Managing international clients: currencies and VAT
Introduction
You've landed your first client abroad? Congratulations. But before celebrating, a crucial question arises: how to invoice correctly? Between VAT on exports, choosing the currency and mandatory information, multi-currency invoicing can quickly become an administrative headache.
The rules differ depending on whether you export physical goods or services, whether your client is located in the EU or Asia, and whether you invoice in CHF or in the local currency. A mistake on VAT can lead to complications with the Federal Tax Administration, whilst poor management of exchange rates can erode your margins.
This guide details the basics of invoicing in foreign currencies and the VAT rules for exports applicable from Switzerland. You'll find concrete examples, tax obligations by type of service, the information to include on your international invoices, and tools to efficiently manage exchange rate conversion. The objective: invoice in full compliance without wasting time or money.
📌 Summary (TL;DR)
Invoicing international clients requires mastering two essential aspects: VAT rules according to destination and type of service, and managing foreign currencies. Exports of goods are generally exempt from Swiss VAT with appropriate documentation, whilst services follow complex rules depending on the place of taxation.
The choice of invoicing currency, managing exchange rates and correctly accounting for transactions in currencies are crucial to protect your margins. Rigorous documentation and specific mandatory information guarantee your tax compliance.
📚 Table of contents
Invoicing in foreign currencies: the basics to master
Invoicing in foreign currencies becomes necessary as soon as you work with clients outside Switzerland. Your European partners often prefer the euro, American clients the dollar. This practice simplifies their payments and strengthens your competitiveness.
The most common currencies are EUR, USD and GBP. Each transaction in foreign currency must be converted to CHF for your accounting, according to Swiss standards. You must document the exchange rate used and keep this information for 10 years.
Managing multi-currency involves choosing a consistent reference rate and tracking exchange rate differences between invoicing and collection. These differences can impact your accounting result, especially on large amounts or long payment terms.
Choosing the invoicing currency: CHF or client's currency?
The choice of currency depends on several factors: your client's preferences, the transaction amount, and your exposure to exchange rate risk. A German client will appreciate an invoice in euros, whilst a small amount may justify staying in CHF.
Invoicing in CHF: you transfer the exchange rate risk to the client, simplify your accounting, but potentially reduce your competitiveness. Invoicing in foreign currency: you facilitate client payment, but assume the risk of fluctuation between issuance and settlement.
For EU clients, the euro generally prevails on significant amounts. For countries outside the EU, assess the currency's stability and sector practices. Large companies often accept CHF, SMEs prefer their local currency.
Managing exchange rates: conversion and risks
Determine the exchange rate at the time of invoice issuance. You can use the daily rate or a monthly average rate, depending on your accounting policy. The important thing is to apply a consistent and documented method.
Reliable sources include the Swiss National Bank (SNB) and rates published by commercial banks. Clearly indicate on the invoice the rate used and the reference date. This transparency avoids disputes and facilitates your accounting.
Exchange rate risk occurs between issuance and payment. If the CHF strengthens, you lose money. To minimise this risk: invoice quickly, negotiate short payment terms, or include an exchange rate revision clause in your general terms and conditions for large amounts.
VAT on exports: rules according to destination
Exports from Switzerland generally benefit from VAT exemption, but the rules vary depending on the nature of your service and the destination country. This exemption is not automatic: it requires appropriate documentation.
The fundamental distinction separates physical goods from services. For goods, the exemption applies as soon as they leave Swiss territory. For services, the place of taxation depends on the type of service and the client's status (professional or individual).
Three main zones structure the rules: the European Union, third countries outside the EU, and special cases such as Liechtenstein. Our guide on VAT on exports details these mechanisms by situation.
Export of goods: VAT exemption
VAT exemption on exported goods applies when you prove that the goods have left Switzerland. You must keep customs documents (export declaration, exit confirmation) and proof of delivery abroad.
On your invoice, explicitly mention the exemption with a standard formula: "Delivery exempt from VAT (art. 23 para. 2 no. 1 VAT Act)". This mention is mandatory to justify the absence of VAT during a tax audit.
Deadlines matter: the exemption applies if the export takes place within a reasonable time after invoicing. Keep all documentation (invoice, delivery note, customs documents, proof of transport) for 10 years. Without this evidence, the tax administration can claim VAT retroactively.
Service provision: place of taxation
For services, the destination principle applies to B2B relationships (between professionals). If your client is a company established abroad, Swiss VAT generally does not apply. The client must self-assess VAT in their country according to the reverse charge mechanism.
The B2B/B2C distinction is crucial. For a German professional client, you invoice without Swiss VAT. For a German individual, the rules differ depending on the type of service. Digital services, consultancy and intellectual services generally follow the recipient's location.
