EU VAT in invoice for a UAE consultant service

[hibiscus]

Hi, I have a new scenario where I don't know the right approach. Maybe someone here knows the answer.

I have a small UAE FZ consultancy and need to bill a customer from Germany. He is paying via wire-transfer into one of my bank accounts.
1. Am I obliged to put German VAT into the invoice?
1.1 Does this change if I provide the service here in UAE while he visits?
2. If I put the VAT on how do I send it to Germany? I guess this is involved with a lot of red tape?

 

[CyprusLawyer101]

What is the typw of consultancy and where ia it performed? Is this an individual or a company?

 

[hibiscus]

CyprusLawyer101 said:
What is the typw of consultancy and where ia it performed? Is this an individual or a company?
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This is a free zone establishment, why are you asking? Is there a difference? I need to invoice a company from Germany (first time).

 

[CyprusLawyer101]

You are asking about German VAT therefore such quedtions become relevant

 

[bigdaddyleon]

hibiscus said:
I need to invoice a company from Germany (first time).
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Reverse Charge

 

[hibiscus]

bigdaddyleon said:
Reverse Charge
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Put the reverse charge sentence with 0% VAT in my invoice then? The customer then pays the almost 19% out of his pocket as expenses? Is this the best way?

 

[bigdaddyleon]

hibiscus said:
Put the reverse charge sentence with 0% VAT in my invoice then?
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0% VAT - Reverse Charge

hibiscus said:
The customer then pays the almost 19% out of his pocket as expenses?
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No

 

[hibiscus]

bigdaddyleon said:
No
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Any explanation for this? I guess his tax consultant in Germany will calculate the tax liability and offsets this with their input taxes? So no big drawback to have the tax liability reversed? There is no way for me to give the customer a discount because of the 19% tax liabilities (because of the reverse charge) on now his side, right?

 

[JackAlabama]

hibiscus said:
Hi, I have a new scenario where I don't know the right approach. Maybe someone here knows the answer.

I have a small UAE FZ consultancy and need to bill a customer from Germany. He is paying via wire-transfer into one of my bank accounts.
1. Am I obliged to put German VAT into the invoice?
1.1 Does this change if I provide the service here in UAE while he visits?
2. If I put the VAT on how do I send it to Germany? I guess this is involved with a lot of red tape?
Click to expand...

You need to check with customer if Germany allows business expense deductions in regards to UAE if that is of any concern. Eventually, your client could not deduct this expense from German tax.

 

[ShillGates]

no you zero rate your invoice to germany, like 5000 euro + 0% vat. the end of the matter for you

the customer in germany receives this and then reports this 5000 euro as input and ouput on their return as if they supplied and bought themselves (silly i know) so 5000+20% german vat = 6000 input and output. Net result 0.

 

[CyprusLawyer101]

Exceptions apply on certain cases and types of services.

 

[hibiscus]

JackAlabama said:
Eventually, your client could not deduct this expense from German tax.
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"reversed VAT" on the invoice should make it an obligation for him to pay the German tax of 19% on the amount in the invoice. Meaning, he will have to compare his paid input tax and can offset it if the input tax is higher but that's another topic of a tax consultant.

OffMyBack said:
no you zero rate your invoice to germany, like 5000 euro + 0% vat. the end of the matter for you

the customer in germany receives this and then reports this 5000 euro as input and ouput on their return as if they supplied and bought themselves (silly i know) so 5000+20% german vat = 6000 input and output. Net result 0.
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Reports this as input and output?! 😀 How sure are you about this? This would mean he has no downside in the deal and somehow no obligation to the german tax authorities? I've read in a couple of threads that listing 0% VAT can be seen as "VAT fraud".
So no reverse charge reference? Would love to understand it for myself to be able to explain this to him in a discussion.

Last edited: Mar 9, 2023

 

[ShillGates]

the customer in germany receives this and then reports this 5000 euro as input and ouput on their return as if they supplied and bought themselves (silly i know) so 5000+20% german vat = 6000 input and output. Net result 0.


i did say "REPORT". A business is vat neutral anyway, so not sure what you referring to. vat is an end user consumer tax.

 

[Zaiga]

Is it B2B or B2C ?

 

[donald1234]

Why making so complicated?
If you provide a service AND customer is B2B AND your company in Duabi is legit, then it's 0% and you got nothing to do with german VAT...

 

[Vernon]

This is what applies to your German customer:
https://europa.eu/youreurope/busine...er-vat/index_en.htm#outsidetheeubuyservices-1
For you there's nothing to do. The requirement of specific reference to reverse charge in the invoice only applies to intra-EU deliveries, AFAIK (note: I'm not a tax advisor).