Save tax expense with the reverse charge procedure
t3n, dated 07.07.2021: Gone are the days when you could only offer your services and products locally. Find out here how you can save a lot of tax effort when working with international customers and partners.
It is 8:19 a.m. Our fictional agency manager Anna M. is sitting in her Berlin office, a fresh coffee steaming on her desk. Together with her team of six, she and her agency are known beyond the country’s borders for haptically and visually appealing print products: Posters, business cards, brochures, flyers and much more are created and realized by the Berliners for their international clients.
Spread out in front of her: the final prints that will be used for an art festival in Spain. The special paper used for this purpose, which is appreciated by the customer for 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.
Limitless, but cumbersome – or not?
The infinite possibilities that our globalized world brings with it are now an integral part of everyday working life. Sales markets have long since ceased to be limited. Anyone can work, trade and do business with anyone. The only downside: the bureaucratic effort behind it. Anyone who works with partners and customers from abroad inevitably has to deal with this brittle side of the coin.
Especially tax aspects often cause headaches when collaborating across national borders. If the partner company has different tax legislation than you do, in theory this means a lot of extra work for companies and their tax advisors.
Less effort thanks to reverse charge
In order to avoid additional work in practice, the reverse charge procedure can be used. In the case of services provided abroad, the VAT is not owed by the contractor, but by the customers themselves. They can then, if entitled, claim this sales tax directly again as input tax.
This does not result in an economic difference, but it does result in a considerable difference in expenditure. 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 – this saves a lot of correspondence, administrative work and thus time and money.
What points must be fulfilled in order for companies to 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 entity.
- The supplying company, for its part, may not show any separate VAT
- The supplying company must indicate in the invoice the reversal of the tax liability to the recipient of the service
Even less effort – thanks to nexnet
Anyone who gets gray hairs when talking about financial management should think about outsourcing this area. For more than 20 years, the Berlin-based company nexnet has stood for successful business process outsourcing – for subscription billing, financial or accounts receivable management, CRM and much more. The Berliners also provide comprehensive advice on process conversions with regard to the reverse charge procedure and, in case of application, also take over the necessary adjustments, so that you can sit back and relax.
In turn, tax-exempt as well as non-taxable transactions are not subject to the reverse charge procedure.
Quality despite quantity
With the ever-increasing number of deals, billings and customer data, it’s important to have a consistently high-quality partner at your side. nexnet GmbH meets high quality standards thanks to annual internal and external audits and complies with DIN ISO 9001:2015 – the most common and important international standard in quality management. Find out now about nexnet’s wide-ranging services and benefit from its many years of experience in e-commerce and the telecommunications industry.