Germany: Self-employed teachers providing services for schools as freelancers are not VAT exempt. (2024)

FAQs

Germany: Self-employed teachers providing services for schools as freelancers are not VAT exempt.? ›

The Federal Fiscal Court of Germany published Decision No. VR 39/20 on 3 December 2021. The court ruled that self-employed teachers providing services for schools as independent teacher are not VAT exempt. Freelancers are only exempt from trade tax (Gewerbesteuer), and not from value-added tax (Umsatzsteuer or Ust).

Kleinunternehmen and VAT. In general, all self-employed persons and every business in Germany must pay VAT – regardless of whether you are a freelance artist or a craft business. However, there is one exception: Kleinunternehmer (small businesses) are exempt from paying and collecting VAT.

Difference between Self-employed vs.

In Germany, certain professions are considered trade versus freelance professions. This means that you cannot simply choose whether you are a self-employed person or a freelancer. Put simply: all freelancers are self-employed, but not all self-employed people are freelancers.

The following are exempt from German VAT: export deliveries, the intra-community supply of goods, services provided by professional groups, financial services, cultural services, voluntary services. Businesses are required to register for VAT in Germany when the annual turnover exceeds a certain value.

If your annual earnings from self-employment in Germany are more than the tax-free allowance (as of 2024: €11,604), you'll need to pay income tax (Einkommensteuer) — no matter whether you're a freelancer or run a company. Like with any income tax, the amount you'll need to pay depends on the size of your income.

Whether you are self-employed, a partnership or a company, you must register for VAT when the previous 12 months' total sale of taxable supplies exceeds the VAT threshold. You can register voluntarily if your expected income exceeds the VAT threshold.

Do I need to register for VAT as a sole trader or freelancer? All businesses must adhere to HMRC's VAT registration threshold and guidelines, no matter whether they are operating as a limited company, sole trader, partnership, or other structure.

The Internal Revenue Service considers freelancers to be self-employed, so if you earn income as a freelancer you must file your taxes as a business owner. While you can take additional deductions if you are self-employed, you'll also face additional taxes in the form of the self-employment tax.

Before embarking on your freelancing journey, it's crucial to understand the distinction between self-employment and freelancing. In Germany, freelancers are considered individuals who provide services in areas like IT, design, writing, and consulting.

Going freelance in Germany. Freelancers (Freiberufler) are self-employed entrepreneurs who work simultaneously for multiple clients and employers.

What are the VAT rules for services in Germany? ›

Value-added tax (VAT)

Proceeds of sales and services effected in Germany are subject to VAT under the common system of the European Union at the standard rate of 19% (7% on certain items, such as food and books, and 0% for the sale and installation of photovoltaic systems and certain related devices).

In Germany, VAT is a 19% tax on most goods and services. In German, it's called Umsatzsteuer (USt.) or Mehrwertsteuer (MwSt.). VAT is always included in the advertised price. If the price label says 20€, the customer pays 20€ including VAT.

The German VAT rates are: Standard rate: 19% Reduced rates: 7%

Yes. In addition to your job as an employee, you can also work independently as a part-time self-employed professional.

VAT ID is the unique identification number that you get when you have a VAT obligation as a freelancer in Germany. A VAT ID is a 9 digit number with the format DEXXXXXXXXX. What is a VAT ID used for? You add your German VAT ID to your invoices when you charge VAT from your clients and customers.

The tax number (Steuernummer)

The Steuernummer is for freelancers and businesses. It's a 10 or 11 digit number, and has the format “12/345/67890”. It's sometimes written as “3012034567890” (the first two digits are the number of your Bundesland ⁴). It's also called Steuer-Identnummer or St-Nr.

However if you are providing services upon the goods like maintenance/repairs then this would be a service and the Place of Supply would then be determined by where the customer belongs. So if the business customer is in Germany then the supply of services would be Outside The Scope of VAT.

In Germany the amount paid for merchandise includes 19 % value added tax (VAT). The VAT can be refunded if the merchandise is purchased and exported by a customer whose residence is outside the European Union.

VAT number (Umsatzsteuer-Identifikationsnummer)

The VAT number will be issued by the Bundeszentralamt für Steuern (BZSt) and you can apply for it when filling the Fragebogen zur steuerlichen Erfassung. You will receive your VAT number 3-6 weeks after your tax number (Steuernummer).

You need to register for VAT in Germany if: You store your goods in Germany or. You sell to German-based consumers (non-business); and. Your sales exceed Germany distance selling VAT threshold of €100,000.