tutoring lessons
August 16, 2010 | 20,00 EUR | answered by Dipl.BW/SB Ulrich Stiller
Dear Sir or Madam,
My son is in the process of setting up a tutoring agency as a sole trader, and I would like to formulate the question to you based on my current "layman's" knowledge:
A. My son will pay a fee (e.g. 20 euros/hour) to the tutor(s), which the student, etc. will have to declare for tax/insurance purposes.
B. My son will prepare an income/expenditure statement for the tax office and will have to pay tax on the difference.
C. In addition to the majority of cases where he (my son) makes a profit, there are also cases where the tutoring students (or their parents, paying 20 euros/hour) are responsible for payment and the tutor should receive the full amount (20 euros/hour) for a "free matching service."
D. Are points A, B, and C coherent and correct, or is there a missing mention of "value added tax" somewhere?
We look forward to your response.
Yours sincerely
J.W.
Dear client,
Scenario A
From a tax perspective, your explanation is correct. From a VAT perspective, unless there is an exempt supply, the VAT should be excluded and the net amount, reduced by input tax, should be paid to the tax office. If VAT is applicable, the VAT should be added to the 20 euros/hour.
However, if your son is a small business owner, with a total turnover not exceeding 17,500 euros in the previous year and 50,000 euros in the current year, and has not voluntarily opted for regular taxation, to which he would be bound for 5 years, then your calculation is correct and VAT is not applicable.
Scenario B
The above applies.
Scenario C
If your son provides something free of charge, no VAT would be applicable to him if he is not a small business owner or has not opted for regular taxation as a small business owner.
I hope I was able to assist you.
Best regards,
Ulrich Stiller
Tax advisor / Dipl. Business Administrator
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