Invoicing in the EU

Hi all,

I’m a freelancer and I’ve been to-ing and fro-ing from Germany in my spare time but my work is all done in the UK, for the UK, and I pay UK tax, etc, etc.

I just finished some work for my girlfriends company situated in Germany, none of it was on site, it was all via remote in sunny(ish) London. Specifically some 3D rendering.

I’m a bit confused about invoicing though, I thought I could just send the invoice like I do to any company in the UK, but apparently they need a registration number for my business … but I’m a UK freelancer and don’t have any kind of registration number beyond my registration with HMRC.

I don’t separate tax on the invoices or anything like that, the price is the price and that is it. I breakdown the task so they can see where the money is spent but that is all.

Does anybody have experience invoicing overseas?
Specifically to Germany if possible, I’ve been doing a lot of reading and it sounds like I may have to register in some way for something, but this is just a one-off job for now.

For the money, it sounds like it is becoming too complicated to deal with for now.

Any insight is appreciated, as I’d like to avoid this getting messy.
Cheers.

The registration number they are asking for is your VAT number.

Are you registered for VAT in the UK? If not, advise them of that fact. That should be the end of the story.

If you are registered, then you should be printing your registration number on your invoices as a matter of course. You should also show the VAT separately. This is a normal requirement, and is not specific to Germany. In fact, if you are registered for VAT, yuo shouldn’t need to ask the question; you should have read the VAT rules regarding invoicing, and you should have been applying them from the start.

Mike

Okay great, that is exactly what I thought.

I’m not VAT registered as I can only hope to earn enough to reach the threshold, and as an option I choose not to for now.

I’ve read over and over about tax, what to do and the issues involved, and I thought I was doing it correctly. People have told me to get an accountant to deal with all the issues regarding invoicing and tax, but I don’t earn enough (or consistently) so far to justify it. I’m hoping as things improve I can “upgrade”.

Thanks for the advice, I’ll see if I can find some specific references somewhere to forward onto them.

MT

I’m glad you found my advice useful. A couple of follow-up points:

I’ll see if I can find some specific references somewhere to forward onto them

I wouldn’t bother. Just tell 'em you are not VAT-registered. They will understand.

People have told me to get an accountant to deal with all the issues regarding invoicing and tax, but I don’t earn enough (or consistently) so far to justify it. I

I agree that you probably couldn’t justify paying an account for this sort of advice. It would be better for you to learn and understand the issues for yourself. VAT, in particular, is not particularly difficult to understand, and in the UK the government publish plenty of advice in non-technical language to help small businesses. The decision whether to register or not is purely a matter of weighing up the pros and cons. I registered for VAT (many years ago) because it was (and still is) cost-effective for me to do so, but all businesses are different, and it’s a decision each will have to make for themselves.

Mike

This seems to explain the situation fairly clearly - your client in Germany should apply the ‘Reverse Charge’ procedure. Basically it’s not your problem as you are not VAT registered - your client needs to talk to their accountant.

BTW, make sure you read up on the VAT rules around electronically supplied services as there are many examples of work you may do that is outside of scope of UK VAT and hence does not count towards your annual ‘taxable supplies’ threshold.

Thanks shadowbox, that link will help a lot.

I’ll check on the electronic services thing too to make sure.

MT

UK is not in the Union and ‘Reverse Charge’ does not apply. The invoice needs to carry out VAT because the company who receives the service is VAT registered and they need to report. I guess you need to register too. Try out with an LTD.

What are you talking about? Of course the UK is in the EU:

No company in the UK is required to be VAT registered unless their taxable supplies for the past 12 months exceed a specific threshold. You do not need to be VAT registered in order to do business with a VAT registered company.

Yes. I was under the impression they were not because they keep their own currency. My fault.