Do I have to pay sales tax as a freelancer?
January 28, 2022 | 40,00 EUR | answered by Dietrich Hohenadel
Dear tax consultant,
I am Jonas Schlittmaier, a freelancer in the field of graphic design, and I am currently facing the question of whether I also have to pay sales tax as a freelancer. So far, I have offered my services without sales tax as I was operating under the small business regulation and therefore exempt from sales tax.
However, I have heard that there is a limit for the sales tax exemption and that I may have exceeded it. I am worried that I may have to pay back sales tax or that I made mistakes by not charging sales tax.
My question to you as an expert in value-added tax is therefore: Do I have to pay sales tax as a freelancer if I can no longer take advantage of the small business regulation? Are there possible solutions to avoid tax payments or to fulfill my sales tax obligations properly?
I would greatly appreciate your support and advice on this matter as I am unsure of the best course of action in this situation.
Thank you in advance.
Sincerely,
Jonas Schlittmaier
Dear Jonas Schlittmaier,
Thank you for your inquiry regarding the value added tax (VAT) obligations as a freelancer in the field of graphic design. It's good that you are thinking about your tax situation to avoid potential issues. I am happy to provide you with a comprehensive answer to your questions.
First of all, I would like to point out that the small business regulation in Germany applies to companies whose revenue did not exceed 22,000 euros in the previous calendar year and is not expected to exceed 50,000 euros in the current calendar year. As a small business owner, you are exempt from VAT and therefore do not have to submit VAT returns.
However, if you exceed the 50,000 euro revenue limit, you are no longer exempt from VAT and must pay VAT. This means that you must now charge VAT on your services, which you must pay to the tax office. It is important to inform yourself in a timely manner about your revenue limits and, if necessary, adjust your prices to account for VAT.
If you find that you have exceeded the small business regulation, it is advisable to promptly consult a tax advisor to clarify your tax situation and take any necessary steps. It is important to avoid potential tax payments and fulfill your VAT obligations properly to avoid legal consequences.
In any case, I recommend keeping your accounting records meticulously and documenting all income and expenses accurately to make your tax situation transparent and comprehensible. A tax advisor can help you fill out your tax returns correctly and take advantage of possible tax benefits.
I hope this information helps you and answers your questions. If you need further assistance or have additional questions, please feel free to contact me.
Best regards,
Dietrich Hohenadel
Tax Advisor