Concrete examples: a consultancy service for a French company is invoiced without Swiss VAT. A design service for an Italian individual may require the application of Swiss or Italian VAT depending on the amount. Always verify your client's VAT status before invoicing.
Specific rules EU vs non-EU
The rules differ between the European Union and third countries. For the EU, request your professional client's intra-Community VAT number and verify its validity on the VIES system. This number justifies the Swiss VAT exemption.
The reverse charge mechanism means that your European client declares VAT themselves in their country. You invoice excluding VAT with the mention "Reverse charge" or "Self-assessment". For neighbouring countries (France, Germany, Italy, Austria), these rules apply fully.
Countries outside the EU follow similar rules but without the VIES system. Keep proof of your client's professional status. Our article on international invoices details the specificities by geographical area.
Mandatory information on international invoices
International invoices require specific information in addition to standard elements. Indicate your complete contact details, your Swiss VAT number (if you are registered), and your client's complete contact details with their VAT number if applicable.
Clearly specify the invoicing currency. If you convert to CHF, mention the exchange rate used and its reference date: "Amount converted at EUR/CHF rate 0.95 on 15.03.2024". This transparency avoids misunderstandings.
For VAT exemption, use an explicit formula with legal reference: "Delivery exempt from VAT (art. 23 VAT Act)" for goods, or "Service exempt, reverse charge by recipient" for B2B services. These mentions are different from domestic invoices and mandatory for your tax compliance.
Documentation and compliance: what to keep
Documentation justifies VAT exemption during a tax audit. Systematically keep: proof of export (customs documents, exit certificates), contracts or purchase orders, correspondence with the client, and confirmations of delivery or service execution.
The legal retention period in Switzerland is 10 years. Organise your documents by client and by tax year. Digital filing facilitates searches and guarantees document longevity (risk of physical deterioration).
Without adequate documentation, the tax administration can refuse VAT exemption and claim the corresponding VAT amount, plus interest. The financial risks justify rigorous organisation. Systematically digitise all documents upon receipt to avoid losses.
Accounting for invoices in foreign currencies
Swiss accounting principles require all transactions to be recorded in CHF. Convert each invoice in foreign currency at the rate on the date of issuance. This initial conversion determines the accounting amount of your receivable and your turnover.
Exchange rate differences appear between invoicing and collection. If the CHF strengthens, you record an exchange loss. If the CHF weakens, you realise an exchange gain. These differences constitute financial income or expenses separate from your turnover.
For VAT declaration, use the CHF amount of the initial invoice. Exchange rate differences do not affect the VAT base. BePaid's VAT management simplifies tracking by automatically calculating amounts for your declaration, even on multi-currency invoices.
Tools and procedures to simplify management
Standardised invoice templates with pre-filled exemption mentions reduce errors. Automate currency conversions by integrating exchange rates updated daily. Tracking payments in different currencies requires clear visibility on expected versus received amounts.
BePaid facilitates international invoicing by automatically managing currency conversions and VAT calculations according to destination. You create compliant invoices in a few clicks, with mandatory information adapted to each situation. The VAT functionality simplifies your declarations.
Practical checklist: verify the client's VAT status, choose the appropriate currency, apply the correct documented exchange rate, add exemption mentions if necessary, and archive all supporting documents. This systematic routine eliminates oversights and guarantees your compliance.
Common mistakes to avoid
Common mistakes are costly. Forgetting the VAT exemption mention exposes you to a tax adjustment. Using an undocumented exchange rate complicates accounting justification. Not keeping proof of export prevents benefiting from the exemption retroactively.
Applying Swiss VAT when it is not due penalises your competitiveness and complicates recovery from the client. Not verifying a European client's VAT number weakens your position in case of audit. Each error requires time-consuming administrative corrections.
Consequences include tax adjustments, penalties, and a significant administrative burden to correct declarations. Prevent these errors by establishing a validation procedure before issuing each international invoice. A systematic 2-minute check avoids hours of subsequent corrections.
Invoicing international clients requires particular attention to two essential aspects: choosing the currency and correctly applying VAT. Invoicing in foreign currency exposes your business to exchange rate risk, but can facilitate commercial relationships. VAT on exports follows precise rules depending on whether you sell goods or services, and depending on your client's location.
To remain compliant, systematically document your transactions: proof of export for goods, certificates of domicile for services, and keep all supporting documents for 10 years. Accounting for invoices in currencies requires setting a reference exchange rate and managing conversion differences.
BePaid allows you to manage VAT on your international invoices with appropriate mandatory information according to destination. Create your invoices in a few clicks, with or without VAT according to export rules, and track your payments with ease. Try it free and simplify your international invoicing today.
