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Assume I'm a VAT registered sole trader in Austria working as a handyman. As a one off, I go to Germany and paint a wall for a non-business, that is consumer. Which VAT rate is applicable and how do I pay it to which country?

This EU help article doesn't help much. My gut feeling is that I will have to charge German (consumer country) rates and pay to the German state. But that means I'd have to register with the German authorities which seems quite a lot of effort just for painting one wall. One way out would be that I am treated just like an German sole trader who does not need to register for VAT unless they have an turnover exceeding 17.5k€ pa. But does that mean I could basically avoid VAT in every EU country up to the threshold?

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  • Before you start thinking I actually live in Austria and paint walls in Germany: All assumptions are for the sake of concreteness :)
    – Cornelius Roemer
    Sep 21, 2019 at 15:35

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Which VAT rate is applicable and how do I pay it to which country?

German - you provide services locally and physically in germany. You need to register with the german VAT authorities for that.

There are exceptions if you run a quite small invoice you STILL invoice it in Austria. There is basically a limit per year per country under which you can use your own country of residence. Unless "one wall" is something like "the berlin wall" (in size) it is quite likely that your one wall falls under this limit, provided you do not do any other significant business in Germany in this one year. You need to check for the exception, but IIRC (I only do B2B) the limit is around 10k€ per year per country.SOmething like that. APainting a wall will be barely 2000€ (and IIRC that is on the high end), unless - as I said - you are somehow on an unusual side (painting = artistic painting, i.e.) and not what someone would do as a handyman (i.e. slap some white paint on a wall in a room).

Ask your tax advisor. As registered business you sould pay someone to provide you legally binding (!) answers to this.

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  • 2
    There's not much left of the Berlin wall, and if you try painting it, you'll have bigger problems than VAT payment :-)
    – gnasher729
    Sep 21, 2019 at 13:50
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Having reviewed relevant EU legislation, the answer, though surprising, seems to be:

Place of Supply of Service is Germany (place where the painted wall is located), according to article 45 of Council Directive 2006/112/EC. Thus applicable rate is German rate payable to German authorities.

There is no small business exemption, despite this being a one-off because the small business exemption does not apply to businesses who are not established in the Member State in which the VAT is due, according to article 283(1)(c).

Here are the relevant EU legislation excerpts:

COUNCIL DIRECTIVE 2006/112/EC of 28 November 2006 on the common system of value added tax

Article 45 (Place of supply of services > Supply of services connected with immovable property)

The place of supply of services connected with immovable property, including the services of estate agents and experts, and services for the preparation and coordination of construction work, such as the services of architects and of firms providing on-site supervision, shall be the place where the property is located.

Article 283 (Special scheme for small enterprises > Exemptions or graduated relief)

  1. The arrangements provided for in this Section shall not apply to the following transactions: (c) supplies of goods or services carried out by a taxable person who is not established in the Member State in which the VAT is due.

Source: https://eur-lex.europa.eu/eli/dir/2006/112/oj

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