Guides

#What's different, and what isn't

An invoice to a customer in another country follows the same basic logic as a domestic one: you and the customer agree on what's being delivered, at what price, and on what payment terms, and the invoice reflects that agreement. What differs is mainly three things: VAT, currency and the route the money takes.

The order matters. Decide how VAT will be handled and which currency to use before you send the quote, not once the invoice needs to be created. A price that looked good can turn out much worse if the exchange rate moves, or if it turns out VAT has to be added to an amount the customer thought was final.

#VAT within the EU: the main rule for services

When selling services to a taxable person, normally a business, in another EU country, the main rule is that the service is considered supplied in the buyer's country. The buyer then accounts for the VAT there, and you invoice without Swedish VAT, with a note on the invoice stating that the buyer is liable for the VAT. Compare this with a Swedish business customer, where Swedish VAT is added at the standard rate of 25 percent for most services.

For the main rule to apply, the customer's VAT number needs to appear on the invoice and be verified. Check it using the European Commission's VIES service and keep a record of the result. There are also exceptions to the main rule for certain types of services, for example those linked to a property or to an event at a specific location, so never assume the main rule always applies. Skatteverket (the Swedish Tax Agency) describes the rules and exceptions at skatteverket.se.

#Private individuals and customers outside the EU

If you sell to a private individual in another EU country, different rules apply than for sales to businesses, and for certain types of services VAT should be accounted for in the buyer's country even then. There's no simple rule of thumb that covers every case, so you can't assume the treatment will be the same as for a business customer.

When selling to customers outside the EU, yet another set of rules applies, and local taxes in the customer's country may also come into play. It sometimes happens that a foreign customer deducts withholding tax before paying, which leaves you with less than the invoiced amount. Ask the customer in advance whether any such deduction will be made, so you can address it in the agreement rather than after the fact.

#Currency, exchange rate and payment route

Preferably invoice in a currency you're able to handle. Invoicing in Swedish kronor shifts the exchange-rate risk to the customer, while invoicing in the customer's currency is easier for them but means you carry the risk between agreement and payment. Decide who bears the risk already in the agreement, and state the currency clearly.

Also decide who pays the fees for the transfer itself. Bank fees, intermediaries and exchange-rate markups can eat into the amount, and on smaller invoices this can be noticeable. State full payment details on the invoice, IBAN and BIC for payments from abroad, and spell out the payment terms clearly so no assumptions about local customs creep in.

#A practical checklist before you send

Check the customer's full details: legal name, address, country and VAT number if it's a business within the EU. Check that the invoice shows the currency, payment terms, due date and what was actually delivered, described in enough detail for an outsider to understand the deal. Find out whether the customer requires a purchase order number or a specific reference, as this is a common reason foreign invoices get stuck.

Keep the supporting documentation. The agreement or order confirmation, correspondence about price and currency, and your VAT check are what show the invoice is correct if the question comes up later. If you're unsure how to handle the VAT, ask before invoicing, since correcting an incorrect VAT return afterwards is considerably more of a hassle.

#Let someone else make the assessment

As a light entrepreneur, the light-entrepreneur company makes the VAT assessment and creates the invoice, while your job is to describe the assignment and the customer correctly in the details you provide. With Truster, you invoice without a company of your own, get paid a salary with tax and contributions already handled, and don't need to keep track of cross-border VAT rules yourself. The platform is built by a payment institution authorised by the Finnish Financial Supervisory Authority and is used by more than 55,000 people across the Nordics. Truster is launching in Sweden by invitation: join the waitlist.