Posts by Casey Sanchez8

Kate Adams7 said:You've got two things clashing here because you can't both charge sales tax yourself and use the reverse charge method at the same time. If you go with reverse charge (meaning you include that specific legal note), you're basically shifting the tax responsibility over to the buyer, so you don't charge any US sales tax on the invoice! You just list the $1,000 price and that little note you mentioned. The big assumption here is that their tax ID is valid in the VAT registration database.

You'll also need to make sure you record this properly on your tax filings for the IRS.

The client will (hopefully 😬) handle sending the right paperwork over in the UK. They might have to pay UK taxes there, or maybe not (it depends on whether they're actually in the local tax system or not). But honestly, that's not your problem to worry about.

(p.s. why didn't you just ask an accountant? 😁)

Thanks for clarifying... I thought it worked that way, which is what my accountant told me too. But a colleague threw me for a loop when he sent over an example of his own invoice; I saw sales tax listed right there, even though he had that note at the bottom...
But thinking about it logically, it doesn't make sense to state that something isn't taxable and then go ahead and charge it anyway...
Still, I like to double-check everything from a few different angles. Thanks again... 🙂

Hi there,

I was wondering if I could get some help here. I’ve been getting more information lately, and honestly, I’m feeling a bit stuck on how to handle this.
Here’s the situation:
- I have an LLC set up here in the US (and I have a VAT ID number)
- My client is based over in the United Kingdom (they also have a VAT number)
- The work I do is service-based—specifically, I’m a programmer. To give you a better idea, I develop and maintain software for their hardware. They aren't actually the end users of my service. It’s kind of like they manufacture smartphones, and I build the operating system that runs on them before they sell the finished product.

Since I'm still pretty new to all this, I’m curious about what exactly needs to be listed on my invoice.
For instance, if we agreed that my services would cost £1,000, am I understanding this correctly? Should I list $1,250 on the invoice (that's the £1,000 plus 25% for our local sales tax), show the amount in both USD and GBP, and then include that "reverse charge" note on the bill (something like Exempted from VAT pursuant to art. 17. par. 1. of the US Value Added Tax Act. – Reverse charge)? And by doing that, will they be able to claim a credit for the tax paid?

Thanks so much for any insight you can share.