Legalsense offers the possibility to set a different VAT rate in case of a foreign client.
When entering a new client, in the field Applicable VAT you can choose from 3 different options
2. Intra-community (EU/EEA)
3. Outside of the EU/EEA
The default VAT rate is already filled in. If you do not make a choice the system will assume a default VAT rate.
Do you provide services to clients in other EU countries? If so, choose the Intra-community (EU/EEA) option and enter a valid VAT number. See this page for the required formats per country.
Whether you actually have to charge VAT depends on whether you are providing the service to an individual or a business.
Are you working for a private individual? In most cases, the service will be taxed in your country and you will therefore charge your VAT. In this case, 'private individual' means a client who does not have a VAT identification number. In this case you choose 'Default' under 'Applicable VAT'.
Is your client a entrepreneur? Then the following often applies: the service is taxed in the country of the client, whereby that client calculates and pays the VAT in its own country. We call this intra-community. The term 'entrepreneur' also refers to an organisation that is not an entrepreneur, but does have a VAT identification number. More information can be found on the website of your tax authorities.
If the VAT is paid in the country of the client, then the VAT is reverse-charged. You do not charge VAT and state 'VAT reversed charge' on the invoice. This is not the same as applying the 0% VAT rate!
You are obliged to mention the customer's VAT number on the invoice. In the VAT return, you indicate the service provided in the statement of intra-Community.
Outside of the EU/EEA
Do you supply services to clients outside the EU or do you purchase services from suppliers outside the EU? You should then select the following option: 'Outside of the EU/EEA'.
It is important for you to know In which country the VAT was charged, yours or another country.