Artistic Services

The following explanations refer to miscellaneous services (as per Section 3 (9) UstG), such as performances and lectures, provided by artists based abroad to clients based in Germany.

Information on the taxation of deliveries of works of art and on remuneration for the granting of rights of use can be found here:

Deliveries of works of art from other countries to Germany

Granting of rights of use by artists based abroad to licensees based in Germany

Please note!
Performing artists in particular may be subject to employment relationships, i.e. permanent positions. The following explanations apply only to artists who are self-employed or perform independent work in Germany.

When artists based abroad provide services (such as performances, lectures etc.) to clients based in Germany, the question of whether these clients are businesses/cultural institutions/associations (B2B: Business to Business) or private individuals (B2C: Business to Consumer) makes a difference.

As with all cross-border transactions, it is necessary to determine the country in which value added tax must be paid (where) and who must pay this tax (who).

Please note: EU – third country (outside the EU)
Under German law, whether the artists based abroad reside in a Member State or a third country (outside the EU) plays a role neither in determining where the value added tax must be paid (where) nor who is liable to pay the value added tax (who).

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B2B (Business to Business)

B2B refers to a delivery or miscellaneous service performed by a business person in return for a fee within the scope of his or her business. Artists are also usually business persons.

If clients who are based in the EU do not use a VAT ID number in transactions with an artist, the artist can generally proceed on the assumption that the clients are not business persons unless informed otherwise (Section 3a.2. UStAE). In this case, the explanations regarding Business to Consumer (B2C) transactions apply. 

A VAT ID is assigned to any business person within the EU upon request (only in his or her own country of residence) and is regarded as an attribute of a person's entrepreneurial status.
The VAT ID must be checked at the time of delivery.

 

In which country must value added tax be paid (where)?

Three distinct principles apply when determining the place of performance: the Registered Place of Business principle, the Place of Supply principle and the Place of Performance principle. The Place of Supply principle and the Place of Performance principle are of particular importance with regard to B2B transactions.

Place of Supply principle

Independent artistic services are generally performed where the recipient of the service operates his/her business, in this case the company based in Germany (Place of Supply principle Section 3a (2) UStG). 

Example:
A dancer based in Italy signs a contract with a company based in Germany to perform in Germany.

The contract is concluded between two businesses (artist and company) (B2B). There is no exception and the place of performance depends on the Place of Supply principle pursuant to Section 3a (2) UStG. The place of performance is Germany, as the company is based in Germany. German value added tax must thus be paid to a German tax office.

 

Who has to pay value added tax (who)?

In the case of miscellaneous B2B services, the recipient of the service, i.e. the client (customer) must pay the value added tax (cf. Section 13 b (5, 1, 2) No. 1 UStG), unless an exception applies. This procedure is called the reverse-charge procedure.

Example:
A musician from Greece signs a contract for a performance with an orchestra based in Germany. 

In the case of miscellaneous services rendered by a business (artist) based abroad to a business based in Germany (orchestra), the recipient of the service is liable to pay the value added tax to the German tax authorities (Section 13 b (5,1,2) UStG)

Notes on invoicing:
No value added tax is listed on the invoice. The Greek artist should list his own VAT ID, the organiser's VAT ID and a note referencing the reverse-charge procedure. The recipient of the service in Germany should therefore request a VAT ID to pass on to the service provider (the artist) (Section 3a.2. UStAE). Otherwise, the artist runs the risk of having to pay the value added tax again, depending on the activity in Germany (Place of Performance principle) or abroad (Registered Place of Business principle). 
The VAT ID must be checked for validity at the time of performance.

Sample wording regarding tax liability:
This invoice is issued without value added tax, as in this case the reverse-charge procedure applies (reverse-charge procedure pursuant to Section 13 b (5) UStG). The value added tax must be declared and paid by the recipient of the service (tax liability of the service recipient).


Note on the small business regulation:

  • It does not matter whether the recipient of the service is a small business owner pursuant to Section 19 UStG, cf. Section 19 (1) (3) UStG. He or she must pay the value added tax for the performance in Germany by the artist based abroad regardless of his or her status as a small business owner. The recipient of the service must request a VAT ID from the Federal Central Tax Office for this purpose. Applying for the VAT ID does not automatically lead to the loss of one's small business status.
  • It is also irrelevant whether the artist providing the service is subject to the small business regulation in his or her country, since only German VAT law applies. Therefore, the small business regulation is only applicable to business persons based in Germany (cf. Section 19 (1) UStG).


