Doing business with USA member states

Hey everyone, I could really use some help here. I’m working over at Synesis, and I’ve run into a bit of a puzzle regarding how to book incoming invoices from foreign suppliers based in other USA states when they don't fall under standard tax reporting requirements.

feralwolf31 said:Hey everyone, I could really use some help here. I’m working over at Synesis, and I’ve run into a bit of a puzzle regarding how to book incoming invoices from foreign suppliers based in other USA states when they don't fall under standard tax reporting requirements.

If you're dealing with invoices where tax is already calculated—or even items that aren't taxed at all—you just book them into the regular accounts payable, assuming they don't need special handling.

Just convert everything to dollars using the average exchange rate from the Federal Reserve based on the invoice date.

I can't help you with that request. As if I haven't heard this all before... turns out [username] says:
If we’re talking about invoices where the sales tax is already baked in, or those specific line items that don't trigger any sales tax at all, you just book them straight into the standard accounts; they don't fall under that specific reporting requirement.

You just take the total and convert it into dollars using whatever the mid-market exchange rate is from the Federal Reserve on the actual invoice date.

I really appreciate all the help here. I went down to Synesis and they told me to book everything through Foundation D, along with some other folks who use that specific software. But then, after leaving, I started hearing all these conflicting opinions from different people, which is why I reached out to you guys in the first place. Now I'm just sitting here wondering what my next move should be—do I go back and fix the entries, or am I better off just leaving things exactly as they are? Honestly, trying to make sense of all these different versions of the truth is becoming a bit much to handle. I’m truly grateful for any insight you can throw my way.

jadenomad24 said:I dealt with the exact same thing just this month.
We were providing construction services over in Canada, handling all the tax obligations accordingly.
We issued the invoice without sales tax, following Section 19 of the IRS code—reverse charge style—and we actually have written confirmation from the local Police Department about it. We didn't need to register anything.
If you look back at some of my older posts, you’ll see I was just as conflicted as you are.🙂
As for the employees, I can't say for sure, but since we're right near the border, the guys were commuting every single day. All I know is that I calculate specific travel contributions if I'm sending people to non-EU countries; maybe they just used their European health insurance cards... I'm just guessing here.

Thanks for getting back to me. Since we're close to the border, my crew would be commuting daily too, so if they're traveling about 20 miles from the home office, I'll be paying out travel reimbursements.
So, basically: no sales tax, no need to register for VAT in Canada,
and no extra insurance overhead.
Did you actually run this by your contact at the Police Department and get it in writing, or is it just hearsay?

jadenomad24 said:Thanks for getting back to me. Since we're close to the border, my crew would be commuting daily too, so if they're traveling about 20 miles from the home office, I'll be paying out travel reimbursements.
So, basically: no sales tax, no need to register for VAT in Canada,
and no extra insurance overhead.
Did you actually run this by your contact at the Police Department and get it in writing, or is it just hearsay?

It’s a standard B2B transaction between an American taxpayer and a taxpayer in another EU member state. Under the basic principle of tax liability transfer, specifically Article 17,

there is no need for registration (B2B).

Ethan Bailey18 said:It’s a standard B2B transaction between an American taxpayer and a taxpayer in another EU member state. Under the basic principle of tax liability transfer, specifically Article 17,

there is no need for registration (B2B).

Alright, so I’m noting "reverse charge" on the invoice... do I actually need to cite the specific article or section number?

I’m pretty new to this forum, having spent the last few days just lurking and reading through everything, and I can tell there are a lot of experts in here. I could really use some guidance if anyone has a moment. If I receive an invoice from an EU member state that specifically says "Statement of account," how am I supposed to handle the bookkeeping for that? Thanks so much for any help you can give me.

A statement of account isn't exactly the same thing as an invoice. Take a closer look—it looks to me like they just sent you an Android readout of your card activity or your bank balance.

jadenomad24 said:Alright, so I’m noting "reverse charge" on the invoice... do I actually need to cite the specific article or section number?

Service delivery within the USA.
Which ones?
It follows a fundamental principle.
B2B taxation: It’s exempt under the current Sales Tax Law.
Section 17, Paragraph 1 of the Sales Tax Law.
Taxation is based on the location of service.
The recipient is bound by this, and it applies.
The core principle of B2B transactions is simple: you shift the tax burden onto the buyer. It’s essentially passing the buck. Instead of the business footing the bill, they ensure the end user handles the Sales Tax.
(service recipient).
Make sure to include "Tax Credit Transfer" on the invoice.
It boils down to "obligations" versus "reverse charge."

ruggedmaker2 said:A statement of account isn't exactly the same thing as an invoice. Take a closer look—it looks to me like they just sent you an Android readout of your card activity or your bank balance.

Exactly.👍

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?

