Thai Company Vs. German Vat

[weary]

Our small Thai company is not VAT registered because the turnover does not reach the level which requires VAT registration.

We have just completed a project for a customer based in Germany.

The issue is this: According to the customer (and our research so far seems to suggest they are right) our invoice must contain the German company's VAT number as well as our company's VAT number - if our VAT number is missing, their company must pay 19% VAT in Germany.

How to solve this? Do we have to pay the VAT in Germany or register for VAT here in Thailand? All ideas appreciated.

[Maestro]

Your correspondent at the German company does not know what he is talking about. The supplier’s VAT number helps the German company save VAT only if the supplier is also in the EU. Last time I checked, Thailand was not a member of the EU.

Even if your Thai company were VAT-registered in Thailand, the German importer would still have to pay the full German VAT rate.

The problem is that some Germans have difficulty grasping the fact that there is a world outside the EU. I had the same problem with a German company once. Tell your German correspondent to talk to his accountant, after telling him that Thailand is not in the EU.

--

Maestro

[LaoPo]

Your correspondent at the German company does not know what he is talking about. The supplier’s VAT number helps the German company save VAT only if the supplier is also in the EU. Last time I checked, Thailand was not a member of the EU.

Even if your Thai company were VAT-registered in Thailand, the German importer would still have to pay the full German VAT rate.

The problem is that some Germans have difficulty grasping the fact that there is a world outside the EU. I had the same problem with a German company once. Tell your German correspondent to talk to his accountant, after telling him that Thailand is not in the EU.

--

Maestro

Well said Maestro! Couldn't have done it better.

A Thai company exports goods to Germany -Free of Thai VAT-.

The German -importing- company has nothing, but nothing to do with Thai VAT.

And YES, they have to pay 19% (since this January 1, 2007) VAT when they import the goods....BUT, they can deduct that, once they resell the goods to clients in Germany or elsewhere in the EU.

For instance:

German co. buys goods in Thailand for Euro 100.--

They have to pay 19% VAT (or Mehrwertsteuer) to the German Tax people = Euro 19.-- (but also VAT over the shipping costs!)

Than they resell the goods for let's say, Euro 200.-- to a certain client, including the VAT.

They than are entitled to deduct the difference of paid tax and received tax.

LaoPo