RA Johannes Fiala (Munich), Sandra Seremek (Eggenfelden) In addition to keeping records, professionals have to fulfil even more far-reaching recording obligations, for example under the Money Laundering Act. In addition, internationally active professionals are subject to additional special reporting obligations under the German Value Added Tax Act (Umsatzsteuergesetz) and the Foreign Trade and Payments Ordinance (Außenwirtschaftsverordnung). The main features are outlined below: I. Value Added Tax in the Internal Market Pursuant to § 1 I No. 1 UStG, services are subject to value added tax in Germany (= according to ö 1 II 1 UStG, the territory of the Federal Republic of Germany with the exception of customs-free territories) if 1. the person rendering the service fulfils the entrepreneurial status pursuant to § 2 UStG and 2. the place of paid services is in Germany pursuant to § 1 I No. 1 UStG.1 In the case of taxable services, the taxable person is required to provide certain information to the competent authority. 1) Entrepreneurs Entrepreneurs within the meaning of § 2 UStG are natural and legal persons, as well as associations of persons, insofar as commercial or professional activities are carried out independently by them. According to § 1 BRAO, a lawyer is an independent organ of the administration of justice who exercises a liberal profession and whose activity is not of a commercial nature according to § 2 BRAO.2 This applies accordingly to the tax consultant, § 32 II StBerG.The professional is thus an entrepreneur in the sense of ö 2 1 UStG. These requirements for entrepreneurial status are not limited to German professionals.3 2) Place of performance The services of an entrepreneur fall under the concept of other services which, according to § 3 IX in conjunction with § 3 I UStG, do not constitute supplies. The following principles must be distinguished in order to determine taxability; in addition to the place of performance, the type of performance, such as the recipient of the service, also has an effect on the taxability of the service.5 a) Principle of the place of business In principle, the principle of the place of business according to § 3 a) I 1 UStG in conjunction with § 21 AO is relevant. § 21 AO is relevant.6 Accordingly, the place of performance is the place from which the entrepreneur operates his business. In relation to a professional, this is the seat of his law firm.7 Exceptionally, according to § 3a) I 2 UStG, the permanent establishment of the enterprise is deemed to be the place of performance if the other performance is carried out by it and the corresponding turnover is actually attributable to it.8 Although the term “permanent establishment” refers to enterprises with commercial activities, an analogous application of the term to law firms of the legal professions is applicable, to which the turnover of the enterprise must be attributed.9 A distinction must be made here between independent and dependent permanent establishments or offices. While the aforementioned applies to the independent permanent establishment, services which economically emanate from dependent permanent establishments are not taxable.10 According to § 2 UStG, these do not constitute a business. It is important for this attribution that the other services have been carried out by the members of the dependent permanent establishment.11 Who or which part of the company has received the order, on the other hand, remains unconsidered.12 The consequence of the place of business principle is the taxation of the service in the country in which the registered office of the supplying company is located.13 The following services are covered by the place of establishment principle: – Advisory services to non-entrepreneurs in the EU territory14 This also includes the representation of clients before courts and authorities as well as contract negotiations15 , even if the litigation does not take place at the place of the registered office but at the place of jurisdiction 16 – Legal advisory services to non-entrepreneurs in the EU territory that are not typical for the profession 17
1Rademacher, Claudia, Grenzüberschreitende Leistungen von Anwalten und Steuerberatern im Umsatzsteuerrecht – Teil I, INF 1997, 385 (385) 2Ahrens, Hans-Jürgen, Die Stellung des Rechtsanwalts – Berufspflichten und prozessuale Fairneß, in: Gilles, Peter, Anwaltsberuf und Richterberuf in der heutigen Gesellschaft, Baden-Baden 1991, p. 21 3Pott, Hans-Michael/Geibel, Stephan, Umsatzsteuer und grenzüberschreitende Anwaltsleistungen, BRAK-Mitt. 1995, 149 (149) 4dito; Schultz, Florian, Umsatzsteuerausweis in Rechnungen international tätiger Anwalts- und Notarkanzleien, AnwBl. 1996, 553 (553) 5Schultz, Florian, Umsatzsteuerausweis in Rechnungen international tätiger Anwalts- und Notarkanzleien, AnwBl. 1996, 553 (553) 6Rademacher, Claudia, Grenzüberschreitende Leistungen von Anwalten und Steuerberatern im Umsatzsteuerrecht – Teil I, INF 1997, 385 (386); 6Pott, Hans-Michael/Geibel, Stephan, Umsatzsteuer und grenzüberschreitende Anwaltsleistungen, BRAK-Mitt. 1995, 149 (150) 7Pott, Hans-Michael/Geibel, Stephan, Umsatzsteuer und grenzüberschreitende Anwaltsleistungen, BRAK-Mitt. 1995,149 (150) 8Rademacher, Claudia, Grenzüberschreitende Leistungen von Anwalten und Steuerberatern im Umsatzsteuerrecht – Teil I, INF 1997, 385 (386) 9dito; Pott, Hans-Michael/Geibel, Stephan, Umsatzsteuer und grenzüberschreitende Anwaltsleistungen, BRAK-Mitt. 1995, 149 (150) 10Rademacher, Claudia, Cross-border services of lawyers and tax advisors in turnover tax law – Part I, INF 1997, 385 (386) 11dito 12dito 13dito 14dito (389) 15dito (387) 16dito (386)
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Dr. Johannes Fiala has been working for more than 25 years as a lawyer and attorney with his own law firm in Munich. He is intensively involved in real estate, financial law, tax and insurance law. The numerous stages of his professional career enable him to provide his clients with comprehensive advice and to act as a lawyer in the event of disputes.
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