Swiss company: how do you invoice a foreign customer?
As a financial document binding both the client and the service provider, an invoice is required to validate any commercial transaction, both within Switzerland and internationally.
Whether providing a service or selling goods, and whether selling to a private individual or another business, the invoice is at the heart of a company’s accounting process. Whilst it is fairly straightforward to issue an invoice between two parties based in the same country (as tax and accounting rules remain the same), what about invoicing a foreign customer?
Invoicing a foreign customer: what guidelines should you follow?
Choice of currencies
Although the Swiss franc is still used on international invoices, it is necessary to include the total amount in the foreign currency (as well as the prices for each line item of goods and/or services).
To ensure that the conversion accurately reflects the current exchange rate between the two currencies, you can use the daily exchange rates updated by the FTA.
Language selection
The most important thing about an invoice is that the customer can understand it. If you don’t speak the same language as the person you’re dealing with, English is always a fallback option.
Please note: Do make sure, however, that the client fully understands the English language! In some countries, such as China, for example, bilingual English speakers are still in the minority.
Bear in mind that, as a service provider, speaking your clients’ language is a competitive advantage that should not be underestimated.
Depending on the resources at your disposal and the potential benefits this could bring to your business, it may be worth outsourcing such a task: a one-off translation of your standard invoice could well prove beneficial in the long term and help build customer loyalty.
Good to know: Should a tax audit ever take place, it is best to provide two copies of your invoice: one in English or another foreign language, and the other in French.
Invoicing a foreign customer: how should VAT be handled?
Exemption
Because, in the context of international invoicing, Value Added Tax (VAT) is determined by your customer’s country and its tax legislation, Swiss VAT does not apply, whether the transaction involves the provision of services or the export of goods.
However, in order for your invoice to be accepted, it must include the words “VAT-exempt” along with the reference number of the legislation authorising such exemption.
Please note: In this instance, section 23 of the VAT Act applies in the majority of cases.
As regulations vary depending on the country in which your customers are based, an exporter authorised by the FTA will be able to provide you with accurate answers to your questions regarding the export of your goods or the provision of your services.
Special cases
Temporary export
A more unusual scenario involves the temporary export of goods to a foreign country. As this type of transaction does not involve a sale (since the goods will subsequently be returned to Switzerland), VAT in the host country is exempt in the same way as Swiss VAT.
This applies in particular when taking part in trade fairs, exhibitions or similar events. Unfortunately, such an arrangement entails additional costs, namely those associated with using a freight forwarder or making a specific request to the carrier.
Consequently, the costs incurred by this type of procedure generally exceed the VAT costs.
Good to know: Obtaining an ATA Carnet as part of an international promotional tour allows you to avoid these costs.
Collection of goods
Another, less common scenario is where a foreign customer may come to collect their goods directly in Switzerland. In this case, and because the service is provided in Switzerland, VAT cannot be exempted.
Invoicing a foreign customer: specific procedures
Apart from the VAT exemption statement, no other legal information is required. Consequently, the details included on an invoice sent to a foreign customer are similar to the mandatory fields you would find on this accounting document within Switzerland.
Due to the volatility of the exchange rate between the Swiss franc and other foreign currencies, it is best to keep the repatriated amount in your bank account denominated in CHF for accounting purposes.
VAT exemption, no particular constraints other than the language spoken by your customers… The biggest uncertainty when it comes to invoicing a foreign customer remains the exchange rate risk.
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