LLC USA need to add VAT for EU invoice?

[Ciropollo]

Hello,
I have a client from EU that made me a payment on my website.

Now he's asking invoice. As long as his company is in EU, I should make the INVOICE included of 20% VAT of his country or just the total with 0% vat?

For example, he spent 1000, I make the invoice 1000 and finish or 800 +200 of vat?

Thanks

 

[Sols]

If you charged VAT, you include that in the amount already paid (unless you plan to charge the client again, separately for the VAT).

If you did not charge VAT, your invoice should be 1,000 wit no VAT or sales tax.

Whether you should charge VAT is a different question. The general rule is that you should, but the reality is that most non-EU companies don't and EU tax authorities aren't spending much time going after small, overseas businesses with no EU assets or presence.

 

[noname]

Exactly like the Sols said, and EU is going to chase big companies Google, Apple, Facebook and will ignore if you are small. I would say you just stick with the rules of your jurisdiction, if you are a US Delaware LLC I woudn't charge any VAT. If you are selling services, it is a very complicated process collecting VAT and paying to appropriate authorities for different countries in the world depending on where your client come from. If you are selling some software in this case you have payment gateways such as Fastspring that does all this for you, same like Google Play store does if you sell apps through them.

 

[uplana]

Forget about VAT in this single situation, I would just send him the invoice without VAT and you will never hear anything from anyone. Unless the VAT amount is in the millions

 

[Marzio]

If you are selling services, it is a very complicated process collecting VAT and paying to appropriate authorities for different countries in the world depending on where your client come from.

If he is selling services VAT should be charged where the service is rendered and not where the client lives.

 

[noname]

If he is selling services VAT should be charged where the service is rendered and not where the client lives.

Yes my mistake I said it wrong. He should charge the VAT of the country where the service is rendered.

 

[stivemoose]

Hello,
If with my LLC in Delaware I have many B2B clients from the EU and they want invoices. How to do?

If I provide an invoice without VAT it would be a problem? And can I apply reverse charge or would sound strange?

 

[Marzio]

Have you ever seen an invoice from any US company with VAT?

 

[AndyAresa]

Hello,
If with my LLC in Delaware I have many B2B clients from the EU and they want invoices. How to do?

If I provide an invoice without VAT it would be a problem? And can I apply reverse charge or would sound strange?

in a B2B transaction a non-EU company (which is not registered as a VAT payer in the EU) does not include EU VAT. So just the amount payable by the EU business client is included.

 

[lostguy]

don't forget to mention it on the invoice, reverse charge VAT!

 

[stivemoose]

don't forget to mention it on the invoice, reverse charge VAT!

On some posts I saw was written that a US company should not add this quote on the invoice but just make the invoice without applying or talking about VAT. Can you confirm that is mandatory to add Reverse Charge VAT in the invoice? thanks

 

[RealDude]

Just hire an international tax advisor…

 

[Marzio]

I never saw a US invoice stating reverse charge VAT and i use a lot of US companies in the hosting space or email service providers

 

[AndyAresa]

On some posts I saw was written that a US company should not add this quote on the invoice but just make the invoice without applying or talking about VAT. Can you confirm that is mandatory to add Reverse Charge VAT in the invoice? thanks

this is not needed. it must be mentioned on invoices only in EU-EU b2b transactions

 

[menzu]

You do not need to add any VAT as a US entity regardless of where the payer is.

 

[Sols]

You do not need to add any VAT as a US entity regardless of where the payer is.

Not that simple.

https://www.trade.gov/country-commercial-guides/eu-value-added-tax-vat

In addition, the European Union applies VAT to sales by non-European Union-based companies of electronically supplied services to European Union-based non-business customers. U.S. companies that are covered by the rule must collect and submit VAT to EU tax authorities. As of 2015, telecommunications, broadcasting, and electronic services are taxable at the place where the customer resides.

 

[Misal]

If you charged VAT, you include that in the amount already paid (unless you plan to charge the client again, separately for the VAT).

If you did not charge VAT, your invoice should be 1,000 wit no VAT or sales tax.

Whether you should charge VAT is a different question. The general rule is that you should, but the reality is that most non-EU companies don't and EU tax authorities aren't spending much time going after small, overseas businesses with no EU assets or presence.

What is small for you? A company in Malta or Gibraltar with a turnover of 2 million per year? what if their owners are residents in EU?

 

[Sols]

What is small for you? A company in Malta or Gibraltar with a turnover of 2 million per year? what if their owners are residents in EU?

It's hard to say because enforcement is unpredictable.

I have seen Scandinavian tax authorities sending VAT invoices for companies with a smaller turnover than that, though.

 

[Jerry1911]

I have seen Scandinavian tax authorities sending VAT invoices for companies with a smaller turnover than that, though.

Assuming that the owner of the US company has nothing to do with the EU, what are they going to do if the US company refuses to pay it?

 

[ElBotellon]

I never saw a US invoice stating reverse charge VAT and i use a lot of US companies in the hosting space or email service providers

If we are talking about B2B services provided from a US supplier to a EU customer then the US is exporting services (which is VAT excluded) but the EU customer should register the invoice and pay the local VAT. If such VAT is deductible you will have double movement: VAT debt for X, VAT credit for X = no payments.
This does not mean that the transaction becomes vat exempt but just that it is fully deductible. Should the customer's tax authority not recognize the right to deduct, the EU customer should pay VAT on imported services.
This is what I understood reading VAT law in EU and non EU countries.