Consulting activities in Sweden
December 8, 2010 | 30,00 EUR | answered by Michael Herrmann
Background: I have been retired since 1.10.2010. I had a commission in Sweden. The customer has requested me privately for 8 days. We agreed on a daily rate beforehand. As a precaution, I applied to the tax office for the "taxation of sales based on received consideration," which was approved with a new tax number.
Current situation: I now want to invoice the following items: a) daily fee b) hotel costs c) AVIS car rental costs d) fuel costs in Sweden e) flight costs (Lufthansa) f) mileage to the airport. The hotel bill includes (local) 12% VAT + 25% - thus the total amount. I am now completely unsure about which costs to include in the invoice and what I need to pay to our tax office after receiving payment.
I was given an example invoice from a German supplier. It states: "The invoice is tax-free according to §4 No.1 letter b in conjunction with §6a UStG." What should I do?
Dear inquirer,
First of all, thank you for your inquiry, which I would like to answer based on the information provided and in the context of your initial consultation. The response is given according to the facts presented. Missing or incorrect information about the actual circumstances can affect the legal outcome.
According to § 3a (2) UStG (German Value Added Tax Act), consultancy services are subject to VAT where the recipient of the service is located. In your case, this is Sweden. The reference to the supplier's invoice is not relevant in this regard.
Under German law, the recipient of the service would be liable for the VAT on consultancy services invoiced by a foreign business, as determined by § 13b) UStG. Under German law, you should not show any tax on your invoice. You should only mention that under § 13b) UStG, the recipient of the service is liable for the tax.
Since VAT law has been harmonized within the EU, there is an identical provision in the Swedish Value Added Tax Act. I cannot provide you with the exact Swedish paragraph.
Therefore, you will not have any burden with VAT taxation in Sweden. You should indicate the recipient's liability for tax and the corresponding provision on the net invoice. In Germany, you should report revenues for which the recipient of the service is liable for tax. No payments are made.
IMPORTANT: You must also include your VAT identification number and that of the client on the invoice. The number can be requested online from the Federal Central Tax Office.
You should invoice the costs to your client only to the extent that you are charged for them. This means that for amounts where you receive a refund of German input tax, you can only invoice the net amount.
I hope that these explanations have provided you with an adequate overview of the situation in the context of your consultation, and I remain
Sincerely yours,
Michael Herrmann
Graduate Financial Economist (FH)
Tax consultant
