Invoices are at the heart of a company’s accounting system, whether it supplies services, or sells merchandise, either privately or professionally. It is easy to prepare invoices when both parties are in the same country and have the same tax and accounting rules –but how do you invoice international customers?
What are the rules for invoicing international customers?
Although the Swiss franc is central to your international invoicing, the total amount will be shown in the foreign currency too – along with the price of each product line and/or service.
To guarantee an accurate exchange rate between two currencies, you can use the currency exchange rate that the Federal Tax Administration publishes daily.
Your customers must understand their invoices. If you do not speak the same language as your contact, English might be a good backup choice.
NB: Always check whether your customer understands English! In some countries like China, English speakers are few and far between.
Remember that speaking your customer’s language gives you a competitive advantage as a supplier.
Depending on the means you have available and the profitability of the operation for your business, outsourcing this task could be an option. Simply having your standard invoice translated could be helpful in the long term and help build customer loyalty.
Handy tip: If an audit is a possibility it is best to produce two copies of your invoices, one in English or the language of your customer and one in French.
Exchange your money quickly and securely
Invoicing international customers – VAT
The tax system of the host country determines VAT on international invoices, rendering Swiss VAT inapplicable regardless of whether you are providing a service or selling goods.
For your invoice to be legal, the VAT exemption must be detailed on the invoice along with the legal article that validates the exemption.
NB: Article 23 of the Swiss VAT Law applies in most cases.
With different rules in each of your customers’ countries, an AFC-approved exporter will be able to answer your queries on exporting goods or supplying your services accurately.
A more unusual situation involves the temporary export of goods to another country. As this kind of operation does not involve a sale (as the goods will be repatriated to Switzerland) VAT is not payable in the host country or Switzerland.
This usually involves trade fairies and exhibitions. Unfortunately, there are other costs involved related to transportation and specific transporter requests.
These costs are usually more than any VAT that would have been payable.
Handy tip: Obtaining an ATA carnet for international promotions will help to avoid these costs.
Collection of merchandise
Another less common occurrence is when an international customer collects their merchandise on Swiss soil. As this transaction takes place in Switzerland it is not exempt from VAT.
Invoicing international customers – specific requirements
Other than stating the VAT exemption, no other detail is legally required. So the elements that appear on invoices for an international customer are similar to those found on a standard invoice for transactions that take place within Switzerland.
Given the volatility of the exchange rate between the Swiss franc and other currencies, it is best to keep the repatriated sum in your CHF bank account as a book value.
With VAT exemptions and easy ways around communicating in your customers’ language – exchange risk remains the biggest risk when it comes to invoicing international customers.
b-sharpe will streamline your exchange transactions to be more transparent, simpler and quicker!