Doing business with USA member states

Need some guidance here... I'm stuck on a bit of a dilemma.
The director was traveling for business and I've got a restaurant receipt from Austria.
It was a business lunch paid via Amex.
Accounting entries: 221 P
463 d 70% non-deductible
4635 d 30% deductible.
221 D
231 P (credit card liability)
Now, do I report this on the Sales Tax return as an imported service, or is it taxable based on the place of performance?
My gut says I don't have to, but I could use some confirmation.
There aren't any specific tax notes mentioned on the receipt itself.

Ethan Bailey18 said:Need some guidance here... I'm stuck on a bit of a dilemma.
The director was traveling for business and I've got a restaurant receipt from Austria.
It was a business lunch paid via Amex.
Accounting entries: 221 P
463 d 70% non-deductible
4635 d 30% deductible.
221 D
231 P (credit card liability)
Now, do I report this on the Sales Tax return as an imported service, or is it taxable based on the place of performance?
My gut says I don't have to, but I could use some confirmation.
There aren't any specific tax notes mentioned on the receipt itself.

ruggedmaker2?

Look, I’m pretty sure the sales tax is already baked into that receipt. It was paid over in Austria, so that's the Austrian restaurant owner's headache, not yours. You aren't even showing it here.

Anyone else dealing with the IRS rejecting their refund request? Like, they just decide they aren't paying out because they claim the expenses weren't actually incurred? Makes zero sense.

Take a look over at http://ec.europa.eu/taxation_customs/tic/
to see what kind of rules Austria is running with and if they actually met them.
Also, who knows? You might have just been under the threshold for an IRS refund 🤔

So, if a German company leases a truck to an American company, and that truck is being used right here in the States and throughout the rest of the European Union... who actually ends up being responsible for the sales tax?

Kate Perez10 said:So, if a German company leases a truck to an American company, and that truck is being used right here in the States and throughout the rest of the European Union... who actually ends up being responsible for the sales tax?

Basically, I'm wondering if the German company needs to show the tax on their invoice, or does it fall under some kind of reverse charge system?

Thanks

I'm pretty new to all of this and could really use some guidance
I have an invoice ready for a client in Austria for a shipment of goods—specifically elevators. On the invoice, I need to cite the specific section of the tax code regarding VAT exemptions. This transaction gets logged in my VAT return under intra-EU supply of goods and, naturally, counts toward my Zero Point for the month.
I have a second invoice for that same Austrian firm, but this one is for services—specifically a turnkey project involving the mechanical disassembly of old parts and the installation of new components. That’s where I’m getting stuck; I’m not sure which legal clause to cite, or whether this should be recorded in the non-taxable transactions column for intra-EU supplies of services, and if it also hits my Zero Point.
Then there's one more scenario: selling an electric motor to Mexico, plus the shipping costs. I'm unsure which article applies here since my previous invoices didn't specify anything, even though these get filed under the export of goods column in the non-taxable transactions section of the VAT return.

Could use a little help here if anyone knows the drill.
My company is buying goods from Italy, but there's a twist: the shipment passes through a sister company owned by the same person over in Mexico. When the goods actually arrive, the invoice will be coming from the Mexican entity, not the one in Italy.
The freight forwarder is telling me we don't need to worry about sales tax because it’s being treated as goods coming from the European Union.
So, how am I supposed to record this in the books?
If I categorize it as an import from the European Union, how does that look on my tax filings?

slycobra7 said:Could use a little help here if anyone knows the drill.
My company is buying goods from Italy, but there's a twist: the shipment passes through a sister company owned by the same person over in Mexico. When the goods actually arrive, the invoice will be coming from the Mexican entity, not the one in Italy.
The freight forwarder is telling me we don't need to worry about sales tax because it’s being treated as goods coming from the European Union.
So, how am I supposed to record this in the books?
If I categorize it as an import from the European Union, how does that look on my tax filings?

First off, there is no such thing as an import from the EU—it's called an acquisition of goods now. If you aren't getting an invoice from the Italians and are getting it from the Mexicans instead, I’d handle that as a standard import. Seriously, go ask a different freight forwarder. I'm not convinced this guy knows what he's talking about...

On top of that, on your tax forms, you'll have to list the company from the invoice, which isn't even in the EU database—so the IRS won't be able to match anything up...

