Administrative services A-Z

forms:

Application - no

Certificate - yes

Online procedure possible:

Application - no
Verification of the certificate - yes

Written form required:

Application - no
Certificate - yes

Personal appearance required: no

If you provide a construction service in Germany to another entrepreneur within the meaning of § 2 of the German Value Added Tax Act (UStG) or to a legal entity under public law, they are obliged to make a tax deduction of 15% from the consideration, which usually consists of a cash payment, for your invoice. The tax deduction must be paid directly to the tax office. The tax withheld will later be credited against any taxes you owe. You only receive the invoice amount reduced by the tax deduction from the recipient of your service.

The recipient of the construction work must submit a tax return to the tax office by the tenth day after the end of the month in which the counter-performance is made and pay the deduction amount calculated by himself to the tax office for your invoice. The recipient of your service must settle with you, stating your name and address, the invoice amount, the invoice date and the payment amount, the amount of the tax liability and the tax office with which the tax deduction has been registered. You will receive a corresponding settlement statement from the latter. The service recipient is liable for a deduction amount that has not been paid or has been paid too little.

The service recipient does not have to withhold tax if the consideration to be paid to you is not expected to exceed EUR 5,000 in the current calendar year. This exemption limit is EUR 15,000 for a service recipient who only carries out tax-exempt sales from renting and leasing (§ 4 no. 12 sentence 1 UStG). For the application of these exemption limits, all of your construction services rendered to this service recipient in the current calendar year must be added together. If the service recipient is a landlord of apartments, the tax deduction is only to be made if he rents out more than two apartments.

By submitting an exemption certificate for tax deduction for construction work, the recipient of your construction work is exempt from the deduction obligation described above. In this case, he does not have to make the tax deduction for construction work and owes you the invoice amount in full.

You can apply to the tax office for an exemption certificate for the deduction of tax on construction work in accordance with Section 48b (1) sentence 1 of the German Income Tax Act (EStG). The responsible tax office is the one in whose district you have your residence or, in the absence of a residence, your habitual abode.

The tax office can issue the certificate for a maximum period of three years.

By presenting a valid certificate to the recipient of your construction work, the recipient is exempted from the obligation to withhold tax. The recipient of the service has the option of checking the validity of the exemption certificate to ensure that there is no liability risk. This is done by an Internet query at the Federal Central Tax Office using the printed security number.

You provide construction services in Germany, have appointed a domestic receiving agent and the tax claim does not appear to be at risk from the point of view of the tax office because you comply with your duty to provide information in accordance with Section 138 of the German Fiscal Code (AO) and your duty to provide information and cooperate in accordance with Section 90 AO.

The responsible tax office determines whether the aforementioned requirements are fulfilled

If you are resident abroad and provide construction services in Germany, proof of tax residency must also be submitted by means of a certificate from the foreign tax authority responsible for you.

As a rule, no documents are required, as the tax office has the information it needs to examine the application. Only in the case of a newly established company is the submission of further documents required by the tax office.

As a contractor, you can apply to the tax office for an exemption certificate for the deduction of tax on construction work. The application is not bound to any form. The tax office checks whether the requirements for issuing the certificate are met. If the requirements are met, the tax office issues the corresponding certificate. You will usually receive this by post. The certificate is to be presented to the recipient of the construction work and exempts him from the obligation to deduct tax when making use of construction work. Each exemption certificate for the deduction of tax on construction work is provided with a unique security number. The client can use the security number to check the validity of the certificate on the website of the Federal Central Tax Office (BZSt).

Resident tax office of the service provider

Section 48b (1) sentence 1 Income Tax Act

• § Section 48b of the Income Tax Act (EStG)

As a performing contractor, you apply for the issuance of the exemption certificate for construction services at the tax office. The application is not subject to any formal requirements. The tax office checks whether the requirements for the certificate are met and issues the certificate requested.

The Federal Central Tax Office provides further information under the following link.

Further information from the BZSt

• Federal Central Tax Office

Ministry of Finance and Europe of the State of Brandenburg