Tax deduction for construction services Exemption

Service Description

If you provide a construction service in Germany to another entrepreneur or to a legal entity under public law, they are obliged to deduct 15% tax from the consideration, which usually consists of a cash payment, for your account. The tax deduction must be paid directly to the tax office. The tax withheld will later be offset against any taxes you owe. You will only receive the invoice amount reduced by the tax deduction from the recipient of your service.

The recipient of the construction service must submit a tax declaration to the tax office by the tenth day after the end of the month in which the consideration is provided and pay the self-calculated deduction amount to the tax office for your invoice. The recipient of your service must settle accounts 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 statement of account from the tax office. The recipient of the service is liable for any withholding 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-free sales from letting and leasing. For the application of these exemption limits, all your construction services provided to this 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 the recipient 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 above-mentioned deduction obligation. In this case, the recipient does not have to withhold tax on construction work and owes you the full invoice amount.

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 means of an Internet query at the Federal Central Tax Office using the printed security number.

Source: Zuständigkeitsfinder Thüringen (Linie6PLus)

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