Invoice for consulting services for a USA company

Dear customer,

thank your very much for your request. Based on the information given by you, I’ve created an invoice draft, that you’ll find as an uploaded attachment. Please add your personell data (company name, adress, bank account, etc.). The description of services delivered and the amount should be changed, as neccesary. For example, if you have to charge extras, like expenses. The invoice number should be assigned on an ongoing basis. The customer ID should be assigned, if needed.

As your are doing your consulting business in germany, your are classified as an „entrepreneur“ in the meaning of German value added tax act (VATA). 

I understand, that you are doing a business to business consulting. In the following, you’ll find some basic information about the german VAT act:

1. Taxable Persons and Entities

The taxable person in the meaning of the VAT law is the entrepreneur. The term “entrepreneur” in the meaning of the VATA means everyone who performs a commercial or professional activity on an independent basis. This activity must be performed on a continuous basis and in order to achieve an income; however, a generation of profits is not required. An enterprise covers the entrepreneur’s entire activity; if several lines of business are operated by an entrepreneur all these activities are combined for value added tax purposes. However, it should be noted that an entrepreneur may also act as a private person, i.e. outside the scope of his enterprise.

2. Taxable Transactions

Turnovers in the meaning of the VATA include

• Supplies;
• Other services;
• Importation;
• Intra-Community transactions.

A supply is deemed to exist if the right of disposal of goods is transferred, provided that the entrepreneur acts within the scope of his enterprise against consideration. Transfers of goods (within an enterprise) to another EU Member State and withdrawals of goods for purposes outside the enterprise, for the entrepreneur or his employees, likewise qualify as delivery.

Other services are all services which do not qualify as delivery. The other service must be performed in the scope of an entrepreneur’s enterprise against consideration. Other ser­vices comprise both actions (e.g. a rendering of professional services by a member of a free profession) and omissions of an action (e.g. refraining from the exercise of an entrepreneurial activity by an entrepreneur against consideration). A use of goods or the execution of services for purposes outside of the enterprise or for the private use of staff without consideration qualifies as other service against consideration.

3. Place of Supply

Other services are generally taxable at the place from where the entrepreneur runs his enterprise. However, this general rule is ap­plicable to the extent only that no special rule applies.

In your special case, Evidon is an entrepreneur. The place of supply moves to the place where the customer runs his enterprise. In my understanding is that place in the USA.

That means, that you have to charge the fee without german VAT, as it is an non-taxable Transation.

4. Further Information

Just for clarification and to avoid missunderstanding: The attached draft invoice should be used exclusively for transactions with Evidon.

Please note, that there are further requirements from german tax authorities due to your business: e.g. monthly VAT declaration, income tax returns. I assume that your are basically familiar with that.

Do not hesitate to contact me for further questions in case of billing. You can also contact me for more information on other issues arising from the tax treatment.

Kind regards and a good start into the new year.

G. Grießhaber