Doing business with USA member states

ruggedmaker2 said:So, who did you buy it from? How is their company registered over there? Are they actual used car dealers, or just some business selling off its own old fleet?
We haven't dealt with registered used car dealers before, so I'm flying blind here.

We bought it from a company that was just selling off its own used vehicles, which triggers reverse charge (no special margin scheme involved), plus all that typical mountain of paperwork involving the IRS, DMV... all that stuff.
In that case, you go with the standard VAT filing, report the liability, you can't claim input credit, and you list it under the specific section for purchasing passenger cars and transport equipment.

The company is private and deals in both new and used vehicles. We mostly stick to used ones because everything is over 3729 miles. The thing is,
we aren't buying these cars for personal use; we’re buying them exclusively to flip for profit. Because of that, I'm thinking we don't have an obligation to file a Form S, right? Just a summary report if we sell it to another company within the European Union.

Nicole Wells38 said:The company is private and deals in both new and used vehicles. We mostly stick to used ones because everything is over 3729 miles. The thing is,
we aren't buying these cars for personal use; we’re buying them exclusively to flip for profit. Because of that, I'm thinking we don't have an obligation to file a Form S, right? Just a summary report if we sell it to another company within the European Union.

Oh, you absolutely have to file with the IRS. Period. I run a business selling used commercial trucks, and let me tell you—if you don't have that official tax stamp proving you reported the acquisition alongside the purchase invoice, your customer is stuck. They won't be able to register the vehicle, and they'll end up getting it impounded by the police. So, yeah! You're filing that paperwork with the IRS.

Anyone here dealt with Puerto Rico before? 😬
Puerto Rico is a bit of a weird one—it’s part of the US, but the tax rules aren't exactly the same. From what I can tell, they don't really have a standard sales tax setup like we do, and a lot of other taxes just don't apply there. Because of that, companies over there don't necessarily need an IRS EIN. I've got an invoice from a vendor in Puerto Rico for some services, and honestly, I'm totally lost on how to book this in my books 🤔
If I list it under foreign services, the system automatically calculates the tax liability and the credit, but that feels totally wrong since the vendor can't even apply a reverse charge if they don't deal with sales tax. Plus, they aren't showing up in the IRS database.

I just received my first foreign invoice in about seven years... since so much has changed recently, I’m feeling a bit lost on what to do with it. Specifically, how should I record this in my books and how does it work for sales tax reporting?
Here is the situation: the invoice is from Germany... the VAT number is verified in the system... and it’s for a software subscription.
The entire invoice is written in English, but the amounts are listed in USD... it shows the net amount, calculates the tax at 25%, and gives a total (though there's a note at the bottom mentioning the final total in USD)
How on earth do I book this? And more importantly, how do I report it for sales tax purposes? Any help would be greatly appreciated!

That’s way too vague. Give me some actual details here.
If they slapped US sales tax on you, are they even registered for tax purposes in the States?
What kind of tax ID is showing up on your receipt?

ruggedmaker2 said:That’s way too vague. Give me some actual details here.
If they slapped US sales tax on you, are they even registered for tax purposes in the States?
What kind of tax ID is showing up on your receipt?

It’s possible they have a sales rep out there, but this was ordered directly through their official website. Since it was an online purchase, we didn't deal with a person—we just received the invoice via email.
The Tax ID is DE245838579

I have no clue why they slapped an American tax ID next to a German one. It makes zero sense.
Just ask them to walk you through it.
Look, if there’s no tax liability transfer happening—for whatever reason—and they aren't even registered for sales tax here in the States, then they really ought to be using the German tax info.
Take a closer look at that invoice, specifically that tiny fine print usually buried at the bottom 😁 ; they might actually have our local tax ID listed there and you just missed it.

darkotter35 said:I could really use some advice on something here. I’m working as an independent contractor and I want to bill a company over in Canada for my services. What’s the absolute cheapest and least headache-inducing way to handle this for both me and the business in Canada?
Also, is this even doable?
We’re talking about a net amount of $10,000—meaning I want that full amount to hit my US bank account after all the taxes and fees back home are settled.
Roughly how much would that end up costing the company in Canada, and what kind of hit would I take personally?
Thanks!

Look, if you don't have a registered business, you can't just whip up an invoice out of thin air.
The whole thing depends on what you actually do. Are you a freelancer, an artist, or working on some kind of intellectual property?
Give us a little more detail; I'm sure someone here who deals with this headache regularly will chime in.

If you don't hear back here soon, my advice is to just call some of those tax advisory hotlines from the professional journals.
Since you aren't a subscriber, look for the non-subscriber line (usually starts with 060).
You've got options like the IRS, RIPUP, or Bank of America... just check their websites and grab a number to ask them directly.

ruggedmaker2 said:I have no clue why they slapped an American tax ID next to a German one. It makes zero sense.
Just ask them to walk you through it.
Look, if there’s no tax liability transfer happening—for whatever reason—and they aren't even registered for sales tax here in the States, then they really ought to be using the German tax info.
Take a closer look at that invoice, specifically that tiny fine print usually buried at the bottom 😁 ; they might actually have our local tax ID listed there and you just missed it.

I've been staring at this invoice for twenty minutes now, and I can confirm there is absolutely no American tax ID listed on it.

Just fire off them an email and demand to know why they butchered the invoice like that. Honestly, I'm out of ideas.

The gear is coming from a supplier over in China, and their invoice is made out to us here in the States.
The equipment hits the EU in Hamburg, where our freight forwarder there handles all the customs and the usual headaches.
From Hamburg, it heads straight to the end customer in Poland. We’ll be issuing the invoice to the Polish client.
It should be tax-exempt here in the US, but I'm drawing a blank on which specific code or article I need to slap on the outgoing invoice to make it official.

