Gone are the days when you could only offer your services and products locally. You can find out here how a lot of tax expenses can be saved when working with international customers and partners.
It is 8:19 a.m. Our fictional agency boss Anna M. is sitting in her Berlin office, a fresh coffee is steaming on her desk. Together with her six-person team, she and her agency are known beyond national borders for haptically and visually appealing print products: the Berliners create and implement posters, business cards, brochures, flyers and much more for their international clients.
Spread out in front of her: the final prints to be used for an art festival in Spain. The special paper that is used for this and is valued by customers because of its special feel was specially supplied by a Polish company.
Without the reverse charge procedure, Anna would now have to deal with the Spanish tax office; the Polish paper supplier in turn with the German authorities.
The endless possibilities that our globalized world brings with it have become an indispensable part of everyday work. Sales markets are no longer limited. Anyone can work, trade and do business with anyone. The only downer: the bureaucratic effort behind it. Anyone who works with partners and customers from abroad inevitably has to deal with this more brittle side of the coin.
Tax aspects in particular often cause headaches when collaborating across national borders. If the partner company has different tax legislation than you do yourself, this means, in theory, a lot of extra work for companies or their tax advisors.
In order to avoid additional work in practice, the reverse charge process can be used. In the event that the service is provided abroad, the sales tax is not owed by the contractor, but by the customers themselves. They can then, if entitled, claim this sales tax directly as input tax.
This does not result in an economic difference, but a considerable difference in effort. Customers and partners abroad do not have to deal with the German tax office, domestic companies do not have to deal with foreign tax offices – that saves a lot of correspondence, administrative effort and thus time and money.
Which points have to be fulfilled so that companies can use the reverse charge procedure?
- The service provided must be listed in § 13b UStG.
- The services must be provided to an entrepreneur or a legal person.
- For its part, the company providing the service is not allowed to show any separate sales tax.
- The company providing the service must indicate the reversal of the tax liability on the recipient of the service in the invoice.
In turn, tax-free and non-taxable sales are not subject to the reverse charge procedure.
If you get gray hair when it comes to financial management, you should think about outsourcing this area. The Berlin company nexnet has stood for successful business process outsourcing for more than 20 years – for subscription billing, finance or accounts receivable management, CRM and much more. The Berliners also provide comprehensive advice on process changes with regard to the reverse charge procedure and, if necessary, also make the necessary adjustments so that you can lean back and relax.
With the ever increasing number of deals, invoices and customer data, it is important to have a consistently high-quality partner at your side. Thanks to annual internal and external audits, nexnet GmbH meets high quality standards and complies with DIN ISO 9001: 2008 – the most important and most important international standard in quality management.
Find out more about nexnet’s extensive services and benefit from many years of experience in e-commerce and the telecommunications industry.