VAT (Umsatzsteuer) obligation for freelancer (Freiberufler)

Tax matters are very complicated in Germany - and the consequences of doing it wrong severe: Cheating on taxes (even inadvertendly) is a criminal offense!

Therefore advising on tax matters is (sensibly) reserved to licensed tax advisers, one of which you should consult with your question. You can find them from a list available on their trade association:

https://www.datev.de/kasus/First/Start? … ncation=42

From my limited layman understanding of the issue, you are performing a servce (and writing bills) to this agent, with both of you located in Germany - so clearly German tax law applies to the transaction. It doesn't matter, for this, that the agent sells your service on to a non-EU customer of his. Therefore, I am pretty sure that you have to register with the tax authority and pay GST ("MWSt" in German, generally 19% on most billed amounts). But for the details (and possible exemptions) you need the tax adviser!

Under a certain level of income one is considered a “Kleinunternehmer” or small business person and doesn't have to collect the value added tax known as Mehrwertsteuer AKA MwSt. If one is over this amount they do and then it can be 19%, or 7% depending on the business. The Finanzamt has a list. As a clown I need to charge 7%, some other types of performers 19%. And of course you have to submit this amount to the tax authorities but you are billing your agent for the VAT so it's not out of your pocket. You are just passing on what you collect; minus the MwSt you pay out on business expenses. Best you find a good tax advisor (Steurberater) to get you started correctly even if you manage afterwards to keep your own books and file tax returns.

Under a certain level of income one is considered a “Kleinunternehmer” or small business person and doesn't have to collect the value added tax known as Mehrwertsteuer AKA MwSt. If one is over this amount they do and then it can be 19%, or 7% depending on the business. The Finanzamt has a list. As a clown I need to charge 7%, some other types of performers 19%. And of course you have to submit this amount to the tax authorities but you are billing your agent for the VAT so it's not out of your pocket. You are just passing on what you collect; minus the MwSt you pay out on business expenses. Best you find a good tax advisor (Steurberater) to get you started correctly even if you manage afterwards to keep your own books and file tax returns.

@beppi

Thanks beppi.  Taxation is indeed a complicated thing.  I asked the same question to a tax account.  His response was that I do not need to pay VAT in this case, but his second response said otherwise !

I will check out the list of tax advisors for advice.