EU, abroad & reverse charge · 5.5

Paying Freelancers Abroad: What Do I Need to Consider?

Short answer

If your GmbH pays a freelancer abroad, reverse charge generally applies: they issue an invoice without VAT, your GmbH reports the tax itself and deducts it as input tax (Vorsteuer). In special cases, you must also withhold tax.

Key points

Invoice: Make sure to get a proper invoice with full name, address, and, for EU freelancers, VAT ID (USt-IdNr.).
VAT: Reverse charge applies, regardless of whether the freelancer is considered a small business owner (Kleinunternehmer) in their home country.
Withholding tax (Abzugsteuer): If the freelancer grants you rights of use, such as licenses for photos, music, or software, or performs in Germany, your GmbH may be obligated to withhold tax and remit it to the Federal Central Tax Office (Bundeszentralamt für Steuern). Check this prior to payment.
Bogus self-employment (Scheinselbstständigkeit): If someone works like an employee, solely for you and following your instructions, issues may arise—especially if they work in Germany.
Contract: A written service or works contract (Dienst- or Werkvertrag) regulating rights of use protects both sides.

Legal basis

§ 13b UStG§ 50a EStG§ 7 SGB IV

Continue

Next video: How do I check a VAT ID?
Related: What is Reverse Charge (§ 13b UStG)?

With Pluto

Pluto books invoices from foreign freelancers as reverse charge.

Try it for free

← Back to topic