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I'm an independent IT consultant in the US, and I just completed some work for a German company, all done remotely from the US. I've sent them an invoice, but they are now asking if I have a VAT registration ID, which I don't have of course not being in Europe. Do I have to do anything about the German VAT tax? Is it up to the company I worked for to sort this out?

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You need to talk to a tax lawyer. –  Daenyth Jun 21 '12 at 0:39
    
Instincts say you don't have to worry about VAT but like @Daenyth said you really should consult a lawyer. –  Rig Jun 21 '12 at 0:46
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I am pretty sure you do have to pay the VAT, but you may qualify for a refund (Export.gov). You should see a tax lawyer and talk to the people here: Finanzamt Bonn –  Jason Morgan Jun 21 '12 at 1:02
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closed as off topic by thorsten müller, ChrisF Jun 21 '12 at 7:52

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2 Answers

up vote 2 down vote accepted

Disclaimer: I am no laywer either, but I do handle VAT matters for a small German business, so I know a bit about VAT in Germany.

From what I know and could gather on the Internet, it's like this:

  • You obviously do not have a German VAT registration number, and you cannot get one - that is only for German companies
  • The reason your customer is asking is very probably because they want a bill where VAT is itemized separately. If they get that bill, then they can turn around and get the VAT they paid to you back from the tax office (that's how a VAT system works). The tax office will only accept bills with the VAT reg.no., so they need it.
  • Of course, this is all totally irrelevant because you, as a foreign company, do not participate in the German VAT system, thus you cannot demand or list on your bill any VAT.
  • The real solution is to check if you, or your customer, have to pay some kind of U.S. VAT for your services. If yes, then they can probably get a refund of that tax - how exactly you'll have to google, this very much depends on the business, the contract and how and where you live and did the work (google for "vat refund business" or similar).

Finally, it may well be the case that neither you nor the customer paid any VAT. Then there's nothing to refund. Just tell your customer that.

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I would first send a message saying I'm not in eu and they don't need to pay anything.

If their accounts can't deal with this you may have register with their tax authorities - but you can probably register anywhere in the EU (eg UK if English is easier). Having a VAT number means they don't pay the tax - basically businesses are able to deal VAT-Free with each other, it's only the end consumer that pays So ironically they are asking if they have to pay tax on what they paid you.

There is also a limit below which you don't need to register for VAT (or charge VAT to your customers) - this is typically around $100-150K of turnover/year. But if you mostly deal with other companies it might be worth it, just because their accounts expect it and you can claim back VAT on anything you buy

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ps. the usual I'm not a lawyer, neither is my cat etc.... –  Martin Beckett Jun 21 '12 at 1:28
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