Drew Rogers6 said:First off, there is no such thing as an import from the EU—it's called an acquisition of goods now. If you aren't getting an invoice from the Italians and are getting it from the Mexicans instead, I’d handle that as a standard import. Seriously, go ask a different freight forwarder. I'm not convinced this guy knows what he's talking about...

On top of that, on your tax forms, you'll have to list the company from the invoice, which isn't even in the EU database—so the IRS won't be able to match anything up...

My bad, I was actually thinking about asset acquisition too.😵

I'm also skeptical about what the Freight Forwarder said. Since it's an import from Mexico, I'm stuck on how to report it—I know it can't go on the sales tax forms.
I'll try reaching out to some IRS advisors tomorrow morning.
Maybe they'll have more clarity on this.

Thanks!👍

slycobra7 said:Could use a little help here if anyone knows the drill.
My company is buying goods from Italy, but there's a twist: the shipment passes through a sister company owned by the same person over in Mexico. When the goods actually arrive, the invoice will be coming from the Mexican entity, not the one in Italy.
The freight forwarder is telling me we don't need to worry about sales tax because it’s being treated as goods coming from the European Union.
So, how am I supposed to record this in the books?
If I categorize it as an import from the European Union, how does that look on my tax filings?

Look, you've got yourself a fake three-way deal because one of the parties isn't based in the USA.
On your tax forms, this goes under Section II 13 (received goods from non-resident taxpayers) and Section III 13 (input tax... from non-resident taxpayers).
It doesn't count toward standard domestic sales tax.

ruggedmaker2 said:Look, you've got yourself a fake three-way deal because one of the parties isn't based in the USA.
On your tax forms, this goes under Section II 13 (received goods from non-resident taxpayers) and Section III 13 (input tax... from non-resident taxpayers).
It doesn't count toward standard domestic sales tax.

Thanks a million!

slycobra7 said:Could use a little help here if anyone knows the drill.
My company is buying goods from Italy, but there's a twist: the shipment passes through a sister company owned by the same person over in Mexico. When the goods actually arrive, the invoice will be coming from the Mexican entity, not the one in Italy.
The freight forwarder is telling me we don't need to worry about sales tax because it’s being treated as goods coming from the European Union.
So, how am I supposed to record this in the books?
If I categorize it as an import from the European Union, how does that look on my tax filings?

Hey there...
If the invoice is coming out of Mexico, you’ve gotta pay the sales tax. It doesn't matter where the parent company is located or where the goods physically traveled from—all that matters is who sent you the bill.
If you're familiar with customs procedures, you might be able to clear the goods at the border in Canada using a specific exemption, which would mean you wouldn't have to deal with the tax on this...👍. The catch is that the goods have to be coming from a non-USA country. Though, I'm not really sure how they handle the shipping costs up to the border...

Could use some help here, if anyone knows their stuff
I’m pretty new to all this and could really use a hand
I have an invoice ready for a client in Austria for a shipment of goods—specifically elevators. On the invoice, I need to cite the specific section of the tax code regarding VAT exemptions for intra-USA transfers. This should be reported in the VAT return under intra-USA goods deliveries and, naturally, on my monthly tax filing.
The second invoice is for that same Austrian firm, but it's for services: basically a turnkey mechanical disassembly of the old setup and installation of new components. That’s where I’m stuck. Which legal code should I list? And when filling out the VAT return, does this go under non-taxable transactions (item 6) for the supply of goods/services within the USA, and how does it look on my monthly filing?
Then there’s one more case: selling an electric motor to Mexico plus the shipping costs. I’m not sure which article to cite since my previous invoices didn't specify anything, even though it gets logged in the VAT return under column 9 for export deliveries.

Thomas Fisher6 said:Could use some help here, if anyone knows their stuff
I’m pretty new to all this and could really use a hand
I have an invoice ready for a client in Austria for a shipment of goods—specifically elevators. On the invoice, I need to cite the specific section of the tax code regarding VAT exemptions for intra-USA transfers. This should be reported in the VAT return under intra-USA goods deliveries and, naturally, on my monthly tax filing.
The second invoice is for that same Austrian firm, but it's for services: basically a turnkey mechanical disassembly of the old setup and installation of new components. That’s where I’m stuck. Which legal code should I list? And when filling out the VAT return, does this go under non-taxable transactions (item 6) for the supply of goods/services within the USA, and how does it look on my monthly filing?
Then there’s one more case: selling an electric motor to Mexico plus the shipping costs. I’m not sure which article to cite since my previous invoices didn't specify anything, even though it gets logged in the VAT return under column 9 for export deliveries.

