VAT – Scope of VAT – Taxable sales – Invoicing service – Light entrepreneurship
The cooperative was an entity that provides invoicing services, through which contractors can operate independently and as entrepreneurs without the need to set up their own business. The cooperative sold the service related to the service performed by the actual contractor and its invoicing. The contractor was responsible for the sale and marketing of his own work and agreed on the assignment and its terms with his client, ie the client of the work. The cooperative invoiced the end price for the work performed in its own name and with its own business ID from the end customer and paid VAT on this amount to the state. The cooperative paid the amount charged to the end customer to the contractor less its own fee. The question was whether the cooperative had to pay VAT on the part of the commission which it withheld.
In this activity, the cooperative had applied the instructions issued by the Tax Administration on the tax issues of invoicing service companies and their users. According to the instructions, a formal, although not an employment relationship within the meaning of the Employment Contracts Act was established between the invoicing service company and the contractor. Accordingly, the cooperative treated the compensation paid to the contractor as a salary paid to him in accordance with section 13 of the Advance Payment Act and took care of the related statutory obligations of the employer. The precondition for the application of the guide was that the contractors did not have their own business ID and were therefore not on the VAT register.
The Supreme Administrative Court held that, in those circumstances, taking into account also the avoidance of double taxation, the cooperative was not considered to provide a separate service to the contractors in return for the remuneration due to it, on which the cooperative would have to pay VAT.
Source: kho.fi
