Example postings – EU trade and reverse charge

Trade between businesses within the EU generally uses the reverse charge mechanism. This means the buyer of the service or goods pays the VAT in their own country on the seller's behalf — the seller does not add VAT to the invoice. More information on the vero.fi website.

Purchasing services from the EU

Example: purchasing a Google Workspace subscription. When a service provider invoices under the reverse charge mechanism, the invoice states this — for example, a Google invoice reads: "Services subject to reverse charge – VAT to be accounted for by the recipient in accordance with Article 196 of Council Directive 2006/112/EC."

You can check the validity of the buyer's VAT number using the EU Commission's VIES service.

In NoCFO: choose Purchase of services from EU countries as the VAT treatment, and the percentage that would be charged in Finland for the equivalent purchase. The program handles the VAT posting automatically, so you don't need to select the VAT accounts separately. 

Selling services to the EU

Example: selling a service to a VAT-registered company in another EU country. The seller does not add VAT to the invoice — the buyer reports the tax themselves in their own country.

In NoCFO: choose Sale of services to EU countries as the VAT treatment. The VAT rate is 0%.

Purchasing goods from the EU (intra-Community acquisition)

Example: buying a machine from a German company. Both parties are liable for VAT. The buyer pays the tax under the reverse charge mechanism.

In NoCFO: choose Purchase of goods from EU countries as the VAT treatment, and the percentage that would be charged in Finland for the equivalent purchase. The program handles the VAT posting automatically, so you don't need to select the VAT accounts separately.