tax-law germany labor-law
Responsibilities (legal and fiscal) for individual (based in Germany) hiring an international freelance contractor online
<p>Suppose that an individual hires a freelance contractor (through online platforms like Fiverr, UpWork, or Freelancer.com). The contractor may be from any country and may or may not have a regular VAT.</p>

<p>In Germany, does the individual that purchases the service have to pay any taxes or social security contributions (or in general any other fiscal, legal, or bureaucratic responsibilities)? </p>

<p>IANAL, and no tax advisor neither. The following are bits and pieces of knowledge picked up as freelancer and business owner located in Germany.</p>

<hr>

<p>I'm going to read "individual" as private individual, so a B2C contract (as opposed to the owner of a business that is not considered separate from the individual - which would be a B2B situation and very different in terms of VAT).</p>

<blockquote>
  <p>does the individual that purchases the service have to pay any taxes or </p>
</blockquote>

<ul>
<li><p>If the services are provided B2C inside EU -> Germany, the freelancer has to charge the appropriate VAT. Which one that is depends on actual situation, can be German or VAT of the freelancer's country, or no VAT if the freelancer is exempt (in which case the invoice needs to state that).<br>
The <a href="https://ec.europa.eu/taxation_customs/business/vat/eu-vat-rules-topic/where-tax_en" rel="nofollow noreferrer">EU has an info page about VAT rules for sales inside the EU</a></p></li>
<li><p><a href="https://www.bzst.de/DE/Unternehmen/Umsatzsteuer/eCommerce/ecommerce_node.html" rel="nofollow noreferrer">B2C e-services from outside the EU -> Germany: German VAT is due and the freelancer has to charge it.</a> </p></li>
<li><p>In some cases, the individual would have to do an income tax withholding i.e. deduct money from the bill and send it on behalf of the freelancer to the German Federal Central tax office (Bundeszentralamt für Steuern), see <a href="https://www.gesetze-im-internet.de/estg/__50a.html" rel="nofollow noreferrer">§50a EStG</a>. This may come into play if the freelancer sells a license.</p></li>
</ul>

<blockquote>
  <p>social security contributions </p>
</blockquote>

<p>Iff the freelancer is properly set up as business they are responsible for their social security themselves. </p>

<h3>Where to really find out? (Don't trust random strangers on the internet...)</h3>

<blockquote>
  <p>(or in general any other fiscal, legal, or bureaucratic responsibilities)?</p>
</blockquote>

<p>I've made good experience with <strong>asking my tax office</strong> whether there's anything special I need to be aware of in terms of taxes/whether I have to report something and which form as I'm in the following situation ... . They are usually friendly and helpful nowadays as long as you don't ask them for advise on how to avoid taxes.  </p>

<p>When buying a software license from outside the EU, my experience with <strong>asking customs</strong> is medium-good: they told me that as my license was provided over the internet (as opposed to a CD being shipped), customs is not involved at all (correct) and that I don't need to do anything special (that part missed said §50a EStG). </p>

<p>Conclusion: customs can probably correctly tell you about what is their concern (import/export of goods and black work would be the relevant in the context of this question), but not necessarily about tax-related specialties. So maybe ask the tax office as well.</p>

<p>BTW: my tax advisor had missed that §50a as well...</p>

<p><strong>Assumptions</strong>:</p>

<ul>
<li>the <strong>customer</strong> is in one EU-Country</li>
<li>the <strong>freelancer</strong> is in another EU-Country</li>
</ul>

<hr>

<p>The freelancer will send a bill to the customer.<br>
This bill will contain 2 tax numbers</p>

<ul>
<li>1st: the tax number of the freelancer

<ul>
<li>the country of the freelancer will get any income tax etc. due</li>
</ul></li>
<li>2nd: the VAT number

<ul>
<li>the country of the customer will recieve the VAT due</li>
</ul></li>
</ul>

<p>After the customer pays the bill, they have no further obligations to the freelancer.</p>

<p>The freelancer must pay any tax or social security contributions from the sum paid with the bill. </p>
