Doing business with USA member states

thanks 👍
If anyone else knows anything else about this, please let me know!

Carol Price4 said:Nah, if you don't have an acquisition setup, goods aren't actually entering California—so there's no sales tax to worry about.

And Intrastat? Doesn't apply either since the shipment never officially hit the US...

thanks for the help

now I'm stuck in this weird limbo trying to figure out how to log this in the books
I use QuickBooks, and whenever I book EU invoices for goods, I use the EU goods acquisition option, but that immediately pulls it into my sales tax and VAT reports

I assume it stays on the balance sheet under liabilities and input tax
but I just leave those specific items off the actual sales tax filing?

Hello everyone,
it seems everyone here has experience dealing with the EC, unlike myself.🐔
My question is this:
a small business, a tax-registered entity in the US, performs construction services in Canada (installing a roof using their materials)
When I invoice the Canadian clients, does the reverse charge apply if they are registered taxpayers?
What if the client is an individual?
And how should the invoice look if I provide construction materials purchased here and installed in Canada?
Regards

vividotter912 said:Hello everyone,
it seems everyone here has experience dealing with the EC, unlike myself.🐔
My question is this:
a small business, a tax-registered entity in the US, performs construction services in Canada (installing a roof using their materials)
When I invoice the Canadian clients, does the reverse charge apply if they are registered taxpayers?
What if the client is an individual?
And how should the invoice look if I provide construction materials purchased here and installed in Canada?
Regards

I think I have that somewhere in my notes, I'll let you know.👍

vividotter912 said:Hello everyone,
it seems everyone here has experience dealing with the EC, unlike myself.🐔
My question is this:
a small business, a tax-registered entity in the US, performs construction services in Canada (installing a roof using their materials)
When I invoice the Canadian clients, does the reverse charge apply if they are registered taxpayers?
What if the client is an individual?
And how should the invoice look if I provide construction materials purchased here and installed in Canada?
Regards

At the seminar, there was a question about "a contractor performing work on property in Italy."
The answer: in the US, you just report the receipts in the KPI, nothing in the VAT or ZP forms.
In Italy? Well, one would have to study Italian laws and follow them accordingly.

As for the construction material? I suppose I would treat that as a standard delivery of goods within the EU. So, it goes into the VAT and ZP forms.👍

casualorca5 said:At the seminar, there was a question about "a contractor performing work on property in Italy."
The answer: in the US, you just report the receipts in the KPI, nothing in the VAT or ZP forms.
In Italy? Well, one would have to study Italian laws and follow them accordingly.

As for the construction material? I suppose I would treat that as a standard delivery of goods within the EU. So, it goes into the VAT and ZP forms.👍

Yes, thanks, but now I'm even more confused.
Is it a service or a delivery of goods? I don't know if the tax treatment is the same.
I read in previous posts that it matters whether the service was performed on the property—it's important for destination-based taxation, depending on whether the taxpayer is a business or an individual.
And the terms "VAT exempt" versus "reverse charge" are tripping me up.
I hope I don't look stupid, just inexperienced... I haven't dealt with this stuff before, just started working in small business accounting this year.

🙂Hi there,
does anyone here have hands-on experience dealing with the specific tax rules for selling telecom services or digital goods to customers within the European Union?
Specifically, I’m trying to figure out which VAT rate actually shows up on the invoice—basically, what amount gets charged to an EU citizen if the price is set for Americans $10—and whether the invoice needs a special disclaimer or note.
Everything I turn up online is just super vague. The IRS website has instructions about registering for the MOSS system and how the registration and payments work, but there isn't a single real-world example out there.
I would be incredibly grateful if someone could share some insight or practical experience regarding this. 🙂🙂

You apply the sales tax rate from the state where the customer is located—so if they're in a place like New York with its specific rates, the gross price stays the same for everyone. Basically, for them, the total is $10, but instead of seeing a base of $24 plus $6 tax, it’s more like $25.21 plus $4.79 tax.

I don't have hands-on experience with this yet—just going off theory here—thank God 😁

But one thing I am curious about—when you're taking PayPal payments, how are you even supposed to figure out which state a customer is in if you're running a webshop?

Carol Price4 said:You apply the sales tax rate from the state where the customer is located—so if they're in a place like New York with its specific rates, the gross price stays the same for everyone. Basically, for them, the total is $10, but instead of seeing a base of $24 plus $6 tax, it’s more like $25.21 plus $4.79 tax.

I don't have hands-on experience with this yet—just going off theory here—thank God 😁

But one thing I am curious about—when you're taking PayPal payments, how are you even supposed to figure out which state a customer is in if you're running a webshop?

