Can I send invoices to customers who are living in a different country?
Yes, you can! As a private trader, you can send invoices abroad. This guide covers a few things that require special attention when sending invoices abroad.
Sending invoices abroad
You can send invoices both to EU countries and outside of the EU. You can also create those invoices in English. However, the currency of the invoices must be in euros.
Abroad invoicing is an extra feature in UKKO Private Trader service as of 1st October 2021 and costs an extra 10€/month for our customers. Read more here.
EU reverse charge mechanism
There is currently a reverse charge system in the EU. This means that in the case of a transaction between Member States where the seller is a VAT-liable company and the buyer is a company registered for VAT in another EU country, the invoice is always VAT-free. The payer of the invoice pays VAT.
The buyer of the service or product must have a valid VAT registration number in another EU country. This is called a VAT number and must be marked on the invoice. The seller must therefore verify the buyer's VAT number when preparing the invoice. If you apply the reverse charge system, the invoice must contain a formal recognition of this. In UKKO Pro, this function is automatically done for you.
Billing outside the EU is also possible if the used currency is euro. In the case of goods and services, taxation works in a slightly different way.
In the export of goods, transport plays an important role in taxation. If the goods are transported directly outside the EU by a seller or a non-EU carrier, the export is usually tax-free. On the other hand, if the buyer arranges the transport with his own transport equipment, the export is usually tax-free only if the buyer is a foreign trader.
In the case of services, taxation is affected by the country of sale. The country to which taxes are paid is defined in the country of sale regulations for the services. These provisions determine which state is entitled to tax the sale of a service. The VAT Act defines in more detail the provisions on when taxes paid on sales are paid to Finland, i.e., when the sale of a service takes place in Finland. VAT is usually paid by the seller.
As a broad guideline, if you invoice a company outside the EU with a valid company number, the sale is usually taxed in the buyer's country, i.e., the sale is made at a VAT rate of 0%. On the other hand, if you alternatively bill an individual outside the EU, the sale is usually taxed in the seller's country, i.e., 24% VAT. However, even if foreign business customers are not invoiced for VAT, such sales must also be reported to the taxpayer in the VAT return.
In VAT matters, you can also get in touch with the Finnish tax administration in order to get more detailed information regarding your situation. The responsibility for the correctness of VAT in invoicing lies with the issuer of the invoice. A company selling services or products must determine for itself whether their activities also bring VAT obligations abroad.
Please note that if you import anything from outside the EU or sell products to consumers around the world via an international platform, the use of our service is not suitable for you.