Help! German company charging VAT

[Nightin16]

I was hoping you could help. We are a talent management company with a turnover less than the VAT registry threshold. We have an actress recently paid for work on a commercial with a German production company.

We were told to invoice for a buyout amount and the funds were received today into our business account.

We were asked for our VAT number at point of instruction but advised we are a non VAT registered company.

Upon receipt of the invoice the German company has charged VAT so we are down a considerable amount from the buyout amount.

Not sure where to start with it and where we stand in terms of what we should be doing?

Any advice/knowledge greatly appreciated,

Best

Anna



Sent from my iPhone

 

[Scalloway]

If you are not VAT registered then the German company will not be willing to zero rate the invoice.

 

[The Byre]

This topic just keeps coming up on an almost weekly basis.

The ONLY valid proof of you being a business that the German authorities accept is a VAT number. That is because VAT numbers are checked against a database that verifies that they correspond to the company and address given. That means that effectively, the German company's hands are tied and they cannot supply you VAT free.

The concept of VAT free businesses does not exist in Germany, so TBH, they just do not believe that you are a real company.

 

[Lavender2306]

I was hoping you could help. We are a talent management company with a turnover less than the VAT registry threshold. We have an actress recently paid for work on a commercial with a German production company.

We were told to invoice for a buyout amount and the funds were received today into our business account.

We were asked for our VAT number at point of instruction but advised we are a non VAT registered company.

Upon receipt of the invoice the German company has charged VAT so we are down a considerable amount from the buyout amount.

Not sure where to start with it and where we stand in terms of what we should be doing?

Any advice/knowledge greatly appreciated,

Best

Anna



Sent from my iPhone

Hi Anna,
Can I just clarify as to what has actually happened?
As far as I understand, you are acting as an agency, let's call you TMA.
Your contract was with that German production company(GPC).
And your contract was to provide them an actor for whose performance GPC agreed to pay a buyout fee. You quoted them an amount, say £5,000, and they paid you this amount, but the invoice is showing this amount as German VAT inclusive?
You are the supplier in this transaction, so I can't understand why they are charging you VAT .
Please, could you explain? Thank you.

 

[Clinton]

The OP has not explained the situation very clearly - which is why I didn't reply to this thread yesterday - and I'm afraid you're adding to the confusion.

You quoted them an amount, say £5,000, and they paid you this amount, but the sales invoice is showing this amount as German VAT inclusive?

How can the sales invoice in this case show German VAT? Sellers create the invoice, not buyers! And this seller is not registered for VAT in Germany.

GMC can't edit the invoice either (to add a field for German VAT). The most GMC can do is assume that TMA's invoice is VAT inclusive and deduct an appropriate amount for VAT before paying the invoice.

 

[Lavender2306]

The OP has not explained the situation very clearly - which is why I didn't reply to this thread yesterday - and I'm afraid you're adding to the confusion.


How can the sales invoice in this case show German VAT? Sellers create the invoice, not buyers! And this seller is not registered for VAT in Germany.

GMC can't edit the invoice either (to add a field for German VAT). The most GMC can do is assume that TMA's invoice is VAT inclusive and deduct an appropriate amount for VAT before paying the invoice.

If you read my edited posting, that may help you with your confusion.
I think the best thing to do at the moment is to wait for Anna's reply with some explanations.

 

[talksalot81]

I might be missing something but I don't see the problem. The German company has to charge you VAT because you are not VAT registered. If isn't that they will keep this money, they have to pay it to their tax authority. If they didn't charge it to you, they would still have to pay it so they would be out of pocket. The only scenarios this is different is if the goods/services should be zero rated (which isn't really up to the company) or if they are outside of the tax system (ie external of EU).

In our case, we always charge VAT unless we are provided with a VAT number.

 

[Newchodge]

The bit that confuses me is that the OP is the supplier and the German company is the client. It is not normal for a client to charge their supplier for the supply. It is usually the other way around.