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Value Added Tax

Reverse Charge Procedure

The reverse charge procedure applies in the assessment of VAT on payments of compensation made by domestic promoters to foreign artists and production companies for revenues earned in Germany. This term describes the transfer of VAT liability from the paying business person to the recipient of business services. The VAT in this case does not fall on the recipient of the services but on the party owing compensation. The tax liability and pre-tax deduction eligibility both apply to that party and balance each other out directly.
 

 

 

The primary goal of this approach is combatting VAT fraud. In the case of “cross-border” earnings, the reverse charge procedure also leads to a lightening of the administrative burden for all parties involved in the transaction.

 

 

 

 
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