I am currently based in Portland, Oregon in the US. As a note, Oregon has no sales tax. I have a client in the Netherlands who pays for multiple Skype-based coaching sessions.
My client pays through Paypal; should I be charging taxes?
In 2015 the EU made big changes to the VAT rules.
This summary from the UK government has lots of good information, even though the target is UK businesses. Of particular note is this piece in the Scope or rule change section:
Businesses outside the EU (for example, the USA) that supply digital services to consumers in one or more EU member state are also affected by the changes.
My interpretation of that is that just because a business (you) is outside the EU it is not exempt from having to collect, and remit, VAT payments.
However, based on your description of the service provided, "coaching", I think you would fit under another section of that summary: Sales not affected by the change.
Using the internet, or some electronic means of communication, just to communicate or facilitate trading doesn’t always mean that a business is supplying e-services. Using the internet for the following doesn’t count:
- services of lawyers and financial consultants who advise clients through email
- educational or professional courses, where the content is delivered by a teacher over the internet or an electronic network (in other words, using a remote link)
Taxes, locally or internationally, are always an important, and tricky, area. Since it can be critical to the existence of your business, it's probably worth the cost to contact a live tax professional/attorney who deals with international taxation to verify, and clarify, any information that you "find" on the Internet, including my information.
I believe she doesn't need to pay taxes. In Canada, when I sell reports to the US, they do not pay taxes. Only charge taxes for Canadian residents.
First I would strongly advise to get outide info from a professional on this. The end of the day, we all have knowledge and tips, but non of us (I assume) are freelance tax specialist.
I know different types of "products" have different kinds of rules. Coaching is a service. For services generally goes that you pay tax in the country where the work (the service) takes place.
So there is the "tricky" part. To my knowledge international law still has no consensus on how to deal with services that are executed remotely through the internet. The same goes for cybercrime. Because what country counts as the country the service is executed? So many different countries, so many laws, so many supervising instances...
So where do you pay tax? (I'm in software development, so basically the same thing. Delivering a service).
You're not in that country, so you're not physically doing your work there... Basically you have nothing to do with the receiving country. So you apply your own tax laws. I invoice with my countries tax and my client can ask taxes back from my country, since they in turn don't need to pay our taxes. There is a whole multi-billion industry build on just tax refunds. In your case that would be simple. Your country doesn't have tax, so you invoice with tax 0%. The big companies like Google do it too, that's why there is so much international criticism, they avoid taxes by having e.a. an office in Ireland and invoice from there.