Value Added Tax (VAT) and invoicing for an English small business owner.
April 1, 2014 | 30,00 EUR | answered by Steuerberater Peter Jansen
Dear Sir or Madam,
I have registered a business with a VAT ID and do not fall under the small business regulation, so I am subject to VAT. I regularly receive programming and design services for my website from abroad in the EU. I have so far applied the reverse charge procedure in accordance with §13b UStG to the corresponding invoices.
Now I have received an invoice from a small business in the UK, who has created a design concept for my website. "Small business" may not be the completely correct term in terms of tax law, but there is apparently a small business regulation in the UK similar to that in Germany, under which this entrepreneur falls. This means that the entrepreneur in question does not have a VAT identification number and therefore does not show VAT on his invoices.
a) What mandatory information must an invoice from the UK small business to me contain so that there are no issues with the tax authorities regarding VAT matters and the procedure remains as simple as possible? Do I have to pay VAT in Germany?
b) How should invoices to me from a non-EU country, for example from India, the Philippines, or Pakistan, look like in a similar situation? In these countries, VAT numbers generally do not exist.
PS: This text is correctly formatted, unfortunately the formatting seems to be lost when I submit the question.
Dear questioner,
I am happy to answer your question as follows.
The services received from the English small entrepreneur are also subject to the reverse charge scheme according to § 13b UStG. As the recipient of the service, you are therefore liable for the value added tax. You are not a small entrepreneur and can deduct this tax as input tax. The application of § 13b UStG depends on whether the entrepreneur is based abroad. Whether they are themselves a small entrepreneur is irrelevant. This also answers part b) of the question regarding entrepreneurs from non-EU countries.
For the incoming invoice, § 14 para. 4 in conjunction with § 14a para. 5 UStG must be observed. In addition to the usual information (e.g. name, address, date, etc.), there must also be a reference to the application of the reverse charge procedure.
Due to the often lacking knowledge of the latter mentioned obligation in foreign countries, it can be assumed that the reference to the reversal of the tax liability in the incoming invoice is often missing. If this is the case, the tax liability still reverses. The reference is not a substantive legal requirement for the tax liability of the contractor. The tax authorities allow the input tax deduction according to Section 13b.15 para. 2 UStAE despite the lack of reference.
I hope I could be of assistance with these statements.
Best regards,
Peter Jansen
Tax advisor
