Artistic Services

The following explanations refer to miscellaneous services (as per Section 3 (9) UstG), such as performances and lectures. 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 Germany to other countries

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

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 and perform independent work abroad.

When artists based in Germany provide services (such as performances, lectures etc.) to clients based abroad, 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 in Germany provide services to clients based 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. 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. The qualified confirmation procedure of the German Federal Central Tax Office (BZSt) is recommended for this purpose.

 

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

The place of performance for services provided by independent artists based in Germany for clients based abroad (B2B) is not Germany. Whether value added tax must be paid abroad depends on the laws of the country in which the client is based.

Within the EU, the place of performance is often determined in accordance with German legislation, since this is based on an EU directive (Art 44 Directive on the VAT system). The place of performance is therefore based on the Place of Supply principle, i.e. the place where the client operates his or her business (Place of Supply principle).

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

The contract is thus concluded between two businesses (artist and company) (B2B). There is no exception and the place of performance is not Germany but presumably in Italy under Italian law.  Whether value added tax must be paid in Italy for the service depends on the law in Italy.


Who has to pay value added tax (who)?

The party responsible for paying value added tax for artistic services in the B2B sector depends on the national laws of the country in which the value added tax must be paid. Provided that the client is based abroad, the national laws of the respective foreign country apply.

Within the EU, the tax liability (who) is generally determined pursuant to the German regulation in Section 13 b (5) UStG, since this is based on an EU regulation (Art 64 (1) Directive on the VAT system). In the case of artistic services in the B2B sector within the EU, the recipient of the service, i.e. the client, is usually liable to pay the value added tax. This procedure is called the reverse-charge procedure.

If the place of performance is in a third country (where), the question of "who" (i.e. the tax liability) is determined by the national laws of the third country. Some countries have regulations that are comparable to those in Germany (e.g. Switzerland).

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

In the case of miscellaneous services rendered by a business (artist) based in Germany to a business based in Greece (orchestra), the recipient of the service (orchestra) is liable to pay the value added tax to the Greek tax authorities (Art 64 (1) Directive on the VAT system).

Notes on invoicing:
No value added tax is listed on the invoice. The German 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 Greece should therefore request a VAT ID (or a comparable certificate from a tax office in the case of a third country) to pass on to the service provider (the artist) (reference 1). Otherwise, the artist runs the risk of having to pay the value added tax again, depending on the activity in Germany (Registered Place of Business principle) or abroad (Place of Performance principle). 
The VAT ID must be checked for validity at the time of performance. The qualified confirmation procedure of the German Federal Central Tax Office (BZSt) is recommended for this purpose.

Sample wording regarding tax liability:
What is certain is that the place of performance is not Germany. This could be phrased as follows on the invoice: "According to Section 3 a (2) UStG, the place of performance is not Germany."
The following sample wording is only appropriate if the reverse-charge procedure applies under national law in the place of performance. The reference to the reverse-charge procedure must be included in the respective national language. The service provider should contact the client for assistance with this. The Chamber of Industry and Commerce (IHK) offers translations of the phrase "reverse charge" in all EU languages here.

English sample wording (we cannot accept any liability for the correctness of the English translation):
"According to Section 3 a (2) UStG, the place of performance is not Germany. This invoice is issued without value added tax, as the reverse-charge procedure applies. VAT must be declared and paid by the recipient of the service."

Note on the small business regulation:

The specific rules regarding the small business regulation depend on the national law of the foreign country in question.

If the artist is subject to the small business regulation in Germany, he or she may add a reference to his or her status as a small business but is not required to do so.


Note for cultural institutions and artists exempt from value added tax:

Whether the service is exempt from value added tax abroad, in accordance with the German regulation in Section 4 No. 20 a UStG, depends on the national law of the respective foreign country, since this only applies in Germany.

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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 according to German law 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 Germany gives a performance in the Netherlands 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; according to German law, the place of performance is thus not Germany (Section 3a (3) No. 3a UStG).

Example 2:
A performer from Germany performs at a children's birthday party/wedding (private individual) in Rome. The place of performance is determined based on the Place of Performance principle; according to German law, the place of performance is thus not Germany (Section 3a (3) No. 3a UStG).

The following applies to both examples: Whether the place of performance is located abroad (in this case: the Netherlands or Italy) depends on the law of the respective foreign country. However, the regulations in the EU are generally comparable with Section 3 (3) No. 3a UStG.


Who has to pay value added tax (who)?

The reverse-charge procedure does not apply to the B2C sector. The group and the performer from Germany must therefore check whether they must pay value added tax abroad under the law of the foreign country.

Note on invoicing:
The foreign value added tax payable abroad by the artist based in Germany may need to be listed on the invoice.