Invoicing missing a Tax ID
Thread poster: Gary Evans

Gary Evans  Identity Verified
Germany
Local time: 23:52
Member (2007)
German to English
Nov 16, 2009

I recently outsourced a translation via Proz, but the translator has not included their tax ID on their invoice.

This concerns a transaction within Germany. I advised the translator that I need their tax ID according to German law, but they responded that they do not have to pay VAT as they are a small business AND therefore also do not have to issue invoices to recieve payment.

I checked their website on their invoice and it does not exist. I also checked their German bank account and it is a private account.

How can I settle this issue as the translator has now become abusive and quite threatening?
Should I insist on a valid tax number or just pay up?


 

Astrid Elke Witte  Identity Verified
Germany
Local time: 23:52
Member (2002)
German to English
+ ...
What country is the translator in? Nov 16, 2009

Hi Gary,

Is the translator also in Germany? If so, and he/she is not registered for VAT, you would need either the normal Steuernummer or the new personal ID issued by the Bundeszentralamt für Steuern last year.

Best regards,

Astrid


 

RobinB  Identity Verified
United States
Local time: 16:52
German to English
I think it's OK Nov 16, 2009

Gary,

AFAIK Kleinunternehmer don't have to quote any tax number on their invoices, see e.g.

http://www.darmstadt.ihk24.de/produktmarken/starthilfe/steuerinfo/Steuern/anlagen/Steuernummer2.pdf

However, the invoice must include a statement to the effect that the Leistungserbringer is a Kleinunternehmer, e.g. "Umsatzsteuerfreie Leistungen gem. § 19b UStG".

Gary Evans wrote:
I checked their website on their invoice and it does not exist. I also checked their German bank account and it is a private account.


Plenty of small businesses have websites that either don't exist or are under construction. The fact that it's a private bank account is irrelevant. As long as the invoice is otherwise OK (in particular the correct name and address of the service provider), there's no barrier to payment.

But how on earth did you find this translator in the first place? Normally, things like websites, tax status, etc. are things are clear up *before* you place an order...

HTH,
Robin


 

Gary Evans  Identity Verified
Germany
Local time: 23:52
Member (2007)
German to English
TOPIC STARTER
Translator is in Germany Nov 16, 2009

Hi Astrid,

Yes they are in Germany. The address is German as well as the bank account etc.

The translator unfortunately made a bad job of the work, missed the deadline and then withheld the files until they got an extended deadline (some might call this blackmail).
They then delivered, but the work was full of silly errors and the formatting was a mess.

So I have other issues alongside that of tax numbers, but I cannot pay them if they do not provide me with an invoice containing a tax number, or is there some other solution?

That was my original question, which is still not completely answered, but thanks for your reply, which I assume is the case: They must provide a valid tax number!

This is the information I found (in German) about what an invoice must contain:

http://bundesrecht.juris.de/ustg_1980/__14.html

Regards,
Gary


 

Gary Evans  Identity Verified
Germany
Local time: 23:52
Member (2007)
German to English
TOPIC STARTER
Would like clarity on this Nov 16, 2009

Hi Robin,

Thanks, I read the document your link refers to and it seems to be unclear just what the law is!

Maybe you are right though. Kleinunternehmer do not have to include their tax number ( I thought this just related to VAT exemption, not income tax), but how come my source (and my local Finanzamt) tell me otherwise?


 

Astrid Elke Witte  Identity Verified
Germany
Local time: 23:52
Member (2002)
German to English
+ ...
Yes, that is the proper information, that you found there Nov 16, 2009

Hi Gary,

I am familiar with that link. I think that is where I got my information originally. As it says, either the VAT ID or the normal Steuernummer should be given on the invoice. However, there is the new number as well now, which is also sufficient identification, since it is a unique number. I would personally insist upon the Steuernummer.

As for paying for work that is not up to standard, it is advisable to do so, for a number of reasons. I have myself paid for work that did not merit any payment. I have, among other things, a Blue Board record to maintain - and somebody will also put you on the Blue Board very soon if you are not on it already. Also, the business risk lies with the person outsourcing the work.

Perhaps you could quote the link you mention to the translator and say that that is what you expect the invoice to contain.

In the case of someone not VAT-registered, their invoice should also contain the statement that Robin mentions.

Actually, I am astonished that Robin says no tax number is needed. Nevertheless, he is a kind of expert on the subject, and you should probably take more notice of him than of me, or look at the link he quotes.

Hope you do not have too much more trouble about it.

Astrid


 

Gary Evans  Identity Verified
Germany
Local time: 23:52
Member (2007)
German to English
TOPIC STARTER
Already informed them, but to no avail Nov 16, 2009

Hi Astrid,

Thanks again. I did send them the link, but their reply just accused me of being "an arrogant foreigner" in attempting to inform them of German law.

Really this has gone beyond a joke. Anyone could produce complete rubbish and present a duff invoice expecting full payment. Is this what we should expect?

BTW. I asked Proz about reporting bad translators and was told that Proz only allows positive comments as it is merely a marketing organisation. So cowboys can get away with extremely shoddy practices and we have to pay them! Incredible.


 

Derek Gill Franßen  Identity Verified
Germany
Local time: 23:52
German to English
+ ...
Rules and Exceptions Nov 16, 2009

Gary Evans wrote:
This is the information I found (in German) about what an invoice must contain:

http://bundesrecht.juris.de/ustg_1980/__14.html


Remember that, as is the case in all legal systems, the statute you are looking at may not even apply (section 14 subsection 1 number 2 is not exactly clear) and, if it does, there may be exceptions: See, for example, sections 19 and 14a, both of which list various exceptions to various rules.

