This section contains examples of recording sales and purchase transactions using the Nocfo service.
Service Purchase from the EU Area #
For service purchases from the EU area, the reverse charge mechanism is generally used in business-to-business transactions. In short, the reverse charge mechanism means that the buyer of the service pays the tax on behalf of the seller in their own country. For more information on this topic, please refer to the tax authority's website. website.
Google workspace #
When the service provider invoices based on the reverse charge mechanism, it's important to verify that the information is stated on the invoice. For example, a Google Workspace invoice might include the following statement:
”Käännetyn verovelvollisuuden alaiset palvelut – vastaanottajalta peritään alv-maksu neuvoston direktiivin 2006/112/EY 196 artiklan mukaisesti.”
Google Workspace example
Service Sales to the EU Area #
In this example, the reverse charge mechanism is used, where the buyer of the service reports the value-added tax.
In this example, it involves selling services within the EU area, where the buyer is registered for value-added tax in another EU country (in practice, this means they are a VAT-liable company) and it is not an exceptional case. The validity of the VAT number can be checked on the EU Commission's website.
Purchase of Goods from the EU Area (Intra-community Acquisition) #
In this example, a company purchases a machine from a German company. In this example, both the buyer and the seller are liable for value-added tax. The intra-community acquisition is subject to the reverse charge mechanism, where the buyer pays the tax.