How is value added tax charged on services provided to individuals?
December 17, 2022 | 40,00 EUR | answered by Friedhelm Sauer
Dear Mr. Ziegler,
I am facing the challenge of correctly invoicing value-added tax for services provided to private individuals and urgently need your assistance.
Background information: I run a small business that offers IT consulting services. So far, I have mainly worked with business clients, where invoicing the VAT was straightforward. However, I now want to attract private individuals as clients and am unsure about how the VAT should be invoiced in this case.
Current situation: I have already acquired some private clients and provided services to them, but I am not sure if I have invoiced the VAT correctly. I have heard that invoicing private individuals is different from invoicing business clients, but I am unsure of how exactly it works.
Concerns: My biggest concern is that I may have incorrectly invoiced the VAT and could encounter tax difficulties as a result. I want to ensure that I comply with all legal requirements and avoid making any mistakes that could harm my business.
Question: Could you please explain in detail how VAT is invoiced for services provided to private individuals? Are there any specific regulations or exceptions that I need to be aware of? How can I ensure that I correctly pay the VAT and avoid any legal issues?
Thank you in advance for your assistance.
Best regards,
Eiko Ziegler
Dear Mr. Ziegler,
Thank you for your inquiry regarding the correct calculation of value-added tax for services provided to individuals. I understand your concerns and would like to help clarify this issue for you.
In general, when providing services to individuals, value-added tax must be specified on the invoice. Unlike with business customers, where value-added tax is often calculated through the reverse charge mechanism, individuals are end consumers and therefore are the ones who must pay the value-added tax.
The standard value-added tax rate for services provided to individuals is typically 19%. This amount must be added to the invoice total and specified separately. However, there are also services for which a reduced value-added tax rate of 7% applies, such as certain cultural or social services. In this case, the reduced rate must be specified on the invoice.
It is important to ensure that you charge the correct value-added tax to avoid any legal issues. If you are unsure whether a reduced rate applies to your services, I recommend consulting your tax advisor or the tax office.
To ensure that you correctly pay the value-added tax, I recommend keeping accurate records of your sales and the corresponding value-added tax. This way, you can always track how much value-added tax you have collected and remit it to the tax office accordingly.
I hope this information helps you and that you can now confidently invoice your services to individuals. If you have any further questions, please do not hesitate to contact me.
Best regards,
Friedhelm Sauer