Note for cultural institutions and artists exempt from value added tax (pursuant to Section 4 No. 20 a UStG):

  • When it comes to tax liability, it does not matter whether the recipient of the service provides VAT-exempt transactions in Germany (e.g. according to Section 4 No. 20 a UStG). He or she must pay value added tax in Germany for the service provided by the artist based abroad, irrespective of his or her exemption status. The recipient of the service must request a VAT ID from the Federal Central Tax Office for this purpose. Applying for the VAT ID does not automatically mean that the exemption concerning his or her own income no longer applies.
  • However, the recipient of the service does not have to pay value added tax for services provided by the artist based abroad if these services are tax-exempt under German value added tax law. The regulations pertaining to VAT-free transactions are also applicable to artists based abroad. In practice, the tax-exempt transactions defined under the following regulations are most relevant in this regard:

    • Section 4 No. 20 a UstG: actors, theatre groups, dancers etc., provided that they perform the same cultural services as theatres;
    • Section 4 No. 20 b UStG: organisers
    • Section 4 No. 22 UstG: to a certain extent, workshops organised by non-profit associations, provided that the proceeds are used mainly to cover costs or, in the case of cultural events, that the fee takes the form of a participation fee;
    • Section 4 No. 26 b UStG (volunteering allowance; "Ehrenamtspauschale"): remuneration for voluntary work.

Example:
A group from Berlin conducts tax-exempt transactions pursuant to Section 4 No. 20 a UStG. It concludes a contract with a dancer from Sweden.

The group from Berlin must pay value added tax for the dancer from Sweden unless the Berlin Senate Department for Culture and European Affairs certifies that the Swedish dancer fulfils the same cultural mandate as a theatre according to Section 4 No. 20 a UStG and that the tax office thus considers her income to be exempt. In practice, it is advisable for the dancer to grant the group power of attorney and for the group to submit a corresponding application on behalf of the dancer (see "Notes on the application process) to the competent state authority (often the local cultural office).

Important!
Even groups and theatres that are subject to value added tax may submit such an application on behalf of an artist based abroad.


Notes on the application process:

  • Although applications need not follow any particular form, the following information should be included:

    • the names and addresses of the artists or associations in question and
    • the location and date of the performance;
    • a short biography, list of artistic activities and press releases about the artists in question.

  • The application for the certificate pursuant to Section 4 No. 20 a UStG must be submitted to the competent state authority.
  • The certificate can be issued retroactively for a period of four years, i.e. until the statute of limitation on assessment (Feststellungsverjährung) according to the rules of the German tax code (Abgabenordnung; AO) has expired.
  • If foreign theatres and orchestras or even individual artists are to perform at different locations in Germany, a certificate from the state authority in whose catchment area the foreign theatre/orchestra or individual artist first becomes active in Germany is sufficient, e.g. in the case of a tour: location of the first performance.


Note on invoicing:

No value added tax is listed on the invoice. The Swedish artist should list her own VAT ID, the group's VAT ID and a note referencing the reverse-charge procedure. The recipient of the service in Germany should therefore request a VAT ID to pass on to the artist providing the service (Section 3a.2. UStAE). Otherwise the artist runs the risk of having to pay the value added tax again in her country.   
The VAT ID must be checked for validity at the time of performance. A note referencing the exemption pursuant to Section 4 No. 20 a UStG will not be added to the invoice.

Sample wording regarding tax liability:
This invoice is issued without value added tax, as in this case the reverse-charge procedure applies (reverse-charge procedure pursuant to Section 13 b (5) UStG). The value added tax must be declared and paid by the recipient of the service (tax liability of the service recipient).

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B2C (Business to Consumer)

The term B2C is used when the recipient of the service is not a business person (Business to Consumer).

 

In which country must value added tax be paid (where)?

As previously mentioned, three distinct principles apply when determining the place of performance: the Registered Place of Business principle, the Place of Supply principle and the Place of Performance principle. 

 

Place of Performance principle

In the case of cultural, artistic, scientific, educational etc. services provided to a private individual (B2C), the place of performance is determined based on the Place of Performance principle, i.e. the place where the service is actually performed. This also applies where the artist or group performing is/are also responsible for organising the performance (Section 3a (3) No. 3a UStG).

Example 1:
A group from Hungary gives a performance in Germany and also functions as the organiser (it sells the tickets itself etc.). The audience consists of private individuals. The place of performance is determined based on the Place of Performance principle, i.e. Germany (Section 3a (3) No. 3a UStG).

Example 2:
A performer from Italy performs at a children's birthday party (private individual) in Bremen. The place of performance is determined based on the Place of Performance principle; i.e. Germany (Section 3a (3) No. 3a UStG).

 

Who has to pay value added tax (who)?

The reverse-charge procedure pursuant to Section 13 b (5) UStG does not apply to transactions with private individuals. In this case, the following principle applies: the person who provides the miscellaneous service and issues the invoice (or who sells admission tickets to private individuals) is liable to pay the value added tax (Section 13 a (1) No. 1 UStG).

The group from Hungary and the performer from Italy must therefore pay German value added tax in Germany and register accordingly with the German tax authorities.

The responsible tax offices can be found here: tax offices responsible for businesses based abroad.

Note on invoicing:
German value added tax is listed on the invoice and, as explained above, must be paid to the German tax authorities by the artist based abroad.