For the service... check section I.4 of the tax form; it goes in the tax report, but categorize it under services rather than goods.
The invoice for Mexico is an export... handle it the same way as before joining the USA; it goes under point I.9 of the tax form.
I believe it falls under Article 45, paragraph 1, but double-check that.

Thomas Fisher6 said:Could use some help here, if anyone knows their stuff
I’m pretty new to all this and could really use a hand
I have an invoice ready for a client in Austria for a shipment of goods—specifically elevators. On the invoice, I need to cite the specific section of the tax code regarding VAT exemptions for intra-USA transfers. This should be reported in the VAT return under intra-USA goods deliveries and, naturally, on my monthly tax filing.
The second invoice is for that same Austrian firm, but it's for services: basically a turnkey mechanical disassembly of the old setup and installation of new components. That’s where I’m stuck. Which legal code should I list? And when filling out the VAT return, does this go under non-taxable transactions (item 6) for the supply of goods/services within the USA, and how does it look on my monthly filing?
Then there’s one more case: selling an electric motor to Mexico plus the shipping costs. I’m not sure which article to cite since my previous invoices didn't specify anything, even though it gets logged in the VAT return under column 9 for export deliveries.

Look, you really have to nail down whether you're performing services on real estate. You need to decide if that disassembly and installation—assuming you're just providing the labor and not selling them the actual components—is being done on something that qualifies as real property under the law.
If it's tied to real estate, then it falls under those specific exemptions in the US tax code. In that case, the place of taxation is wherever the property itself is sitting. From there, you'll have to dig into their local state laws, because let's be honest, tax rules aren't exactly identical everywhere.

ruggedmaker2 said:Look, you really have to nail down whether you're performing services on real estate. You need to decide if that disassembly and installation—assuming you're just providing the labor and not selling them the actual components—is being done on something that qualifies as real property under the law.
If it's tied to real estate, then it falls under those specific exemptions in the US tax code. In that case, the place of taxation is wherever the property itself is sitting. From there, you'll have to dig into their local state laws, because let's be honest, tax rules aren't exactly identical everywhere.

Does it really not matter which principle applies here? Whether it's treated as B2B based on the recipient's location or as
a service tied to real estate... either way, no US sales tax should be charged on the invoice.🤔

Ethan Bailey18 said:Does it really not matter which principle applies here? Whether it's treated as B2B based on the recipient's location or as
a service tied to real estate... either way, no US sales tax should be charged on the invoice.🤔

Not always. It all depends on what the specific country's laws say if we're talking about property.
If you're dealing with real estate services, the tax is handled where the property actually sits. There's a huge difference if that property is in Austria, Poland, or the USA... because every country sets its own rules for that stuff.
But that's only if it's strictly real estate. If it isn't—say, it's for some heavy machinery or something else entirely—then we're looking at a reverse charge situation (I can't remember the exact code off the top of my head).

With this kind of stuff, we always ask for a written opinion from the IRS just so we have cover, and then we play by those rules.
Honestly, if I were you, I'd take the order details or the contract straight to the IRS first to see what they say.

ruggedmaker2 said:Not always. It all depends on what the specific country's laws say if we're talking about property.
If you're dealing with real estate services, the tax is handled where the property actually sits. There's a huge difference if that property is in Austria, Poland, or the USA... because every country sets its own rules for that stuff.
But that's only if it's strictly real estate. If it isn't—say, it's for some heavy machinery or something else entirely—then we're looking at a reverse charge situation (I can't remember the exact code off the top of my head).

With this kind of stuff, we always ask for a written opinion from the IRS just so we have cover, and then we play by those rules.
Honestly, if I were you, I'd take the order details or the contract straight to the IRS first to see what they say.

And if the service is provided to a tax entity (and from what I gather, that firm in Austria is a registered taxpayer), my understanding is that the recipient of the service handles the sales tax calculation in this scenario.
In my experience, an Italian vendor once issued a reverse charge invoice because the transport service was completed on my end... so I made that connection.
On another note... here I go again... regarding a ticket for a trade show in Austria... do I just book it to account 221 and 4 using the exchange rate from the date of issuance? 🤦 🤦🤦
I think I'm losing the thread here.🙂