In Germany, a default withholding applies to payments for construction work, and it lifts or resumes to the day depending on whether an exemption certificate covers the payment date. A payment dated the day before the certificate expires goes through without withholding; the same payment dated the next day does not. This application carries that switch and refuses a payment that ignores it.
Who the application is for
For German general contractors, or for businesses using construction subcontractors in Germany, who need to know, on every payment, whether the withholding applies and pay what it requires to the competent tax office.
What the application does
- Carries each subcontractor's exemption certificate, with its end date and the tax office that issued it.
- Lifts the withholding as long as the certificate covers the payment date, and brings it back on its own the day after it expires.
- Compares the year's running total of payments to a subcontractor against the minimis threshold set on your company, and lifts the withholding below it.
- Applies a higher minimis threshold only when your company carries out exclusively exempt operations.
- Refuses a withheld payment if the subcontractor has no German tax number on file.
- Gathers, month by month, the withheld payments into a return ready to be filed.
Day to day
- Record the subcontractor's German tax number on their file.
- Record the exemption certificate received, with its exact end date and the issuing tax office.
- At payment time, let the application compare the payment date to the certificate's end date and to the minimis threshold.
- Each month, attach the withheld payments to a return and record the acknowledgement number once it is filed.
- Periodically check with the competent authority that a certificate has not been revoked since it was issued.
What the application does not do
- It does not connect to any administration portal: the check is made online by you, and its result is recorded here with its reference.
- It does not pay anything to the tax office: the withholding is calculated and tracked, its payment stays a matter for your accounts.
- It does not cover the reverse-charge value-added tax, which is a separate regime.
- It does not replace the advice of a German tax adviser: the rate, the thresholds and the filing deadline are settings to check with them, and they do change.
Getting started
Set the withholding rate, the two minimis thresholds and the filing deadline on your company record, checking them with your German tax adviser, then record the exemption certificates already in hand before entering a first payment.
Going further
To find out whether this application suits your business and how to activate it, compare the plans or write to us.