Note: I'm not saying that these exceptions apply here, but there are exceptions. In fact, section 19 even says that section 14 subsection 4 does not apply and, although one could certainly argue that the lawmakers really did mean the entire subsection, they probably meant just section 14 subsection 4 number 8.

Also, the whole point of these rules is to secure the State's entitlement to taxes and they do not have much to do with what the parties actually owe each other.

And what happens if the section you mentioned is violated? Well, the amount the recipient of the invoice owes does not just vanish. The code itself provides for a small fine that can be assessed by the State (see http://bundesrecht.juris.de/ustg_1980/__26a.html ). But nowhere does it say that the recipient of the invoice doesn't have to pay.

Whether you should pay for substandard work is an entirely different question.

Your best bet would probably be to ask an attorney or tax consultant who you trust.

Good luck!icon_smile.gif

[Edited at 2009-11-16 15:52 GMT]


 

Gary Evans  Identity Verified
Germany
Local time: 23:52
Member (2007)
German to English
TOPIC STARTER
More rules to read! Nov 16, 2009

Thanks Derek,

Obviously the situation with tax ID's is less clear than many believe.

No wonder then that most Germans do not understand the tax system! I just read the link you sent me and I'm still none the wiser!

BTW. I do intend to pay them, minus my work correcting their mess, but I wanted to clear up this uncertainty regarding tax numbers. My concern is that I will end up paying the tax due on their work when it is not my responsibility.


 

Derek Gill Franßen  Identity Verified
Germany
Local time: 23:52
German to English
+ ...
OT Nov 16, 2009

On a side note: This client of yours really is being difficult. The person most certainly has a personal tax identification number (not to be confused with a VAT-ID-no.) and could just give it to you, if for nothing else than to put you at ease.

I am considered a "small business" according to German tax law, and I do not to have a VAT-number, but I do include my personal tax ID-no. on my invoices (I've never really looked into whether I need to or not) and, as Robin correctly points out, that I do not charge VAT because of section 19.

What happens on the side of the German IRS is this: When they audit a company, they randomly select invoices and circle the ID-nos. (or names, if the numbers are missing), adding the note "Kontrollmitteilung," which means that they then check on that person's (or company's) returns to see if they also reported the earnings or, if applicable, VAT.

While I was there I had a case where a new attorney (!) had charged VAT, but had failed to report and forward the tax to the IRS, which is even worse than not reporting it. Even if you do not have to (as a small business), once you charge VAT, then you have to give it to the IRS. He claimed not to really know how the whole VAT-system worked and just assumed that, as a businessperson, one "got" to add 19%.

icon_biggrin.gif

[Edited at 2009-11-16 17:54 GMT]


 

RobinB  Identity Verified
United States
Local time: 16:52
German to English
BMF document Nov 16, 2009

Gary Evans wrote:
Thanks, I read the document your link refers to and it seems to be unclear just what the law is!


The law is what the BMF says it is, until the courts decide otherwise. That's the way it works....

but how come my source (and my local Finanzamt) tell me otherwise?


Perhaps you could quote this BMF-Schreiben to them (it was also published in the BStBl) and see what they say. Other than that, I'm afraid I can't really give any more advice. We have absolutely nothing to do with Kleinunternehmer (at least in Germany, where the threshold is still pretty low), so don't keep abreast of any developments in that area. Personally, I always throw tax questions straight at our StB (and *never* in some online platform like ProZ!), who at least is liable if the answer is incorrect...

Robin


 

PCovs
Denmark
Local time: 23:52
Member (2003)
English to Danish
+ ...
Just found this Nov 17, 2009

http://www.emwa.org/JournalArticles/JA_V17_I2_Lang1.pdf

I hope the link works - see the second page here under invoicing, where this guy explains what must be stated on the invoice.

Hope it helps.icon_wink.gif

New link - hope it works better.

[Edited at 2009-11-17 08:28 GMT]


 

Gary Evans  Identity Verified
Germany
Local time: 23:52
Member (2007)
German to English
TOPIC STARTER
I'd say I have enough info now Nov 17, 2009

Thank you Derek, Robin & PCovs for the advice.

RobinB - In my case I trust the Finanzamt are correct. An invoice must include a tax ID.

Derek - Yes, difficult is an understatement in this case! This person claims to be a VAT-exempt small business, but seems to have issued over 65,000 invoices this year!

DCovs - The article you linked to cites my original Bundesministerium source , but thanks anyway! I will assume it is factually correct.


 

RobinB  Identity Verified
United States
Local time: 16:52
German to English
Caution Nov 17, 2009

Gary Evans wrote:
RobinB - In my case I trust the Finanzamt are correct. An invoice must include a tax ID.


Gary,

Please note that you should *never* rely on informal guidance provided by a Finanzamt. It's often wrong (many Finanzbeamten are just as confused about aspects of tax law as the rest of us - we have experienced several cases where we actually knew more about the relevant tax rules than the people at the Finanzamt!) and, because the guidance is non-binding, you have absolutely no recourse whatsoever if turns out to be 100% wrong. The only way to obtain binding guidance is to pay for it, and (apart from very large companies) the Finanzbehörden will only provide binding guidance to a Steuerberater.

That's why it's always best to bypass the Finanzamt (and even more so to avoid online forums) and go straight to your Steuerberater, who will be in a position to provide or obtain binding guidance - and if they're wrong, and you suffer financial loss as a result, you will be compensated.

Robin


 


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