Cross-border invoicing: EU intra-community vs third-country, currency rules

Scenario 1: EU → EU, B2B with valid VIES VAT number. Place of supply (Art. 44): customer's country. VAT due in customer's country. Mechanism: reverse charge (Art. 196 + national transposition). You issue at 0% with the legal note "Reverse charge — VAT to be accounted for by the recipient" in the customer's language. The customer reports VAT in their VAT return as both output + input (usually netting to zero). This is the EU's flagship simplification for cross-border B2B services.

Pre-conditions Clozo enforces: - Customer's country differs from yours. - Customer has a VAT number filled. - VAT number validates in VIES (the EU's official checker, queried at proposal-issue time).

If the VAT number doesn't validate, the engine drops to the "domestic" rule and applies your country's standard rate. This protects you from the case where a customer claims to be a business but isn't VAT-registered — domestic rate is the safe fallback.

Scenario 2: EU → EU, B2C (consumer). Default place of supply (Art. 45): supplier's country. Your country's VAT rate applies. Exception for cross-border digital services (Art. 58, telecoms/broadcasting/electronic services): place of supply is the consumer's country — you can either register for VAT in every country your consumers live (impractical) or use the One-Stop-Shop (OSS) scheme.

OSS thresholds and mechanics: - Threshold: €10,000/year of total cross-border B2C sales of digital services + distance sales of goods (Art. 59c). Below this, you may charge your home country rate. - Above the threshold: you charge the consumer's country rate. Register for OSS once with your home tax authority. File one quarterly OSS return that distributes VAT across all EU member states with your consumers. - Clozo's `oss` rule (article 5.2): when your regime is OSS-opted-in and the client is B2C in another EU country, the engine applies the client's country rate. PDF prints the breakdown clearly.

Scenario 3: EU → non-EU (third country). Place of supply for B2B services: customer's country (Art. 44 read with Art. 59 for some specific services). Effect: outside EU VAT scope. You issue at 0% VAT with no special note. Your tax-office return reports it as "exports of services" or your national equivalent.

For B2C: Art. 59 lists specific service categories (legal, advertising, telecoms, broadcasting, electronically-supplied services) where the place of supply for non-EU consumers is the consumer's country — also outside EU VAT. Other B2C services to non-EU consumers: place of supply is your country, your home VAT applies.

Scenario 4: special cases. - Triangular transactions (Art. 141): A in country X invoices B in country Y for goods shipped to C in country Z. Specific simplification rules apply; Clozo doesn't currently model this — speak to your accountant. - Margin scheme (Art. 311 et seq.): for second-hand goods, art, antiques, collectors' items, travel agents. VAT on the margin only, not the full price. Clozo's vat_rate_override lets you set 0% on the document and add the margin-scheme legal note manually; full margin-scheme support is on the roadmap. - Reverse charge B2B services to EU customer that has no VAT number: drops to your country's domestic rate. Customer can request VAT refund from their tax office under EU 13th Directive (non-EU) or Directive 2008/9/EC (EU) — but most don't bother for small amounts.

Currency rules.

EU member states allow invoices in any currency (Art. 230 of the Directive). However: - The VAT amount itself must be expressed in the national currency of the country where VAT is due. If you invoice a German B2B customer in USD with reverse charge, your invoice can be USD-only (no VAT line). If you invoice a German consumer in USD, the VAT amount must also be shown in EUR on the invoice (using the FX rate at the date of taxable event). - The FX rate must come from a recognised source. EU-wide acceptable: the European Central Bank (ECB) reference rate published on the day of taxable event, or the rate of the customer's country central bank (Art. 91 of the Directive). National rules may further specify (e.g. Germany §16 Abs. 6 UStG: ECB or BMF-published monthly rate).

Clozo's currency handling: - Default currency: EUR (most common for EU freelancers). - Other supported: GBP, USD, PLN. - When you issue an invoice in non-EUR, Clozo records the FX rate from the ECB published rate for the issue date. The rate is locked at issue time (you can't retroactively re-rate). - The PDF always shows the invoice currency. If VAT is due in your country and the currency is non-EUR, the PDF prints both the foreign-currency total and the EUR-equivalent VAT amount with the FX rate footnote. - Stripe charges in the invoice currency; the freelancer's payout to their bank may incur an FX conversion at Stripe's published rate (typically ~2% above mid-market).