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Where Taxpayers and Advisers Meet

How to write an invoice for German business?

docutale
Posts: 2
Joined: Fri Dec 05, 2014 3:27 pm

How to write an invoice for German business?

Postby docutale » Fri Dec 05, 2014 3:32 pm

Hi all,

I have a very simple question, (well at least in tax terms) but I thought perhaps a tax professional might be able to answer this quickly.

I have just moved to London from Berlin. I had a tax number, since I have now de-registered and no longer a resident, i no longer need this number correct? I am not sure how to write invoices for German businesses now as i have one as a client. I used to apply VAT on the invoices which is 19% to the invoice but now i do not think I have to, i also used to put my German tax number but now i dont think i need to.
So on he UK end, i am self employed individual, doing consulting. What should or would i need to do to get going here. OR what should i be applying to an invoice for someone who doesnt have a registered business here yet, or is a national insurance number here enough? I need a UK tax number correct?
The German business is paying money into a German account, does that change anything?

Any help is appreciated.

Ari

GlobalTaxAdviser
Posts: 633
Joined: Fri Dec 05, 2014 1:18 am

Re: How to write an invoice for German business?

Postby GlobalTaxAdviser » Fri Dec 05, 2014 11:41 pm

Dear Ari

There are multiple issues here

1) Business to invoice Client (UK or Germany)
2) VAT
3) Tax Residence
4) Tax Efficiency
5) Corporate Tax or Income Tax

Presumably you are a consultant working on your German Client premises and that you do not have a fixed place of work in Germany ? If your based is UK then you an can invoice your client from the UK and since you are invoicing another business in Germany the customer can take deal with the VAT under reverse charge. You just need to mention a few points about reverse charge on the invoice. Actually you may not even need to register for VAT in the UK since the supply of service is where the customer based ie Germany and the they need to take into account VAT in their VAT Return (there is no loss to them. If you feel you need to invoice from Germany as a sole trader not sure you would be allowed if Non Resident in Germany then you would need to register there and since the transaction is between a German business to another German business then you need to apply 19% VAT and pay the VAT in Germany less any input tax.

Yes you would need to register as a sole trader either in the UK or Germany (if you are allowed to register as non resident). On the residency you could be deemed to be resident in both countries in the first year and hence pay tax in both countries. It really depends on the German domestic law on residency and the double tax treaty in terms of tax relief. UK has statutory Residency Tests and anyway you would be taxed under split year (from the time you enter the UK) though if you have been to the UK in the past tax years then this may be a consideration. Other potential issues could be remittance or arising basis if you have overseas income.

I think the income and corporate tax rates are a lot higher in Germany and since you are resident in the UK it would be prudent to pay UK Tax. From a tax efficient point of view if say your profits are higher than 30K GBP then operating through a Limited Company may save substantial amount of tax through being paid via dividends. There are many other advantages of a limited company. Now a question would be a German or UK Limited Company. If you are going to be based in the UK then I would suggest UK otherwise if you open a GMBH then under the tax treaty between UK and Germany the place of effective management could be happen in the UK (though maybe ways around it) and hence you end up pay tax twice. The Gmbh would get a tax credit for the UK tax paid .

To summarise it maybe better, and simpler to just invoice from your UK Company and just pay yourselves dividend. There are also other ways of reducing Corporation Tax. Doing business I have found much easier in the UK with taxes etc than Germany though I am sure someone will disagree with me.

Opening a UK company is the easiest in the world and opening a UK Euro Bank Account shouldn't be a problem either. Is your German Client willing to pay you into a UK Bank Account. Its not normally an issue in the EU. You would have to complete a self assessment tax return.

Hope I have answered your question though I am sure some of the above may of confused you so apologies. Please do not hesitate to post any follow up questions

Thanks

Sash

nikkisizer
Posts: 342
Joined: Fri Nov 04, 2011 5:26 pm
Contact:

Re: How to write an invoice for German business?

Postby nikkisizer » Sat Dec 06, 2014 6:01 am

I have just moved to London from Berlin. I had a tax number, since I have now de-registered and no longer a resident, i no longer need this number correct? - Not for your UK self employment I am not sure how to write invoices for German businesses now as i have one as a client. I used to apply VAT on the invoices which is 19% to the invoice but now i do not think I have to, - Not for your UK self employment i also used to put my German tax number but now i dont think i need to. - Not for your UK self employment
So on he UK end, i am self employed individual, doing consulting. What should or would i need to do to get going here. OR what should i be applying to an invoice for someone who doesnt have a registered business here yet, or is a national insurance number here enough - No I need a UK tax number correct? - Yes
The German business is paying money into a German account, does that change anything? - No
Hi Ari,

Please refer to my comments above in blue.

You will need to register your self employment with HMRC who will then issue you with your UK unique tax reference number (UTR).

You will also be required to file a self assessment tax return annually.

Happy to help if required so if you need any further assistance please do not hesitate to contact me.
Kind regards,

Nikki Sizer

Sizer & Co Accountants
nikki@sizeraccountants.com
[url]http://www.sizeraccountants.com[/url]

Birmingham - London - Manchester - Leeds

docutale
Posts: 2
Joined: Fri Dec 05, 2014 3:27 pm

Re: How to write an invoice for German business?

Postby docutale » Sat Dec 06, 2014 5:07 pm

thanks so much for your help.
I appreciate it.

Ari


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