If you, as a supplier or service provider, send an invoice to a private person in another EU country, then your place of business is the place of performance. As a result, you are subject to sales tax regardless of where your customer is based in Germany. Accordingly, your invoice shows your normal sales tax rate valid in Germany – either the standard tax rate of 19% or the reduced tax rate of 7%. Special regulations only apply if you reach a delivery threshold because you regularly bring goods or services to another country in the European Union.
Delivery to a company within the EU – VAT abroad
If you provide your delivery and service to another entrepreneur in another European country, then the place of delivery is considered the place of performance. As a result, VAT is due at the recipient’s location in another European country. Since it would cause too much effort for you as a German entrepreneur to declare VAT outside of Germany, the reverse charge procedure was introduced. As part of the procedure, you do not show any VAT on your invoice to your commercial customers within the EU. Rather, your customer has to take care of reporting and paying the VAT for your delivery or service to his local tax authority.
No VAT as a small business owner
If you, as a small business owner, are exempt from the obligation to collect sales tax from your customers, you will in no case show sales tax on your invoice. This also applies to invoices that you send to other EU countries. Regardless of whether your customer is a private person or whether you spend your services to the commercial companies, you basically exalt you of your customers VAT.
Value added tax for invoices abroad: What applies to third countries outside the European Union?
If you, as the recipient of the service, are based in a third country, assessing the value added tax in an invoice is more difficult because there is no uniform legal basis that applies to all third countries. In some countries, the reverse charge regulation common in the European Union is also used, for example in Switzerland. The use of the sales tax calculator is important in this case.
The same applies to third countries in which your turnover as a German service provider is not recorded, namely if it is not subject to tax at all under the tax law of the respective country or if there is no comparable taxation at all , for which the United Arab Emirates are exemplary. Ultimately, there is only one legal security for the treatment of VAT in an invoice for third countries concrete country information. A possible contact for you is the German chambers of commerce abroad in the respective third country.