Doing business with USA member states

vividotter912 said:I'm issuing an invoice for construction services performed in Mexico.

What exactly should I include in the notes:
the service is not taxable under Section 19 of the Tax Code, or
the tax liability is transferred per Section 19...

I know the invoice needs to be in dollars, but if I want to show the amount in euros as well, do I just use
the mid-market exchange rate?

Look, when you're dealing with real estate services, the tax hit happens right where the property sits.
In your case, that’s Canada.
So, unless they have some kind of simplified filing system—which varies wildly from one European Union country to the next—you're probably looking at having to register for VAT over there in Canada. You'll have to double-check their specific rules.

The bill needs to be in USD, but yeah, you can include the Euro amount using the mid-market rate from the invoice date.

ruggedmaker2 said:You’ve got to register for VAT purposes in a second state if you’re actually running business operations within its borders.
Take real estate, for instance. Usually, the tax location is wherever the property sits, but individual states have the power to set their own rules or carve out specific exceptions. (I'm bringing this up because I once handled a job on a property over in Canada, and we didn't even need to register there because we fell under one of their local legal loopholes)
It’s entirely up to each state how they play it, so when those situations pop up, you really have to dig into that specific state's statutes.
The first step is always identifying the exact taxing jurisdiction—once you nail that down, everything else follows.

Look, my point is this: when you're dealing with messy, complicated business setups, you can't just wing it. You have to do your homework and know exactly how things work before you even start.

Thanks, ruggedmaker2, for the reply. I did some digging through your old posts and found this one. It sounds like your situation was just like mine: doing property work in Canada without needing to register.
I actually called some consultants—I think it was Ms. Wolf—and she suggested that a simplified tax procedure applies in Canada.
Does anyone know where I can find a list of countries that allow that kind of thing?

We didn't go the simplified route back then because we weren't the direct contractors. We were actually subbing under a firm that had set themselves up specifically for VAT purposes, so honestly, we just got lucky 😁

So, basically, we didn't bill the construction services directly to Canada; we billed the main contractor from the States who had registered for VAT over there.
It’s a bit of a headache, I know, but that’s how it went down.

As for which countries follow these rules and which don't? You're probably better off checking with each country individually.
Just shoot an email to the Canadian tax authorities and ask—better safe than sorry.
I know for a fact France applies it, but I can't say for sure about Canada. Since we were just subs working under the main guy who handled the registration there, it never even crossed our desks.

Hey there! Just saying hi.

I’m curious to get everyone’s take on something... we're looking at a situation where we'd be handling all the installation and assembly work for equipment that an investor bought directly from a specific vendor and had shipped straight to the job site. What do you guys think about that setup?

So, there’s that one company—you know the one—that sells us all the gear. Once they finish the installation and wrap up all the onsite work, they send over those warranty certificates for everything they installed. And then, we just take those warranty docs and pass them right along to the client on our invoices. Simple enough, right?
So, that company is actually based out of Austria—they have their main headquarters right here in the States—but if you look at the account, the tax ID starts with ATU... weird, right?
So, I just saw a charge hit my account for $4,500... and now I’m sitting here scratching my head. Honestly, I can't tell if this is actually for some goods I bought or if it's a service fee from somewhere in the European Union?? Just totally unsure what we're looking at here.

So, we just sold off a fixed asset over in Canada... I'm assuming this would be an invoice without sales tax? You know, handled like a standard export under Section 45 or whatever... right?

Matthew Mendoza9 said:Hey there! Just saying hi.

I’m curious to get everyone’s take on something... we're looking at a situation where we'd be handling all the installation and assembly work for equipment that an investor bought directly from a specific vendor and had shipped straight to the job site. What do you guys think about that setup?

So, there’s that one company—you know the one—that sells us all the gear. Once they finish the installation and wrap up all the onsite work, they send over those warranty certificates for everything they installed. And then, we just take those warranty docs and pass them right along to the client on our invoices. Simple enough, right?
So, that company is actually based out of Austria—they have their main headquarters right here in the States—but if you look at the account, the tax ID starts with ATU... weird, right?
So, I just saw a charge hit my account for $4,500... and now I’m sitting here scratching my head. Honestly, I can't tell if this is actually for some goods I bought or if it's a service fee from somewhere in the European Union?? Just totally unsure what we're looking at here.

It’s a service-based model—from what I gather, you guys just handle the installation of the equipment, while the hardware itself gets billed directly to the developer. So, basically, that gear won't even show up on your invoice.

