US Business owners: VAT question
 

Have a long time European customer that is requesting we not forget to add the VAT to his invoice. Have any of you dealt with this? How?

TIA

The 2015 eu vat law says you must pay his country the vat.

So am I supposed to add a tax and mail it to his version of the IRS?

Never dealt with that myself but I would ask the client what is the VAT in his country
and then "back out" that percentage and show it on the invoice.

And does the VAT change according to the country he lives in?

Jurisdiction Rate (Standard) Rate (Reduced) Abbr. Name
Austria 20% 12% or 10% MwSt. / USt. German: Mehrwertsteuer / Umsatzsteuer
Belgium 21% 12% or 6%
BTW
TVA
MWSt
Dutch: Belasting over de toegevoegde waarde
French: Taxe sur la Valeur Ajoutée
German: Mehrwertsteuer
Bulgaria 20% 9%[36] ДДС Bulgarian: Данък върху добавената стойност (Danăk vărhu dobavenata stojnost)
Cyprus 19%[37] 9% or 5%[36] ΦΠΑ Greek: Φόρος Προστιθέμενης Αξίας (Fóros Prastithémenes Axías)
Czech Republic 21% 15% or 10% DPH Czech: Daň z přidané hodnoty
Croatia 25% 10% PDV Croatian: Porez na dodanu vrijednost
Denmark 25% none moms Danish: Meromsætningsafgift
Estonia 20% 9% km Estonian: käibemaks
Finland 24%[38] 14% or 10%[39][40]
ALV
Moms
Finnish: Arvonlisävero
Swedish: Mervärdesskatt
France[41] 20% 10%, 5.5% or 2.1% TVA French: Taxe sur la valeur ajoutée
Germany 19% 7% MwSt. / USt. German: Mehrwertsteuer / Umsatzsteuer
Greece 23%[42] 13% or 6%[43] ΦΠΑ Greek: Φόρος Προστιθέμενης Αξίας (Fóros Prostithémenis Axías)
Hungary 27% 18% or 5%[36] ÁFA Hungarian: általános forgalmi adó
Ireland 23%[44] 13.5%, 9%, 5%, 4.8% or 0%
VAT
CBL
Value Added Tax
Irish: Cáin Bhreisluacha
Italy 22%[45] 10% or 4% IVA Italian: Imposta sul Valore Aggiunto
Latvia 21%[46] 12% PVN Latvian: Pievienotās vērtības nodoklis
Lithuania 21% 9% or 5% PVM Lithuanian: Pridėtinės vertės mokestis
Luxembourg 17% [2] 14%, 8%, or 3% TVA French: Taxe sur la Valeur Ajoutée
Malta 18% 7%, 5% or 0%[36] VAT Maltese: Taxxa fuq il-Valur Miżjud
Netherlands 21%[47] 6% BTW Dutch: Belasting toegevoegde waarde
Poland 23% 8%, 5%[36] PTU / VAT Polish: Podatek od towarów i usług
Portugal 23%[48] 13% or 6%[48] IVA Portuguese: Imposto sobre o Valor Acrescentado
Azores 18%[48] 9% or 4%[49] IVA Portuguese: Imposto sobre o Valor Acrescentado
Madeira 22%[48] 12% or 5%[48] IVA Portuguese: Imposto sobre o Valor Acrescentado
Romania 24% 9% or 5%[36] TVA Romanian: Taxa pe valoarea adăugată
Slovakia 20% 10% DPH Slovak: Daň z pridanej hodnoty
Slovenia 22% 9.5% DDV Slovene: Davek na dodano vrednost
Spain 21%[50] 10% or 4%[50] IVA Spanish: Impuesto sobre el valor añadido
Canary Islands 7% (is outside the European Union VAT area) 0% or 2% IGIC Spanish: Impuesto General Indirecto Canario
Sweden 25% 12% or 6% Moms Swedish: Mervärdesskatt
United Kingdom
Isle of Man

20% 5%[51] and 0%[52]
VAT
TAW
English: Value Added Tax
Welsh: Treth ar Werth

Thanks, I have a feeling this is going to be a PITA

You can't just randomly add VAT to an invoice, you can only charge VAT if you're VAT registered.

This seems like a pretty good summary and a good starting point for US businesses regarding VAT:
http://export.gov/europeanunion/buil..._eu_089244.pdf

If you are EU business selling to outside EU no VAT is charged.
If you are US ( or anywhre otside of EU jurisdiction) business selling to EU no VAT is charged.
If you are EU and sellingbto EU must charge VAT.

The rest is dealt with the varrious custom rules...:2 cents:

It's not that simple anymore. Read the document linked above.

Yeah, I wouldn't pay a tax to a another country when my business is not physically there and
don't think I'd even have the right to collect it from the buyer.

:2 cents:

Dosent he mean he wants you to specify the VAT on the invoice ("0" if you dont charge)?

The rules are different depenging on what service/product you are selling and his home-country

In general:
- IF you are selling to the EU, and you dont add VAT, he will have to pay the VAT in his country.
- If you are adding VAT, you need to specify it on the invoice, since he only have to pay the difference between your VAT and the VAT in his country.

The more I read the more confused I get. Some of what I read implies the EU resident isn't taxed but my company is

This going to have to be handled on a payment processor or gateway level in order to not confuse the hell out of webmasters. I personally have no idea how to tackle it.

http://ec.europa.eu/taxation_customs..._ec_annexi.pdf

this is for b2c purposes

Mine is b2b. If the client has to pay if I don't I guess that clears that up, but I have my doubts it is that easy. I don't feel like paying taxes to a bunch of other countries

b2b is generally exempt -- services in the production of goods for sale are part of the COGS (*cost of goods sold)
The VAT is included in the b2c sales value (price) generally.

As far as I know no VAT applies if your client is B2B and VAT registered in the EU and you are based in the US.

At least it's like that the other way round for me.

I am going to go this route, thanks

Yes, http://export.gov/europeanunion/buil..._eu_089244.pdf has the same info:

Page 5:
III. VAT rules on the supply of services to EU customers

When it comes to B2B transactions, in many cases, the business customer will account for VAT using the reverse charge procedure thus making it not necessary for a U.S. based supplier to register for a VAT number in the EU.

However, under certain circumstances - depending on the relevant legislation of each Member State -, registration for VAT purposes is necessary. This may occur when the buyer is a non-business customer not registered for VAT purposes. For example, radio and television broadcasting services are governed by specific EU rules requiring non-EU suppliers to register in the Member State where they are providing the service to non-business customers.

Consequently, where a U.S. producer needs to pay VAT and at what rate depends not only on the type of service that is provided, but also what the status of the customer that is receiving the service. This is either a taxable person (which is a business customer acting in an economic capacity) or a non-taxable person (the final consumer who is not carrying out any further activity).

So, if my customer doesn't register as a business I am supposed to be responsible for paying the tax? If so, Americans will register as a business to reduce taxes. Is it the opposite in the EU?

Lol this makes no sense. Why would you pay taxes to a country you don't live or run your business out of?? Even if this is a new law in eu, how will this ever be enforced in the US.......

You got it wrong -- being the tax collector for another country.:2 cents:

search: 'nexus for collection of sales and use taxes'

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