Invoicing from Dubai companies to German companies: A comprehensive guide

Introduction

Globalization and the increasing interconnectedness of the global economy have led to companies doing business across borders. A common question that arises is whether and how a company in Dubai can invoice German companies. In this article, we will explain the legal, tax and practical aspects of invoicing from Dubai companies to German companies.

Legal basis

1. Legal admissibility:

• In principle, a company in Dubai is permitted to issue invoices to German companies. This falls under international trade and services.

1. Contractual agreements:

• Before services or goods are delivered, a written contract should be concluded between the Dubai company and the German company. This contract should contain all important details such as performance, price, payment terms and dispute resolution procedures.

Tax aspects

1. Value added tax (VAT):

• A value added tax (VAT) of 5 % has been applicable in Dubai since 2018. If a company in Dubai sells services or goods to a German company, it must be clarified whether and how VAT is applied.
• VAT is normally only applied within the UAE. When exporting goods and services to another country such as Germany, VAT is usually not charged. It is advisable to consult a tax advisor in Dubai to ensure that all relevant regulations are observed.

1. Double taxation agreement:

• Germany and the UAE have concluded a double taxation agreement to prevent income from being taxed twice. This agreement regulates which taxes may be levied in which country.
• A tax advisor can help you understand and correctly apply the provisions of the double taxation agreement.

1. Value added tax in Germany:

• For the German company that purchases the services or goods from Dubai, it may be necessary to calculate and pay the VAT as part of the reverse charge procedure. The German company becomes liable to pay tax as the recipient of the service and must calculate the VAT itself and pay it to the German tax office.

Practical aspects of invoicing

1. Invoice format and content:

• An invoice from a Dubai company to a German company should contain all the necessary information:
  • Name and address of the Dubai company
  • Name and address of the German company
  • Tax number of the Dubai company
  • Invoice number and date
  • Description of the goods or services supplied
  • Quantity and price of the goods or services supplied
  • Terms of payment
  • Bank details for the transfer

1. Payment modalities:

• International payments can be processed via various methods, including bank transfers, PayPal, or other online payment service providers.
• It is advisable to establish clear payment terms, including currency, payment deadline and any fees for international transfers.

1. Currency conversion:

• As Dubai uses the dirham (AED) as its currency and Germany the euro (EUR), a currency conversion must be carried out. It is customary to state the current exchange rate at the time of invoicing.

Compliance and legal requirements

1. Export and import regulations:

• When delivering goods, the export regulations of the UAE and the import regulations of Germany must be observed. This includes customs regulations, import restrictions and required documentation.

1. Documentation and archiving:

• Both the Dubai company and the German company should carefully archive all relevant documents. This includes contracts, invoices, payment receipts and correspondence in order to be prepared for possible audits by the tax authorities.

The invoicing of Dubai companies to German companies is possible in principle and is a common practice in international trade. However, it requires a good understanding of the legal and tax framework as well as careful contract drafting and documentation. By following the above steps and consulting professionals such as tax advisors and lawyers, both the Dubai company and the German company can ensure that the process is smooth and compliant.