• German GmbH using freelancers based in India

Does a German GmbH need to register or pay any taxes for using a Indian based freelancer working in India?

The German GmbH is providing services to, and sends the invoices to a German based client (another GmbH) who has a sister company in India.

Meaning can the GmbH simply pay a agreed rate for the freelance project in India? (with no additional taxes or regulations)?
Asked 12 months ago in Professional Tax

German GmbH would not be required to register or pay taxes in India for using a freelancer who is based in India.Given that German GmbH is delivering services to a client with a German address and is sending them invoices, it is likely that the transaction is being conducted predominantly in Germany. As a result, any taxes or regulations would be based on German law.

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Shubham Goyal
CA, Delhi
177 Answers
2 Consultations

5.0 on 5.0

Hello,

Case : German GmbH 1 providing services to German GmbH 2.
            German GmbH 2 has a sister concern in India
           To provide these services, German GmbH 1 is taking services from a freelancer based out of India.
           
Query : Can GmbH 1 simply pay a agreed rate for the freelance project in India (with no additional taxes or regulations)?

Answer : Yes, German GmbH 1 can simply pay an agreed price to that freelancer with no additional taxes provided German GmbH 1 does not have entity in India.

Thanks
Damini
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Damini Agarwal
CA, Bangalore
398 Answers
31 Consultations

5.0 on 5.0

Since you are taking services from India you are not required to make any tax compliance in India.

 

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Naman Maloo
CA, Jaipur
4256 Answers
96 Consultations

5.0 on 5.0

Yes, Generally speaking German GmbH can simply pay agrees fees for the freelance project in India.

 

In certain cases GST is added in invoice (which is the duty of freelancer) but in most of the cases GST is not levied since it will be considered as export of services 

Lakshita Bhandari
CA, Mumbai
5687 Answers
904 Consultations

5.0 on 5.0

- For providing services to another German Gmbh, accrual of income arises in Germany therefore German tax laws is applicable to you irrespective of the fact that another German Gmbh has sister company in India.

- For using freelance services from India, you should again check German tax laws (both VAT and Income tax).

- You should pay at an agreed rate to Indian freelancer as per the agreement and invoice shared by him. Since it is an export of service for Indian freelancer, he can export with payment of tax (tax here means GST) and without payment of tax. In invoice, you may find tax in the form of GST. The rate of tax is 18%. For withholding taxes under German Income tax law read with DTAA (Double taxation avoidance agreement), responsibility of compliance lies on you.

- You can share copy of agreement and invoice with Indian freelancer and another German Gmbh at aroravivek1982@gmail for further discussion

 

For detailed discussion you may opt for phone consultation

 

Vivek Kumar Arora
CA, Delhi
4810 Answers
1013 Consultations

5.0 on 5.0

It purely depends upon terms of agreement and order issued 

 

It can be drafted to make sure there is no withholding tax effect or gst implications

Vishrut Rajesh Shah
CA, Ahmedabad
924 Answers
37 Consultations

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