Tax Nation

The tax officer at my local Finanzamt in Berlin recently confirmed what many freelancer translators in Germany already know to be true: even tax officers working for the Finanzamt (as well as private tax consultants) are often  unfamiliar with the tax laws that apply to freelance translators in Germany.

Small businesses and freelancers registered in Germany earning more than 17,500 € a year are required to add a 19% VAT (Umsatzsteuer) to their invoices. Those freelancers earning less than 17,500 € a year are exempt and only require a disclaimer on their invoices like for instance, “Gemäß §19 UstG, wird MwSt. nicht gesondert ausgewiesen”.

Those freelancers earning more, must collect the VAT tax and pay it to the Finanzamt usually in quarterly installments. The third installament for 2009 will be due on October 10. But because freelance translators do so much international business, there are a some exceptions to the rule:

-Invoices sent to clients within Germany must include 19% VAT (Umsatzsteuer).

-Invoices sent to clients outside of Germany but within the European Union must include 19% VAT only if the client is a private person. When doing business with companies (large or small) including translation agencies within the EU, you are not required to add VAT.

-Invoices sent to clients outside of the European Union do not require VAT.

So essentially, the only invoices that get VAT tax are those for actual German clients or individuals within the EU. Otherwise when doing business with foreign companies not responsible for paying VAT tax, always include your disclaimer:

“Ort der sonsitigen Leistung ist nach § 3a Abs. 3 i. V. m. § 3 a Abs. 4 Nr. 3 UStG [DE] der Ort, an dem der Leistungsemfänger sein Unternehmen betreibt, sodass deutsche Umsatzsteuer nicht zu erheben ist.”

You could also make it a little less formal if you prefer: “Steuerschuldner ist Leistungsempfänger”.

I look forward to my next meeting with my tax officer so I can teach her a thing or two.


5 responses to “Tax Nation

  1. Just stumbled upon your blog, very nice. A small clarification though: isn’t the due date for the 3rd installment the 10th of Oct? Sept. 10 is still QIII. Gave me a scare there, but I have a Dauerfristverlängerung anyway. I prefer to send my tax advisor to butt heads with the FA 😉

    • Thanks Michele. I double checked my calendar and you are right. VAT is due Oct. 10. Those prepaying their income tax in quarterly installments make their 3rd payment on Sept 10. Sorry about the scare. I’m correcting the date in my post.

  2. Oh good, I thought I was going mad. BTW did you solve your query from twitter about Einstein’s “absolut ruhender Raum”? I’d say “absolutely stationary space”. It’s from the second paragraph of, which is available in English here

  3. Hi. Are these rules just for translators or all freelancers?

    • All freelancers, assuming nothing has changed since 2009. I’m not really up to date on any changes that may have been made.

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