Twenty years ago as an employed software engineer I created a data acquisition system for an institute in Germany. Now the customer wants to hire me for some improvements but I am unsure about invoicing a foreign entity due to regulations, particularly EU tax and labor laws. My old employer wants nothing to do with this, and it is not a lot of work. Maybe 40 hours/year.

Does anyone have advice about an American company (a one man S corp) invoicing a client in the EU? I asked my accounting firm but they are going to charge me a consultancy fee for looking into it.

Thanks

 

In my experience it is no problem for a European company to arrange to pay you in dollars drawn on an account in an American bank.

 

It should be no problem for your client to send payment by international wire transfer. Have done it several times. I have done this with clients in China, Hong Kong, and the EU without any problem (except for this one client in the EU who abandoned the project without paying -what can you do?).

Be sure to claim the income on your schedule C (if that is the form you use for you S corporation), and of course any related expenses such as bank fees for receiving payment.

 

Just in case, make sure you have really clear who pays the costs of the transfers. Had surprises with that detail, and is it not a minor one.

 

Either, just send the invoice by e-mail and pretend you know what you are doing or ask your contact what method of payment is best for them.
My bank charges $10 handling and a small percent which is just the cost of doing business. I would not ask "Germany" to pay for that. Some times I get the money through VISA and they nick me 3%.
If you really want the fees back, just add on 15 minutes of time, with out making it known.

 

Paypal?

Bob

 

All good suggestions, thank you. Perhaps being paid by an American bank is the answer. I wasn't so much worried about the mechanics of receiving funds, as violating EU tax and labor regulations. I believe I've read that Germany has some protectionist like rules to try to encourage hiring Germany labor rather than foreign. I suppose I'd be such small potatoes the risk of being caught is low.

It'd be my luck that the client files a document showing payment to my foreign S corp, then I get hassled by regulatory agencies, and finally I end up on a no fly list or subject to arrest on a visit to the EU. Maybe I'm being paranoid.

 

It'd be my luck that the client files a document showing payment to my foreign S corp, then I get hassled by regulatory agencies, and finally I end up on a no fly list or subject to arrest on a visit to the EU. Maybe I'm being paranoid.

You are being paranoid. The onus for complying with EU regs is on your client, not on you.

 

rules to try to encourage hiring Germany labor rather than foreign

You need to talk with the German company. Normally payments to a US "LLC" are fine (for labor) and your $2.75/hour is so low no one will care (joke). In some cases we needed to ship a product not labor. You really don't care if the invoice said "for product delivered". Simple email to your contact and the problems are solved.

 

Simple email to your contact and the problems are solved.

The lab manager (my client) says it's no problem to pay me, but I'm not sure what he knows about international trade laws. And I have no product other than my time and software source code. But as said previously I'm being too paranoid. The worst thing that could go wrong is probably having to pay a fine.

 

As @BobTPH said, you are being paranoid. You are not in Germany (apparently) so you don't have to worry about it. There are regulations in the U.S. that limit with what countries you can do certain things (Iran and North Korea comes to mind at the moment) but I really doubt that Germany is a problem.

 

There are regulations in the U.S.

I'm not concerned about US regulations. It's the unknown rules of EU/Germany relating to labor and taxes that concern me. But I admit those concerns are probably unnecessary. Just pulling something out my hat, what if "doing business" in Germany requires ISO9000 certification or some other nonsense?

 

I'm not concerned about US regulations. It's the unknown rules of EU/Germany relating to labor and taxes that concern me. But I admit those concerns are probably unnecessary. Just pulling something out my hat, what if "doing business" in Germany requires ISO9000 certification or some other nonsense?

If there were certifications required, I’d expect your client to have let you known. It’s more likely that they’d be punished than you.

 

If there were certifications required, I’d expect your client to have let you known. It’s more likely that they’d be punished than you.

That's still something I worry about. I do the work, submit the invoice, and then the client asks for my certification, or EU tax ID number. But I'll make a point of asking him if there are any such issues beforehand.

 

That's still something I worry about. I do the work, submit the invoice, and then the client asks for my certification, or EU tax ID number. But I'll make a point of asking him if there are any such issues beforehand.

Yes, good. I doubt you will have any tax liability in the EU but please share any surprises with us.

 

I worked mostly here in Argentina for clients in Australia, USA and many countries in Europe, including UK and Germany.

Using the same bank, who paid the transfers costs was well defined.

I had to take care of our local exigences (taxes / invoicing procedure details). The other end took care of same at their side. Accepting that you could be fined as part of your venture is ridiculous. A bad record is a bad record everywhere.

Be careful with the certification thing: once, I had quoted already for my services. Later, I learnt that my possible client got a better quotation after accepting mine, and to dismiss me, he asked for an unusual certification that I did not have, using that as an excuse to say, Sorry, we can't hire you.

Buena suerte.

 

Twenty years ago as an employed software engineer I created a data acquisition system for an institute in Germany. Now the customer wants to hire me for some improvements but I am unsure about invoicing a foreign entity due to regulations, particularly EU tax and labor laws. My old employer wants nothing to do with this, and it is not a lot of work. Maybe 40 hours/year.

Does anyone have advice about an American company (a one man S corp) invoicing a client in the EU? I asked my accounting firm but they are going to charge me a consultancy fee for looking into it.

Thanks

Yes, you could send a bill.
However; some rules apply if you not a registered company;
1: do not use the term invoice but used the term declaration. ( declaration point to a private person invoice to a company)
Sounds silly however the company in Europe should book this as private or company. The last one needs a valid registration in the country of orgin ( In your case US). (Address , chamber of commerce and VAT number)
This will be checked by the accountant (Eu law. This to avoid trade with non existing companies ( fight money laundry).)

When a declaration is under the 5000 Euro no questions are asked. The bank has to report strange money transfers. All western countries do this including the US maybe a different amount.
Picbuster

 

The last one needs a valid registration in the country of orgin

This is the kind of thing I worry about. I'll be sure to bring it up with the client and make sure this all worked out ahead of time.