Companies in Dubai enjoy numerous advantages, including tax incentives, a business-friendly environment and a first-class infrastructure. For many entrepreneurs and self-employed people based in Dubai, however, the question arises: How do I write a tax return as a Dubai-based company? Invoices to customers in Germany or the European Union (EU)? What tax and legal regulations apply? In this article, you will find out what you need to bear in mind when issuing invoices from Dubai to customers in Germany or the EU.

1. tax framework conditions: Invoices from Dubai

Dubai and the entire United Arab Emirates (UAE) are known for the fact that there is no income tax and, with a few exceptions, no corporate tax. Companies can therefore often operate tax-free. However, this does not mean that no regulations apply to all invoices sent abroad. If you invoice customers in Germany or the EU, there are several factors you should consider.

1.1 Value added tax (VAT) in the UAE

Since 2018, the UAE has levied a Value Added Tax (VAT) of 5 % on certain goods and services. However, this tax mainly affects the local market, i.e. it primarily applies to sales within the UAE. Invoices to customers outside the UAE (as in Germany or the EU) are usually not subject to VAT as long as you offer cross-border services or goods.

1.2 No VAT in invoices to German or EU customers

If you run a business in Dubai and sell services or goods to customers in Germany or the EU, you must include the following on your invoices no value added tax or value added tax. Dubai is to be regarded as a third country in this context, which is why cross-border services or exports are often subject to VAT. tax-free be provided.

2. what must be on the invoice?

Even if invoices from Dubai to German or EU customers are not subject to VAT, they must still meet certain formal requirements. This is particularly important if your customers want to claim the invoices from the tax authorities. Here are the key details that must be included on an invoice:

2.1 Information on the invoice

• Name and address of the company providing the service (Your company in Dubai)
• Name and address of the customer (company or person in Germany or the EU)
• Invoice numberEach invoice should have a consecutive invoice number.
• Invoice dateThe date on which the invoice was created.
• Service descriptionDetailed description of the service rendered or goods delivered.
• AmountThe amount invoiced (usually in an agreed currency, e.g. Euro or USD).
• Information on the terms of paymentThe deadline by which payment is to be made and the bank details.
• VAT number in the UAEIf you sell goods subject to VAT within the UAE, you should provide your VAT number. However, this is not necessary for services abroad.

2.2 Note on tax exemption

For invoices from Dubai to German or EU customers that do not include VAT, you should include a reference to the Tax exemption on the invoice. An example of such a formulation could be:

"This service is exempt from VAT in accordance with the applicable tax regulations of the UAE."

This information clearly indicates to the recipient of the invoice that it is a tax-free invoice.

3. services or goods: Differences in invoicing

There are differences whether you sell goods or services to customers in Germany or the EU. These differences also influence the type of invoicing.

3.1 Services

If you provide services from Dubai to German or EU customers, these are generally exempt from VAT as they are provided across borders. The Place of performance-This means that services are taxed where the customer is based. As your company is based in Dubai, no VAT is payable.

Examples of services that you can invoice from Dubai to German or EU customers:

• Consulting services
• IT services
• Marketing and advertising
• Management consultancy

3.2 Goods

If you export physical goods from Dubai to Germany or the EU, different rules apply. In this case, your deliveries in the UAE are exempt from VAT, but the Importer in the EU may be required to Import sales tax to pay. This depends on the destination country and the regulations that apply there.

4. customs duties and import sales tax in the EU

When exporting goods from Dubai to Germany or the EU, you should note that the recipient may be subject to Customs duties and Import sales tax are incurred. The recipient (your customer) is generally obliged to pay these duties to the customs authorities. It is important that you inform your customers about these costs in order to avoid misunderstandings.

The import VAT usually corresponds to the VAT rate of the respective EU country into which the goods are imported. For Germany, this rate is currently 19 %. If your customer is a company, it can usually claim this tax as input tax.

5. advantages of invoicing from Dubai

For entrepreneurs in Dubai, invoicing customers in Germany or the EU offers numerous advantages, including

• No VAT liability in the UAEAs Dubai offers a very tax-friendly environment, you can make your profits without large deductions.
• CompetitivenessAs you do not have to charge VAT, your services or products may be more attractive to customers in the EU.
• Simple processingAs Dubai does not have the complicated tax regulations of the EU, international business transactions and invoicing are often less complicated.

6. double taxation agreements and liability issues

However, there is one important point to note: Germany and the UAE have not had a double taxation agreement (DTA) since 31.12.2021 more. This means that certain activities, particularly those involving personal presence in Germany or permanent establishments in the EU, may give rise to tax obligations in Germany. It is therefore advisable to seek advice from a tax consultant to ensure that all regulations are complied with.

Conclusion

Invoicing from Dubai to German or EU customers is usually straightforward and tax-efficient, as VAT is not charged on most services. However, it is important to ensure that your invoices contain all the necessary information and that you are aware of any customs and import taxes that your customers may have to pay.

Dubai offers crypto investors, consultants, service providers and exporters a tax-friendly environment that encourages international trade. If you take the step to set up a business in Dubai and invoice customers worldwide, you can benefit from the numerous economic advantages.