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.
• An international invoice must include the amount in foreign currency in addition to CHF, ideally using the daily rate published by the Federal Tax Administration.
• The invoice language must be understood by the customer; producing a French version and a foreign-language version makes tax audits easier.
• Swiss VAT doesn't apply to foreign customers: the VAT exemption and the corresponding legal article must be noted on the invoice.
Whether you are providing a service or selling goods, and whether you are selling to a private individual or to another business, the invoice lies at the heart of a company’s accounting process. While it is fairly straightforward to issue between two parties based in the same country (since tax and accounting rules remain common to both), what about invoicing a foreign customer?
Invoicing a foreign customer: which rules should you follow?
Choice of currency
Although the Swiss franc still has its place on an international invoice, it is necessary to add the total amount in the foreign currency as well (along with all prices for each line item of goods and/or services).
To ensure a conversion that accurately reflects the exchange rate in force between the two currencies, you can use the daily exchange rate updated every day by the FTA.
Choice of language
What matters most with an invoice is that it can be understood by the customer. If you do not speak the language of the person you are dealing with, English is always a fallback option.
Please note : Make sure, however, that the language of Shakespeare is genuinely understood by the customer! In certain countries, such as China, for example, bilingual English speakers remain a minority.
Keep in mind that speaking your customers’ language represents a competitive advantage that should not be underestimated as a service provider.
Depending on the resources available to you and the profitability this operation is likely to represent for your business, it may be worthwhile outsourcing such a task: a one-off translation of your standard invoice could well pay off in the long run and help build customer loyalty.
Good to know : Should a tax audit ever take place, the ideal approach is to produce two copies of your invoice, one in English or another foreign language and the other in French.
Invoicing a foreign customer: how do you handle VAT?
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 a service or an export of goods.
To make your invoice valid, it is nevertheless necessary to include the wording “VAT exempt”, together with the number of the article justifying said exemption.
Please note: In this case, it is Article 23 of the VAT Act that applies in most cases.
As the regulations change depending on the country in which your customers reside, an exporter approved by the FTA will be able to answer your questions on the export of your goods or the provision of your services with precision.
Special cases
Temporary export
A more unusual situation concerns the temporary export of goods to a foreign country. Since this type of transaction implies that no sale takes place (as the goods will subsequently be brought back to Switzerland), VAT in the host country is exempt in the same way as Swiss VAT.
This scenario notably applies when taking part in trade shows, fairs or exhibitions. Unfortunately, such an initiative involves other costs, namely those linked to using a freight forwarder or making a specific request to the carrier.
As a result, the costs generated by this type of process generally outweigh the VAT costs.
Good to know: Obtaining an ATA Carnet as part of an international promotional tour makes it possible to avoid these expenses.
Collection of goods
Another, rarer possibility is for a foreign customer to come and collect their goods directly on Swiss territory. In this case, and because the service takes place in Switzerland, VAT cannot be exempted.
Invoicing a foreign customer: specific handling
Aside from the VAT exemption statement, no other legal mention is required. The elements found on an invoice addressed to a foreign customer are therefore similar to the mandatory fields found on this accounting document within Swiss borders.
Due to the volatility of the exchange rate between the Swiss franc and other foreign currencies, it is best to keep the amount ultimately repatriated to your bank account recorded in CHF as its accounting value.
VAT exemption, no particular constraint other than your customers’ language… The greatest uncertainty regarding invoicing a foreign customer remains exchange rate risk.
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