International VAT obligations: how does it work?

Your business is gaining momentum and becoming known outside Belgium. But what happens with VAT abroad? When do you charge it, and when do you have to pay it? And is there a difference inside and outside the European Union? Find out here.

1. Who pays VAT on transactions within the EU?
2. Who pays VAT on transactions outside the EU?
3. What are the exceptions to the 'reverse charge’ VAT rule?
4. How do I know whether an international VAT number is valid?
5. Do I have to pay VAT myself when making purchases abroad?
6. How can I simplify my VAT declaration?

Who pays VAT on transactions within the EU?

When it comes to VAT abroad, it’s first important to establish where you are operating as an entrepreneur: inside the EU or outside the EU.

If you supply goods or services to EU clients, the client almost always has to pay VAT in their own country. We call this 'reverse charge' VAT.

Who pays the VAT on transactions outside the EU?

When supplying goods or services goods outside the EU, you don't have to charge or pay VAT. 

However, you will have to prove that your products have effectively left the EU. For this, use the documents you receive from customs when the products are inspected, along with other relevant documents.

What are the exceptions to the 'reverse charge’ VAT rule?

There are a few exceptions to the reverse charge VAT rule:

• If you are VAT-registered in Belgium and provide services to a private individual in another EU member state, you simply charge VAT as usual.
• In some countries, you cannot reverse charge VAT on services related to real estate. In this case, you need to register your activity in that EU country, apply for a VAT number, and keep accounts there for at least one year. So check beforehand whether all these obligations for VAT abroad are proportionate to the final revenue you expect.

Read all about reverse charge VAT

How do I know if an international VAT number is valid?

It’s crucial that your clients have valid VAT numbers.

💡Accountable tip: check via the EU search engine VIES whether a company is registered to trade with companies in other EU countries. If you can’t find the number, it’s best to check with your client.

Something else to note: if you’re going to deliver products to international customers within Europe, you need to prove – just like for trades outside the EU – that the goods have indeed left the country. Therefore, gather as much evidence as possible for the VAT administration: 

• Tracking proof of a parcel
• Invoice from a postal company
• Receipt email from your customer

Do I have to pay VAT myself when making purchases abroad? 

If you make purchases abroad with your business, logically, the reverse of what you read above applies. It’s important to give your business number to the supplier so they don’t invoice you for VAT abroad (i.e. in the country of origin). 

What happens if you still receive a foreign invoice that includes VAT? Unfortunately, you can’t recover the VAT via your VAT return. So make sure to agree everything properly with the supplier from the start.

How can I make VAT returns simpler? 

By now, you’ve seen that the international VAT system is quite complex.

Key points to remember: you don’t charge or pay VAT abroad if you operate outside the EU. Different rules apply within the EU. Keep the rules in mind so you can avoid any penalties.

Would you like to enjoy hassle-free VAT returns? With Accountable, you can see a projection of your exact VAT contribution for that quarter at any time. Plus, the app prepares your VAT return for you, exactly when you need it. So start using the app for free now.

Want to go one step further? Then hire a partner accountant. They’ll review your finances every quarter and give strategic advice on how to continue growing as an independent.

Author - Valesca Wilms

As content marketing lead at Accountable Belgium, Valesca writes about freelancing, self-employment, and taxes based on her own experience as a freelancer.

Who is Valesca ?