Provision of services in the EU through a commission agent

Provision of services in the EU through a commission agent

 

Question:
Hello!

Bulgarian natural person registered for VAT, art. 97a, as he works from Bulgaria and provides services to EU companies, generally registered for VAT.

The person works with an agent in Germany, and the agent issues invoices to customers who are in the EU, on behalf of the individual, but on his own form and numbering of invoices. After receiving the amounts on the bank account of the agent, he accordingly transfers an amount with the deducted commission to the person in Bulgaria and / the agent / issues two statements with the same number to the person in BG that they have transferred an amount to an account in Bulgaria for one project for company client X, and the other - for the value of the commission on the project and it says "We have settled the above ammount with today's statement / We have settled the above amount with today's statement".

The agent claims that we do not need the invoice that he issued to the client, and after insisting he sent it to us, but without the VAT number of the client.

In all three documents there is an added text that the person is exempt from taxes in Germany (we gave a document from BG that he is a local person, from Germany they issued some document for tax exemption in DE).

However, in BG we have to submit a diary of purchases, sales, VIES declaration, after there is VAT registration.

Until now there was another scheme - the agent issued an invoice on behalf of the person in BG to the client, we made it in Bulgarian with 10 digit numbers, respectively an invoice from the agent to the person, we put one invoice in the sales journal, the commission invoice in the purchase journal, respectively we paid 20% VAT on the commission.

However, with the new documents, how could we proceed? Which in purchases, which in sales, in practice we do not have a document issued to the client ....

What documents do we need to require from the agent in order to submit correct data to the tax administration?

Thanks in advance!

 

Answer:

Hello,

The purest option, in our opinion, is to issue an invoice to the agent in Germany on the value of the service with the deducted commission. For its part, the agent should issue an invoice for the final price of the service to customers. He receives the amount from the end customer in his bank account and transfers to you what is due on your invoice. In this case, you declare 1 invoice per transaction in the sales log and end the question. The other option is to issue an invoice again to your agent for the full value of the project. The agent will issue you an invoice for deducted commission and after offsetting the two invoices will transfer the difference to you. In this case, you have 1 transaction invoice in the sales journal and 1 protocol in the purchase journal. And the third option is to issue invoices directly to end customers, the agent to issue an invoice for a commission to you. Again, you have 1 transaction invoice in the sales journal and 1 protocol in the purchase journal. However, this option is the most unacceptable, as you will encounter the following problems:

1. The person to whom you issue an invoice should also be the person from whom you receive the money. In this case, this will not be the case, as you will be invoicing to end customers while receiving the money from the agent.

2. If your customers are individuals, you will start to form a taxable turnover for VAT registration on a general basis, and after 01.07.2021 in the countries where these individuals are residents.

We hope we have been helpful to you.

Greetings!