I assumed that was how the tax percentage worked, but I honestly have no clue how my team is going to pull this off. When an order hits their site, they get the payment info and the total amount, and then the electronic service is considered rendered once the payment clears.
I even called up the IRS—they're just as clueless about how this works in practice; they just recite what the tax code says (all theory, zero real-world examples).
According to whatever law applies, the crucial factor is where the computer or the transmitter sending the order is located—that determines the tax jurisdiction, not necessarily where the customer lives. Apparently, you can even get penalized for it—like if Hans is usually based in Germany but is currently vacationing in Spain and places an order from there, and I charge him German sales tax based on his home address instead of the Spanish rate 😵 We Americans running small businesses just don't have the resources to track that kind of data. Sadly.
The only way we can know a customer's location is by whatever country they list during checkout.
My guys are probably going to have to change the workflow entirely—collect the customer's data first, and then send them a pro forma invoice based on that info.

Ryan Rogers4 said:I assumed that was how the tax percentage worked, but I honestly have no clue how my team is going to pull this off. When an order hits their site, they get the payment info and the total amount, and then the electronic service is considered rendered once the payment clears.
I even called up the IRS—they're just as clueless about how this works in practice; they just recite what the tax code says (all theory, zero real-world examples).
According to whatever law applies, the crucial factor is where the computer or the transmitter sending the order is located—that determines the tax jurisdiction, not necessarily where the customer lives. Apparently, you can even get penalized for it—like if Hans is usually based in Germany but is currently vacationing in Spain and places an order from there, and I charge him German sales tax based on his home address instead of the Spanish rate 😵 We Americans running small businesses just don't have the resources to track that kind of data. Sadly.
The only way we can know a customer's location is by whatever country they list during checkout.
My guys are probably going to have to change the workflow entirely—collect the customer's data first, and then send them a pro forma invoice based on that info.

So, does the business just register for sales tax in every single state at once?

Give me one specific detail on how this actually works in practice if it’s supposedly functional. I’m genuinely curious to see the real-world application here.

Good luck 😉

Henry Edwards33 said:So, does the business just register for sales tax in every single state at once?

Give me one specific detail on how this actually works in practice if it’s supposedly functional. I’m genuinely curious to see the real-world application here.

Good luck 😉

lilli, do you have an alternative? Like, do you register for sales tax in the country where you're shipping, or do you just use the simplified CIA system here—paying our guys and letting them pass the cash along...

Carol Price4 said:lilli, do you have an alternative? Like, do you register for sales tax in the country where you're shipping, or do you just use the simplified CIA system here—paying our guys and letting them pass the cash along...

Got it, thanks. I haven't really looked into the specifics yet.

What do you guys think—is this note actually okay and sufficient on an invoice for a three-party deal where we're the ones receiving the goods? I'm having a nightmare trying to get through to these guys from Canada—I've explained it to them several times now—but they just consulted with their accountants and sent over an invoice with this specific note:
"Three-way delivery: VAT exempt per Section 46(1) ZDDV-1"

An American trucking company has a valid VAT ID and handles transport from Washington, D.C. to Berlin... The invoice is issued to a taxpayer based in Canada.
How exactly should I structure this invoice? Which clauses apply here, and am I only calculating tax on the leg driven within the US?
Should I be billing based on specific legs traveled according to mileage:
Canada - US
US-Canadian border
Canada - Germany
Germany-Canada
Canada-US
US-Canada

or just go with
Canada - US
US-Canadian border
European Union-European Union
European Union-European Union
Canadian-US border
US-Canada

Thanks for any help!

When I'm booking an invoice for services received from the European Union, there's a 25% reverse charge liability... the service itself is 15 EUR, plus a 20 € reminder fee and 0.26 in interest on arrears, but does that total 20.26 fall under non-taxable items??

So, I just got the green light from my supplier over in the European Union, dated July 13th. Since this was part of a three-way deal, everything was already logged under July. Now I’m stuck wondering—do I actually need to go back and fix the forms for July?
II 13 -amount
III 13 -amount
VIII 6 -amount
Does this look right to you guys?

Steven Anderson14 said:So, I just got the green light from my supplier over in the European Union, dated July 13th. Since this was part of a three-way deal, everything was already logged under July. Now I’m stuck wondering—do I actually need to go back and fix the forms for July?
II 13 -amount
III 13 -amount
VIII 6 -amount
Does this look right to you guys?

Actually, I'll just answer my own question, maybe someone else is stuck on this too.😉
The folks at the IRS told me that since three-way deals don't show up on the standard VAT return, I should just include the approval in the next filing (October). No need to mess with the July paperwork.

An American business is invoicing a Canadian taxpayer based in Canada for real estate services performed there.

Does the American firm need to register for VAT in Canada and charge it on the invoice, or does the tax liability shift to the Canadian entity?

vividotter912 said:An American business is invoicing a Canadian taxpayer based in Canada for real estate services performed there.

Does the American firm need to register for VAT in Canada and charge it on the invoice, or does the tax liability shift to the Canadian entity?

It's a reverse charge situation since you're billing the buyer... assuming you guys have a valid VAT ID.

When it comes to property services, you pay the VAT in whatever state the real estate is actually sitting in.