Reverse Charge

You have certainly noticed the term reverse charge more and more recently. It is connected to our offers, which we have been preparing for you in the name and for the account of SERVICE-REISEN CH GmbH since April 2022. But what does reverse charge mean and how does this procedure affect our cooperation? Below we have compiled the most important information and frequently asked questions about the reverse charge procedure.

1. What is the reverse charge procedure?

The reverse charge procedure is a special regulation for the payment of VAT, which is particularly common in the tourism industry. If this is applied, the recipient of the service (you as the tour operator) and not the company providing the service (we as the service provider) pays the VAT. 

2. What are the advantages of the reverse charge procedure?

The reverse charge procedure has enormous simplification potential, as you as a customer do not have to pay VAT first to the supplier for refundable input tax and then get it refunded again by the tax office, but you directly only pay the difference between VAT and refundable input tax to the tax authorities for the respective purchase. The advantage for you as a customer is that you retain liquidity in your company, as in the normal procedure you first pay the full VAT in order to be (partially) reimbursed again later.

3. How is the deduction procedure applied by SERVICE-REISEN? 

Since 01.04.2022, your contractual partner for package tours is SERVICE-REISEN CH GmbH, based in Bottighofen, Switzerland. Invoices are issued by SERVICE-REISEN CH GmbH. SERVICE-REISEN CH GmbH is not registered in Germany and invoices with a Swiss VAT ID number. For services rendered in Germany, SERVICE-REISEN CH GmbH issues a so-called net invoice with the note reverse charge. This means that you, as the recipient of the services, must declare and pay the VAT payable on the services provided by SERVICE-REISEN CH GmbH in Germany as part of your VAT return. 

4. An example to illustrate the procedure

We would be happy to show you an example to illustrate the procedure:
In 2021, you were offered an arrangement price (gross) of 107.00 euros by SERVICE-REISEN Heyne GmbH & Co KG, based in Germany. SERVICE-REISEN CH GmbH now invoices you for the trip with a net amount of 100.00 euros, which you must pay to SERVICE-REISEN CH GmbH accordingly. It is noted on the invoice that the invoice is subject to the reverse charge, together with the underlying tax rate (in this case 7%). You post the invoice in your bookkeeping with a reverse charge of 7%. Through the posting, you now receive the purchase price of 107.00 euros (net invoice of SERVICE-REISEN CH GmbH plus VAT from reverse charge) and deduct the 7.00 euros as part of your tax declaration.
You pay tax on the trip within the framework of margin taxation. This means that the purchase price of 107.00 euros is deducted from your sales price and the 19% turnover tax (margin tax) is to be paid from the difference.