How does VAT work for clients outside Germany?
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Here is how to get your invoices for clients in the EU, and further afield, in tip-top shape!
An invoice for an international client needs to include all the things you would see on a German invoice:
- Name and address of both yourself and your client
- A unique invoice number
- The date the invoice is delivered
- Your Steuernummer and VAT number (Umsatzsteuernummer in German)
- The VAT number of your client – use this handy tool from the European Commission to confirm a client’s VAT number
- A description of the work completed
- The price per unit and the total amount charged
- Your bank details, for easy transfer
- And don’t forget your signature!
⚠️ Invoices for clients outside Germany differ from those issued inside Germany when it comes to VAT.
Should I charge VAT to clients in the EU?
Short answer: No. Here’s why:
The reverse charge procedure
VAT is charged for goods and services throughout the EU. But when your client is based in a different EU member state, something called the “reverse charge procedure” applies.
Think about it this way: VAT, or value-added tax, is added to goods and services throughout the production process and passed on and on until it hits the end user.
It doesn’t make sense for you to charge VAT to a client in France, for example, because then their VAT would land in Germany’s coffers, despite it being a deductible business cost for them in France.
For this reason, freelancers should not charge their clients outside Germany any VAT.
Make sure to include a reference to the reverse charge procedure on your invoice, eg. “The reverse charge procedure applies to this invoice, so no VAT is charged.” Now you have met the legal requirements for a freelance invoice for an EU client outside Germany.
💡 Tip: Accountable offers automatic invoice generation and can even add the relevant VAT references when you need them. Try it out for yourself.
Invoicing clients outside the EU
There is no need to charge tax on any invoices you issue to clients outside Germany, including those outside the EU.
And invoicing non-EU clients is even easier, as you don’t need to reference the reverse charge procedure.
Simply include the elements listed above and you’re good to go.
And there you have it, a simple, stress-free answer to one of the most common German tax questions!