Quote:
Originally Posted by KlenTelaris
Yep, and the irony none of accountants which i asked about it had a clue about it, including company which i used for dealing with papers and accountant which i use currently.
I think it's due fact how when dealing with EU companies it's not VAT deduction, but VAT auto-deduction, so if someone would charge me VAT on invoice i wouldn’t be able to deduct, unless it wasn’t been included in invoice at all, ie. auto-deducted.
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Well... I think auto-deduction is not the correct term. EU B2B services are a reverse charge. It's not 0% because it's VAT-free or already deducted. It's 0% because the buyer side is responsible for adding the VAT. (Of course right after adding they can also deduct, IF eligible.)
With your setup (not VAT registered, but have a EU VAT ID), you are basically a private person in the dealings:
1. local companies have to charge you VAT
2. you can't charge VAT,
3. you can't deduct the VAT from the invoices from local companies
Basically you are like a private person, a VAT "endpoint", who pays VAT for real when buying something.
Now with EU B2B it gets strange.
- B2B EU income: you don't charge VAT for B2B services when getting income, that's clear
0% VAT on the invoice, the other side is responsible for paying it. It's not 0% because you are VAT free locally, but because it's a reverse charge because of EU laws.
- B2B EU expenses - if you get a 0% VAT invoice from an EU company, you may need to self-asses the local VAT for it and pay it
Your side is responsible for paying it. Normal VAT registered companies add then deduct this VAT, effectively paying 0% VAT. (The VAT will still be paid down the line of course, when they sell something to an "end-user".)
If you're not VAT registered, you can't deduct, and you may be responsible for adding the local VAT to the 0% invoice, reporting it via a special form, and paying it.
This is a stupid quirk of course, that originates from you getting 0% VAT invoices from EU businesses (because you've got an EUVATID), which you don't get from local businesses.
About this special case, I wouldn't be surprised if not all countries enforce self-reporting and paying it.
I personally find these "special tax status"/"VAT exempt" things to be too much trouble when doing international business. My experience is the same, most accountants don't know the rules for these special cases (special tax status + international transaction).
If you're only doing international B2B, and not selling anything to locals (or private persons abroad), you don't get any extra money by being VAT-exempt. But if you get big advantages on other kinds of taxes because of it, it can still be well worth it of course.
