Value added tax on commissions of a service provider located in a European foreign country
January 4, 2015 | 30,00 EUR | answered by Dipl.-Kfm. Frank-Olaf Illiges
Hello and good day,
I receive goods from a dealer located in a European country due to my German VAT ID for further resale without the deduction of the VAT valid in their country. When reselling these goods purchased net, I tax them with the corresponding tax rate and pay the VAT to my tax office accordingly.
However, due to sales from additional sellers I have recruited, I also receive a sales commission. In my commission statements, it states "The tax liability is transferred to the service provider according to 3AABS.6.USTG."
My question: Are the commissions I receive subject to VAT for me, meaning do I have to pay VAT on them, or are they VAT exempt because the VAT has already been paid by the supplier?
Dear inquirer,
Thank you for your inquiry, which I am happy to answer taking into consideration your contribution and the rules of this platform.
Please note that my explanation is based on the facts presented, and that adding, omitting, changing information, or the ambiguity of information can change the tax outcome. Please be aware that this does not replace individual comprehensive advice.
According to § 3a (2) of the Value Added Tax Act (UStG), you provide your brokerage service to a business where the recipient of the service is located. Therefore, the place of supply of your brokerage service is abroad. Consequently, the commission for the brokerage service is not subject to VAT in Germany (§ 1 (1) No. 1 UStG; reverse conclusion), so you do not have to pay VAT on the brokerage commissions in Germany.
However, in your VAT return, the brokerage commission should be entered in box 21 (Non-taxable other services according to § 18b sentence 1 No. 2 UStG). Furthermore, the brokerage commission must be reported in your Recapitulative Statement, including the VAT identification number of the service recipient.
You also do not have to pay VAT on the brokerage commission abroad, as your liability for VAT shifts to the service recipient under the reverse charge procedure. This means that the foreign business calculates and pays the VAT on the brokerage commission in their home country.
Best regards,
Dipl.-Kfm. Frank-Olaf Illiges
Tax Advisor
Am Wieksbach 55
33378 Rheda-Wiedenbrück
Phone: 05242/4055666
Fax: 05242/4055677
e-mail: office@illiges-steuerberatung.de
Website: www.illiges-steuerberatung.de
