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I sit in Germany (EU), and my customer is in Brazil:

According to the department of finance in my home town, as a freelancer I do not have to bill VAT because my customer is an enterprise residing outside of Germany.

But: Will Brazil take VAT, that for example my customer has to pay?

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  • You don't bill VAT because you are doing export. What exactly do you mean by the last question?
    – Cjxcz Odjcayrwl
    Commented Aug 21, 2013 at 8:26
  • @ŁukaszLech Concerning the last question, see my answer: My customer has to pay VAT on my invoices in Brazil. This is unfortunate since it indirectly also affects my rate. By the way, inside of the EU no VAT has to be paid on international business to business transactions. And inside of Germany, VAT has to be paid, but business customers do get it back.
    – feklee
    Commented Aug 21, 2013 at 11:43

3 Answers 3

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According to HMRC's VAT section the rules for export of goods and services are petty clear. In summary:

  • If goods are exported outside the EU, VAT isn't charged.
  • If the place of supply of your services is not in the EU, then your supply of services is outside the scope of VAT. You don't have to charge EU VAT or include the sale on your VAT Return.

In other words, if you are a UK company supplying goods or services to Brazil then VAT is not applicable, and you should ZERO RATE them.

So, that's the EU perspective...

In Brazil, they also have a tax on the provision of services - ISS = Imposto Sobre Serviços

The best information I can find comes from KPMG as a PDF

It looks like this is chargeable on the supply to the Brazilian customer, even if the supplier is outside of Brazil...

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  • That's good information, and with sources, but it doesn't answer my question about VAT when importing into Brazil. Note that even when I as a German freelancer don't have to charge for VAT, if my customer has to pay VAT when importing, then this indirectly still affects my rate.
    – feklee
    Commented Aug 21, 2013 at 18:49
  • Added to my answer..
    – Andrew
    Commented Aug 21, 2013 at 20:00
  • Thanks. On page 7 of the document you linked to, it says: "On importing of services, ISS, PIS and COFINS are paid", where ISS is the *Tax on Services, PIS is the Social Integration Tax, and COFINS is the Social Contribution Tax.
    – feklee
    Commented Aug 21, 2013 at 20:14
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My customer just told me that they "will have to pay 24% of taxes on [my] invoices to the Brazilian government".

Unfortunately, I don't have an authoritative source. But common sense tells me that he is right. For example, some years ago, I imported a product from Switzerland, and when I picked it up at the customs office I had to pay VAT. Note that while Switzerland is in Europe, it is not part of the European Union (EU).

I guess in many countries there are similar rules, also concerning the import of services. Only, in Germany, many (not all) businesses and freelancers can get their expenses for VAT back in yearly or shorter intervals. I don't know how it is in Brazil.

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  • You need to determine whether this was VAT or some form of import duty. Also, Switzerland (and also Jersey and Guernsey) are outside the EU, the VAT (etc) was due because it was a supply INTO the EU - there used to be a concession for small amounts, which was why there was a plethora of CD and book distributors in the Channel islands
    – Andrew
    Commented Aug 21, 2013 at 18:44
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In any country, Import duty and sales taxes (or VAT, if VAT type tax is used) is payable when goods 'CROSS the frontier'. It is peculiarity of customs & tax unions that there may be no tax payable inside a tax union and no customs duties payable inside a customs union. The EU is a customs union and has specific tax rules. NOTE the VAT in Germany applies to all invoices even those for export customers but the RATE applicable to exports is 'zero per cent' The invoice does carry EU VAT but at a zero rate. VAT exempt supplies and services are very specific and very few. in Brazil there are many sales taxes at Federal, state and district level, even goods crossing from one state to another inside Brazil causes many tax papers to be filed.

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