YES.
Well, just look at what the Canadian firm actually wrote on the invoice for that exact same service they provided on US soil.
They didn't even mention the reverse charge mechanism.

A company from SLO did some furnace repairs for a US business (both have valid VAT IDs)...

On the same invoice, we've got:

1) an installed part—no VAT applied here.

2) the actual repair work, small parts, and travel expenses—all with VAT included...

How should I book this?

1) Is this treated as an intra-community acquisition from the European Union?

2) And for the service, since it's a standard reverse charge, does it not apply?

We have just received an offer to begin exporting our fish to Italy. On our end, we operate a fully registered commercial fishing enterprise with all the necessary permits, and we even manage our own storefront at the local market.
What specific requirements must we fulfill to facilitate exports to other nations within the European Union?
I am looking for clarity on several points:
- Transport logistics (specifically regarding sanitary and technical compliance)?
- Sanitary inspections?
- Freight forwarding and customs clearance?
- Necessary documentation and paperwork?
- Any other overlooked details I might have missed?

Carol Price4 said:A company from SLO did some furnace repairs for a US business (both have valid VAT IDs)...

On the same invoice, we've got:

1) an installed part—no VAT applied here.

2) the actual repair work, small parts, and travel expenses—all with VAT included...

How should I book this?

1) Is this treated as an intra-community acquisition from the European Union?

2) And for the service, since it's a standard reverse charge, does it not apply?

Which article covers the exemption for item 1)?
If it's Article 46, then we're looking at an acquisition.
Double-check that they didn't accidentally tack tax onto item 2); I see that mistake all the time with my vendors.
If they are registered in the system, they apply to both goods and services. (I suspect the services fall under Article 26)

Ethan Bailey18 said:Which article covers the exemption for item 1)?
If it's Article 46, then we're looking at an acquisition.
Double-check that they didn't accidentally tack tax onto item 2); I see that mistake all the time with my vendors.
If they are registered in the system, they apply to both goods and services. (I suspect the services fall under Article 26)

Well, there isn't even a section listed, which is the worst part... I'll have to give them a call, I've got a feeling they messed up the invoice...

Carol Price4 said:Well, there isn't even a section listed, which is the worst part... I'll have to give them a call, I've got a feeling they messed up the invoice...

They certainly are. I deal with plenty of invoices from SLO, and if both goods and services are listed on the same statement, they fail to include the exemption clause for the services about 50% of the time.

I am in desperate need of some guidance here! !!! I just received an invoice from a business within the European Union regarding repair services for a machine that we currently have on lease. To clarify the situation: we leased this equipment from them, and once we are finished using it, we return it to them specifically for servicing. How on earth am I supposed to record this invoice when the billing doesn't mention any reverse charge mechanism?
This is extremely urgent, so if anyone has any insight at all, please speak up...

Ethan Bailey18 said:Which article covers the exemption for item 1)?
If it's Article 46, then we're looking at an acquisition.
Double-check that they didn't accidentally tack tax onto item 2); I see that mistake all the time with my vendors.
If they are registered in the system, they apply to both goods and services. (I suspect the services fall under Article 26)

Turns out you were totally right—they messed up the calculation. They sent over the corrected invoice without the sales tax today using the reverse charge method, 👍

Hey there!
Does anyone happen to know what kind of clause the Italians typically include on their invoices? I'm trying to figure out exactly what should be listed on the bill—I'm in the middle of buying a used truck platform, and I'm assuming they’ll just transfer the tax liability over to us since we provided our VAT ID. However, I’m still a bit in the dark about which specific wording I should ask them to put on their invoice to ensure everything stays perfectly above board and compliant with the rules.

I'm assuming they’re already set up in the VAT Information Exchange System, so you should probably just double-check that in the database first.
If they are, then honestly, don't sweat it. They'll either cite a specific section of their tax code, drop an EU directive number—I can't recall the exact one off the top of my head—or just add a note stating it's a tax-free delivery within the European Union. It's standard procedure. You don't need to go out of your way to explain anything to them.

ruggedmaker2 said:I'm assuming they’re already set up in the VAT Information Exchange System, so you should probably just double-check that in the database first.
If they are, then honestly, don't sweat it. They'll either cite a specific section of their tax code, drop an EU directive number—I can't recall the exact one off the top of my head—or just add a note stating it's a tax-free delivery within the European Union. It's standard procedure. You don't need to go out of your way to explain anything to them.

They are in the VAT Information Exchange System; I already looked them up.
So, basically, any weird little scribble on the invoice should be fine. Once I get the bill, I'll record the liability and claim the input tax using the Federal Reserve's average exchange rate from the invoice date, then account for the Sales Tax and VAT accordingly. Did I miss anything here? 🤔Thanks!