I keep asking questions, yet I always overlook one crucial detail.
As I mentioned earlier, I am invoicing for construction services in Canada on a real estate project involving our own materials, but I neglected to ask if the whole package is classified as a service?
Both the labor and the materials...😵

I haven't personally run into that issue since our workload is basically just non-stop grinding, but I’m pretty sure the Republicans have already weighed in on it.
I can't quite recall the exact date or where I stumbled upon it, but it was definitely out there somewhere.
It had something to do with the ratio of material costs compared to the total invoice value... or something along those lines 🤔 , my memory isn't perfect.
Just take a look through the official opinions over on the Republican website.

What does your contract actually say about this specific job? There might be some fine print in there that clears things up.

Ryan Rogers4 said:It’s a service-based model—from what I gather, you guys just handle the installation of the equipment, while the hardware itself gets billed directly to the developer. So, basically, that gear won't even show up on your invoice.

Honestly, those warranty certificates always trip me up... because they charge us for the certificates (which we then pass along to the developer), yet they're technically part of the equipment we're installing...

Matthew Mendoza9 said:Honestly, those warranty certificates always trip me up... because they charge us for the certificates (which we then pass along to the developer), yet they're technically part of the equipment we're installing...

A warranty is pretty intangible—it's essentially a service.
The only way I'd bundle everything under goods is if the warranty was listed right there on the invoice alongside the hardware.

Ryan Rogers4 said:A warranty is pretty intangible—it's essentially a service.
The only way I'd bundle everything under goods is if the warranty was listed right there on the invoice alongside the hardware.

Yeah, you make a good point... thanks!

I looked into property services over in Austria.
An American taxpayer is required to register there for VAT purposes.
What's the move here—do I issue the invoice with tax or not, and where does it go on the return? help please...🙏

Hey there,
I’ve got an invoice from a vendor in Canada for services performed right here in the US, and they’ve included their tax ID.
The note on the invoice says this:
VAT exempt per Section 1.46 of the local tax code or Article 138 of Directive 2006/112/EC.
So, how am I supposed to handle this on my sales tax return?
Do I treat it as a service acquisition where I calculate 25% sales tax based on the invoice total, then report that amount as both a liability and a credit at the same time?

jadenomad24 said:Hey there,
I’ve got an invoice from a vendor in Canada for services performed right here in the US, and they’ve included their tax ID.
The note on the invoice says this:
VAT exempt per Section 1.46 of the local tax code or Article 138 of Directive 2006/112/EC.
So, how am I supposed to handle this on my sales tax return?
Do I treat it as a service acquisition where I calculate 25% sales tax based on the invoice total, then report that amount as both a liability and a credit at the same time?

That’s correct.👍

I’ve got an invoice from a company based in Canada, but they’re billing us for a service actually performed here in the US.
They have a valid tax ID.
The note on the invoice says: VAT is exempt under Article 138, paragraph 1 of EU Directive 2006/112/EC.
How am I supposed to report this amount on my sales tax return?
Should I treat it as an acquisition of services and calculate 25% tax on the total?
And then just list it as both a liability and a credit at the same time?

jadenomad24 said:I’ve got an invoice from a company based in Canada, but they’re billing us for a service actually performed here in the US.
They have a valid tax ID.
The note on the invoice says: VAT is exempt under Article 138, paragraph 1 of EU Directive 2006/112/EC.
How am I supposed to report this amount on my sales tax return?
Should I treat it as an acquisition of services and calculate 25% tax on the total?
And then just list it as both a liability and a credit at the same time?

Spot on! That's exactly right...👍

vividotter912 said:I looked into property services over in Austria.
An American taxpayer is required to register there for VAT purposes.
What's the move here—do I issue the invoice with tax or not, and where does it go on the return? help please...🙏

Correcting myself, if anyone cares, (maybe ruggedmaker2👍)
Turns out registration isn't required for real estate services in Canada; it falls under the reverse charge rule per the IRS code. That's what my consultant at the Police Department told me...

👍
Just figured I'd throw that out there, in case anyone actually needs it.

Hey everyone, I could really use some help here... I’ve run into a situation I haven't dealt with before. I bought a vehicle from a company that doesn't have a valid tax ID. Should I be recording this under received goods and services from non-resident taxpayers? And am I supposed to calculate the sales tax based on the price actually paid?
I already sent an inquiry out, but I haven't heard anything back yet, and today is the deadline for filing...

Thanks, ladies.
Just realized my post ended up going through twice. 😉