German VAT or UK VAT

Glowria

I am a singer dancer on a 1 year contract in a show in Germany. The position was sourced for me through my uk entertainment agent who under contract is entitled to a percentage of my monthly gross wage. Added to that is VAT. Should the VAT be charged at UK rates or one of the German rates. Perhaps 7% for cultural category? I have German resident status and my work status is classed as employed by the German theatre company. Thank you for your help

DullGreyGuy

One really for an accountant with international tax knowledge but still...

Dont know German employment law but assuming its broadly inline with the UK as many things are thanks to our prior involvement in the EU, as an employee you will be paid a salary and there is no VAT on salary. 

So the VAT you are talking about therefore is on the bill from the Agency to you? Does your contract with them state its net or gross of VAT? 

VAT for international services is complex and it heavily depends on if the customer (which would be you in this case) is a business or a consumer. The general rule of thumb is that if you are a business then its where the supplier is (UK in this case) that drives the VAT whereas if you are a consumer then its where the customer is based (Germany).

It may be further complicated by if they are considered an intermediary

first step, read your contract with the agency.

Glowria

Correct re the employment. I am considered an employee and am subject to German taxes etc.
On a monthly basis I forward my payslip to the agent who calculates their fee, adds vat and sends me an invoice which I pay. This is in accordance with the contract. I was hoping that the German VAT rate would apply. Ah well!

DullGreyGuy

Glowria said:

Correct re the employment. I am considered an employee and am subject to German taxes etc.
On a monthly basis I forward my payslip to the agent who calculates their fee, adds vat and sends me an invoice which I pay. This is in accordance with the contract. I was hoping that the German VAT rate would apply. Ah well!

If you are considered a consumer, it might, but then German standard VAT is 19% so not a massive difference. 

You'd need to have a lot more information on the reduced rate VAT to know if it might apply or not given they are really in the employment sector not the arts. For example if I buy a train ticket its 0% VAT, but if I pass on the cost of the train ticket to my client I have to charge them 20% VAT because I'm not actually selling them a train ticket I am selling the service of me having to buy a train ticket and that isnt a zero rated service.  I see this as similar, they aren't in the arts, they find jobs for people, just so happens that some (or all) of those people are in the arts. 

Glowria

Thank you @DullGreyGuy! It’s kind of you to respond. I guess I have to pay up in this instance.

molerat

I think this covers it

https://www.gov.uk/guidance/vat-how-to-work-out-your-place-of-supply-of-services

The general rule and the place of belonging

For most supplies of services, the place of supply is decided by what’s known as the ‘general rule’. But some supplies are subject to special rules that will affect their place of supply.

The general rule for working out the place of supply of services, apart from those covered by special rules is if you supply services to a:

• business customer, the place of supply is the place where the customer belongs

• non-business customer, the place of supply is the place where the supplier belongs

penners324

If the agent is UK and is billing you as a person then UK VAT.

If they're billing you as a business that is VAT registered it's where that VAT Registration is.

Ounds like the former. Set up a UK VAT registration to claim it back?

Glowria

Thank you everyone. Im finding that the more I read and the more I learn, my situation could be a bit complicated. I am self employed and submit a tax return. I am not vat registered. I was uk based when I was submitted for the audition for the job. Now I have the job, I live in and am registered in Germany. The job is a contract for 1 year and I will pay German taxes as an employee. Towards the end of the contract I expect to be auditioning from Germany for other jobs which could be in any country. So from what I understand my agent is an intermediary (?) and I should be paying VAT of the country I am working in? I pay the agent on a monthly basis. Am I reading this completely wrong? I think I am going to have to speak to an expert in theatre accounts who may have the best understanding as they must have come across this countless times.