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Uniform VAT for Main and Ancillary Services
Generally speaking for service companies:
It is rare for different tax rates to be applied simultaneously on an invoice. Typically, we refer to main and ancillary services.
English image not yet available... Ancillary services are those that do not have their own economic purpose.
They are
- Incidental compared to the main service
- Closely related to the main service
- Enhancements, improvements, or complements to the main service
- Usually provided together with the main service
The cost ratio between the main and ancillary services is irrelevant for assessment. The cost of the ancillary service can be higher than that of the main service.
Rule of thumb: The ancillary service shares the same tax rate as the main service.
According to the law, the ancillary service shares the tax fate of the main service. In other words, how the main service is assessed for VAT purposes determines the tax treatment of the entire service. Therefore, only the tax rate applicable to the main service is applied.
This applies in Germany, as well as in Switzerland and Austria.
Specific examples include:
- Personal expenses such as travel costs (ancillary service) related to a consulting service (main service)
- Printing costs (ancillary service) for magazine design (main service)
- Hosting or image material for website development
- Packaging and postage costs (ancillary services) for the delivery of items (main service)
- Artists' social security contribution (KSK)
Should additional services like personal expenses be billed with gross or net amounts?
Neither is explicitly required. This can be determined individually or agreed upon with the client.
It is common
- for VAT-liable companies to charge expenses at their net value, so the client does not have to pay tax on tax.
- for non-VAT-liable companies to charge gross, as the invoicing party cannot claim input tax deduction and would have to bear the VAT themselves.
Original receipts must remain with the invoicing party
The original receipts for the recharged additional services should not be given to the client in their original form but only as copies if proof is required.
Further links on the topic
Links | Switzerland
"Ancillary services are closely related to the main service. The main service represents the core and is the focus, while the ancillary service is only incidental. Ancillary services are treated for tax purposes the same as the main service."
Links | Germany
agd.de
“How the main service is assessed for VAT purposes determines the tax treatment of the entire service. Therefore, only the tax rate applicable to the main service is applied.”
“How the main service is assessed for VAT purposes determines the tax treatment of the entire service. Therefore, only the tax rate applicable to the main service is applied.”
https://www.haufe.de/finance
https://www.steuerberaterin-berlin.com/pdf/Checkliste-Weiterberechnung-Auslagen-Auftraggeber.pdf
https://www.steuerberaterin-berlin.com/pdf/Checkliste-Weiterberechnung-Auslagen-Auftraggeber.pdf
Links | Austria
11.1.5.7.2.1519 Different Tax Rates
"Dependent ancillary services are subject to the same tax rate as the main services. (...)"
"Dependent ancillary services are subject to the same tax rate as the main services. (...)"
Disclaimer: This article was created in collaboration with experts. However, we do not guarantee the accuracy of the information.
