Red alert: the promoter needs an invoice! But you haven’t applied for a tax number at the tax office or your band isn’t registered as a partnership (GbR) yet… what’s next? The Smart cooperative offers a solution for musicians and other freelancers: the cooperative simply invoices on your behalf so that you don’t have to apply for your own tax number. And the promoters are happy, too: they receive a correct invoice for their own bookkeeping.
Using Smart As An Administration Tool for Your Band
You then get your payment through an employment contract with the cooperative. This can also be done over several months or through a so-called Mini-Job (for monthly salaries under 450 €). Smart will take care of the registration with the health and pension insurance. Based on your income (the concert fees invoiced by the cooperative), Smart will pay the social security contributions and you’ll receive a monthly salary. Non-EU citizens can only use this employment model if they already have a residence permit that allows them to be employed by any employer in Germany (“Beschäftigung gestattet” or “Erwerbstätigkeit gestattet” has to be mentioned in the permit).
In addition to your employment, you can have your costs reimbursed. This means that Smart will reimburse expenses if, in return, you send Smart an invoice for an expense that is related to the concerts that Smart invoiced on your behalf. 
Think of the coop as a band administration tool that you can also use to buy a new guitar or pay the travel expenses for the gig.
Advantage: Value-Added Tax Reimbursement
An additional advantage comes into play: since Smart is entitled to deduct input tax, you will also get a refund of the value-added tax on expenses – if you paid 119 € for a new guitar in the shop, you would get 19 € (19%) back from Smart. So the guitar costs you only 100 €. Important: Smart invoices promoters with value-added tax. If a band member has his or her own tax number, the member can also simply write an invoice to Smart to receive the proportionate fee. In this case, Smart would have to deduct the artists’ social security contribution (Künstlersozialabgabe, 4.2%).
How Much Does It Cost?
Smart is a cooperative – members who want to be employed through the cooperative must buy a cooperative share for 50 € on a one-off basis. For bands, at least one member must also become a cooperative member and buy a share. For each invoice processed through Smart, 7% of the net sum goes to the cooperative. In case of employment, both the employer’s and the employee’s share of the social security contributions as well as the wage tax are deducted. Another advantage of paying out a fee via this employment model is that you then don’t have to do anything for your tax return: Smart automatically transfers all data to the tax office.
Example: 500 € for 4 Gigs
You will play four concerts between August and November. Net fees of 500 € in total have been agreed upon with the promoters.
- Smart will invoice the promoters for a total of 500 € + VAT
- The promoters will transfer the amount to Smart (if you get the money in cash, you have the possibility to transfer it to Smart yourself)
- Smart pays the VAT to the tax office
- Smart deducts 7% (Smart’s fee) from the net amount: 500 € minus 7% (35 €) = 465 € remain
- You now have 465 € at your disposal to generate an employment contract and to have your expenses reimbursed.
- You are now free to decide how to use the money. For example, you can decide to generate a Mini-Job for a band member for two months for 200 € each and get travel expenses of 65 € gross (including 19% VAT) refunded.
- For the Mini-Job, Smart will take care of paying the flat-rate fees to the Mini-Job Centre (at 200 €, about 50 € per month). The band member then receives a Mini-Job salary of 150 € (200 € minus 50 € per month) for two months.
- The remaining 65 € will be used to reimburse the travel expenses. But only 54.62 € are used for this because 10.38 € will be refunded as input tax. This amount can then be used for a future employment contract.
Invoicing Promoters In Other EU Countries
You can also use Smart to invoice gigs in other countries in the European Union. Smart has an international VAT identification number, which is central to invoicing internationally in the EU. This is only possible if the promoter in the other country also has an international VAT identification number.
And What About the Künstlersozialkasse?
If you are already insured through the KSK or if you meet the requirements in the future, the Smart model only makes sense in special cases (such as invoicing to other EU countries).
Using Smart To Invoice Other Freelance Services
Smart can not only invoice gigs but also most other freelance services. Exceptions: activities that require a licence (for example, protected crafts activities, Handwerk) and the sale of goods.
Further information can be found on the website www.smart-eg.de/en and at regular info sessions (currently online, registration via the website).
