provided and in the context of your initial consultation. The response will be based on the facts presented. Missing or incorrect information about the actual circumstances can affect the legal outcome.
I would like to point out in advance that the question cannot be conclusively answered within the scope of an online consultation. Unfortunately, your question pertains to a rather complicated part of the value-added tax law, which is characterized by many gray areas and requires detailed knowledge of copyright law. Ultimately, each individual text service must be assessed separately.
To give you an overview, I quote the relevant, easily understandable value-added tax directive R 168:
"(1) According to § 12 para. 2 No. 7 letter c UStG, other services are favored whose essential content consists of the granting, transfer, and exercise of rights under the Copyright Act. Whether this is the case is determined based on the economic result achieved in accordance with the contractual agreement. In addition to the agreed service fee, it is decisive for which part of the service the consideration is provided in the context of the exchange of services (cf. BFH judgment of 14.2.1974, V R 129/70, BStBl II p. 261). Services in the field of opinion, social, economic, market, consumer, and advertising research are not favored, for example, because the main content of these services is not in the transfer of rights, but in the execution and evaluation of demographic surveys, etc. ...
(3) According to § 7 Copyright Act, the author is the creator of the work. Works in the copyright sense are only personal intellectual creations according to § 2 para. 2 Copyright Act. Protected works in literature, science, and art include, in particular, language works such as written works, speeches, and computer programs (cf. paragraphs 1 and 6 to 14); ...
(6) Tax reduction is available for writers to the extent that they grant others rights to copyrighted works. Protected language works include, for example, novels, epics, legends, narratives, fairy tales, fables, novellas, short stories, essays, satires, anecdotes, biographies, autobiographies, travel reports, aphorisms, treatises, poems, ballads, sonnets, odes, elegies, epigrams, song lyrics, stage works of all kinds, librettos, radio plays, scripts, scientific books, essays and lectures, research reports, memoranda, comments on political and cultural events, speeches, and sermons ...
So, it is not the writing of texts itself that is favored, but the transfer of copyright to specific texts with increased literary value that fall under copyright law. Therefore, each text must be assessed individually.
In general, it is not correct to always apply a specific tax rate, be it 19% or 7%. The tax rate is determined by the economic result of the service provided. It is not based on the tax rate stated on the invoice, but rather on what was contractually agreed upon.
Therefore, the service on the invoice should be clearly described. The taxation is based on what was actually provided. The note about the transfer of rights on the invoice is therefore not necessary if it was agreed upon and actually carried out.
I hope that these explanations have given you a sufficient overview of the situation within the scope of your inquiry and this initial consultation, even though you may not be able to derive a completely satisfactory result from it, and remain
Yours sincerely,
Michael Herrmann
Dipl.-Finanzwirt (FH)
Tax Advisor