So, I’ve got a situation here. An American company is getting an invoice for some goods acquired from a supplier in Bulgaria. There's a receipt attached to the invoice. Now, the twist is that this exact same merchandise is being sold off to a customer who is also based in Bulgaria. All three parties involved have valid VAT IDs. Here’s the kicker: the goods never actually move. The Bulgarian supplier ships them directly to the Bulgarian buyer. The American company is just acting as the middleman in this whole setup, and they aren't even tacking on a markup. Honestly, I don't get it. If both the supplier and the buyer are right there in Bulgaria, why on earth is this being routed through an American firm?

Robin Gray9 said:I just received my first foreign invoice in about seven years... since so much has changed recently, I’m feeling a bit lost on what to do with it. Specifically, how should I record this in my books and how does it work for sales tax reporting?
Here is the situation: the invoice is from Germany... the VAT number is verified in the system... and it’s for a software subscription.
The entire invoice is written in English, but the amounts are listed in USD... it shows the net amount, calculates the tax at 25%, and gives a total (though there's a note at the bottom mentioning the final total in USD)
How on earth do I book this? And more importantly, how do I report it for sales tax purposes? Any help would be greatly appreciated!

This sounds like an electronically delivered service to me...

Did you buy the software online and just download it—and by any chance, did you forget to provide your Tax ID?? If that happened, they probably assumed you weren't a business entity and charged the full 25% US sales tax since you're the end consumer here in the States.

I'm curious about something—if I get a VAT ID (mostly because I'll be selling stuff through eBay and need to account for the fees they charge me),
does that threshold rule still apply where the tax is charged in the seller's country?

On that note, am I even required to register for a VAT ID in the first place? specifically when dealing with an eBay entity (a European Union firm) providing "electronically supplied services" to me.

Just a heads-up, I’m operating as a small business under the simplified flat-tax system...
(If I don't have a VAT ID but actually should have one just to handle those service purchases, how would they even catch me?)

What exactly constitutes a "legal entity that is not a taxable person" under the US Value Added Tax Act? http://porezi.net/zakoni/a_pdv/Pravi...dnost_2017.htm (If you could just search the page for "legal entity that is not a taxable person"—it pops up in a few spots, but I can't seem to find a clear definition of who actually falls into that category or what else it might be synonymous with.)

2) Does anyone here have firsthand experience with the VAT refund system? It would be great if we could share our stories—specifically, who managed to successfully claim a refund and who didn't (and perhaps what specific scenarios caused the issues).

Could someone clear something up for me? I'm looking to pick up some goods from a company over in Slovakia. If I buy this as an individual, the price hits $896, but they actually offer a way to buy without paying sales tax. Once I plug in all my business info (address, Tax ID, etc.), the final tax-free total comes out to $717.
What's the deal with the tax in this scenario? Am I going to get hit with a bill for it later, or did they already handle the import taxes into the US, meaning I'm good to go with just this tax-free price? Thanks!

Since you have to pay VAT regardless, and given that Slovak rates are likely lower than what we deal with here in the States, it’s probably smarter to let them handle the tax calculation.

If they apply a reverse charge on the invoice—basically shifting the tax liability to you—you'll be responsible for paying the US VAT. Just make sure you grab a tax ID before that happens if you don't already have one. Look, I'm certainly no tax expert, but that's just my take based on how much I've dug into this stuff myself.

I was hoping someone could set me straight if I'm off base here—if I'm invoicing a client in another EU country, and they pay me through eBay using either Euros or Dollars (since that's how eBay handles things),
is it okay if my invoice is issued in USD? Or can I list a second currency alongside it?

Also, regarding the language—can the invoice be strictly in English, provided that all the mandatory legal notes are also in English?

Are there any other specific requirements I need to keep in mind when billing clients abroad?

Taylor Campbell4 said:I was hoping someone could set me straight if I'm off base here—if I'm invoicing a client in another EU country, and they pay me through eBay using either Euros or Dollars (since that's how eBay handles things),
is it okay if my invoice is issued in USD? Or can I list a second currency alongside it?

Also, regarding the language—can the invoice be strictly in English, provided that all the mandatory legal notes are also in English?

Are there any other specific requirements I need to keep in mind when billing clients abroad?

The latest updates to the US Value Added Tax Act are basically just more paperwork for everyone involved. It’s the same old story: new regulations that promise clarity but mostly just create a bureaucratic maze for small businesses trying to stay compliant.

Issuing bilingual invoices isn't illegal, nor will it be flagged as misconduct, according to the IRS after they revisited their stance on the issue. While the standard rule is that invoices must be issued in English using the Latin alphabet—following precedents set by the European Court of Justice—the IRS has clarified its position. You can always issue an invoice in a foreign language by using a bilingual format....if that's what it takes to satisfy the requirements for cross-border transactions.

The export barriers are finally crumbling, thanks to the IRS preemptively moving to fix a mess. This follows last year's ruling by the European Court of Justice that basically tore apart the agency's old 2013 stance. It turns out the auditor, Dubravka Kopun, was right all along when she warned us that the old logic needed a serious overhaul. She clarified today that the whole issue was about those bilingual invoices and whether you can still claim a VAT deduction when, say, an invoice is issued in both English and American.It’s just standard operating procedure in everyday business.

Does anyone actually know how this works? Like, what should I be putting on my invoice if the client is a legal entity from a third country (the USA) but the actual delivery happens within the European Union (Germany)?

I'm trying to figure out if I should mark it as VAT exempt under some specific local rule, or if we're looking at a reverse charge situation here. And if it is reverse charge, whose tax ID am I even supposed to list, since our buyer is based over in the States?