As your business grows across national borders and becomes international, the invoicing of foreign customers becomes topical. When invoicing foreign customers, the value added tax used in invoicing must also be borne in mind. In this guide, we will briefly guide you through the basics of foreign VAT.
Light entrepreneurs and foreign customers
As a light entrepreneur, you can also invoice customers abroad in the same way, regardless of the country. Light entrepreneurs using Eezy’s light entrepreneurship service can invoice their foreign customers easily.
When invoicing foreign customers, however, you must take care to choose the correct VAT assessment. When invoicing Finnish customers through Eezy as a light entrepreneur, you must always add sector-specific VAT to the invoice.
When invoicing foreign customers, the invoicing of VAT depends on whether the customer is an individual or a company, and whether the customer is located in or outside the EU.
For most light entrepreneurs, invoicing mainly consists of service sales, which is why the following guidelines on the taxation of VAT apply especially to service sales abroad.
Invoices for private persons
Selling services to foreign individuals is simple in terms of VAT, as invoicing is subject to VAT. The invoice uses the standard VAT rate that you would use in your field for a domestic customer.
Invoices for companies outside the EU
The sale of services outside the EU differs from the invoicing of domestic companies in terms of VAT. As a rule, services sold to companies outside the EU must be invoiced without VAT.
Invoices for companies in the EU
The third possible situation in the field of VAT as regards international sale of services is the intra-EU sale of services. Intra-EU sale of services to companies is generally taxed with the so-called reverse VAT.
This means that, as a light entrepreneur, you invoice your customer with 0% VAT, but the payer of the invoice is liable for the VAT itself. For the reverse VAT, you will need the VAT number of the foreign customer company.
However, the normal VAT practices of intra-EU or intra-Community sale of services do not apply to certain sectors, such as staff transport, restaurant and catering services. A complete list of services can be found in the Tax Administration’s guidelines. If the European company to be invoiced does not have a VAT number, the foreign invoice and the zero rate will be used.
Working as a light entrepreneur abroad
At Eezy, you can invoice foreign customers for work you do in Finland, but you can also work abroad yourself.
When you are operating as a light entrepreneur abroad, both Finnish and non-Finnish customers are invoiced in the same way as you would in Finland, as long as you are a taxable person in Finland. If you are not a taxable person in Finland, invoicing as a light entrepreneur is not possible through Eezy.
If you have questions about value added tax on the sale of services invoiced abroad, you can use the Tax Administration’s in-depth guidance on foreign trade in services or contact Eezy.
Remember this from foreign VAT as a light entrepreneur
- The sale of services to foreign individuals is subject to VAT.
- The sale of services to companies outside the EU is exempt from VAT.
- Intra-EU sale of services to companies is subject to the reverse VAT where the purchaser of the service accounts for the VAT.