Why is there no VAT on the invoice?
There is no VAT on your invoice because Gigapay (Gigapay Sweden AB) is located in Sweden. Cross-border transactions are considered to be VAT-free and therefore, if your company is located outside of Sweden, you will issue an invoice to Gigapay without VAT.
But my client is in the same country as me?
Usually, when you invoice your client who is in the same country as you, you would issue the invoice including VAT. Your client might be in the same country as you are, but when you are using Gigapay to get paid, you will invoice us and therefore you should issue an invoice without VAT.
What is reverse charge?
Reverse charge is the common term used in the EU for when the liability to pay VAT is on the buyer and not on the seller. This menas that you as an influencer do not include VAT on your invoice when issuing an invoice to a foregin company.
When does it apply?
Reverse charge applies to cross-border transactions. When you sell goods or services to another VAT-registered business, you usually include VAT on your invoice if you both are in the same country. With reverse charge, you do not charge VAT on the sales invoice if your client is located outside of your country. As a seller, you transfer the liability to the buyer for them to pay VAT.
How does reverse charge work?
When services are sold to a foreign taxable person, the main rule is that you do not charge VAT. The services are considered to be supplied in the country where the buyer is, Gigapay, is established. When you sell your service, you transfer the liability to Gigapay to report and pay VAT. To be able to do this you must our VAT-registration number, and also be VAT registered, meaning you as an influencer must be VAT registered to be able to use the reverse charge mechanism reverse charge.
How do I claim back the VAT on an invoice with reverse charge?
When Gigapay purchase a service from a foreign influencer, we will be liable to report output VAT (reverse charge) in our VAT return.
You as an influencer that sells as a service with reverse charge, does not put VAT on the invoice. You might think you will be missing out on VAT, but when you report this to the tax authorities, you report it as “Export of goods and Services”.
In the event of reverse charge VAT liability, Gigapay as the buyer have the right to deduct the input VAT. We calculate the input VAT according to general regulations in our country. If we have full deduction rights, we can deduct the entire VAT and the net will be 0.
When you as an influencer want to invoice us it is important that you do not apply VAT and invoice it as a cross border transaction. You should also add a description on why it is no VAT, for instance “**Article 44, 196 VAT directive reverse charge applies”**
Why do different countries have different terms on “reverse charge”?
When searching for the meaning of reverse charge, you may come across different terms depending on which country you are in. Even though “reverse charge” is commonly used in the EU, the principle is the same globally. Meaning that, when you sell services to foreign companies, the liability to report VAT lies on the Client you sell to and not on you. You will therefore issue an invoice without any VAT.
Sweden —> Sweden = VAT
You sell a service for 1000 SEK, VAT in Sweden is 25%, meaning you input 1250 SEK when you issue the invoice to the Swedish company.
Netherlands —> Sweden = NO VAT.
Service cost 1000 EUR VAT is 21%. You send the invoice without VAT and for 1000 EUR . Swedish company will later pay the tax authorities the 210 EUR when they do their own VAT return.
Norway —> Sweden = NO VAT
Norway, which is outside EU, applies the same rules. Service cost 1000 NOK, VAT is 25%. You send the invoice with 1000 NOK only. Swedish company will later declare the invoice as a sale within EU.