Im self employed in the UK and am designing some artworks for a company in Germany.
I will be sending them about half a dozen invoices over the next 4 months, as well as asking other self employed craftspersons / companies in the UK to work on this also on my behalf. These other people will invoice the company in Germany directly as I am doing so.
The German company tells me that for 'any invoice outside of Germany' they have to deduct 20% German tax. So my first invoice to them for 2000 euros, they sent 1600 euros. I have worked for Germany companies before, and not had them deduct german taxes for my invoices, which is why I am perplexed.
I understand I can offset the German taxes as credit relief when it comes to do my annual tax return, however it will leave me little actual profit in the meantime, and the companies who I will be instructing in the UK (carpenters etc) are not going to be happy having 20% deducted from their invoices, and it might ruin the relationships I have held over the years.
Why would this company 'have' to deduct tax on my invoices, when other German companies didnt?