How to save 20% VAT when invoicing

Xolo
Written by Xolo
on January 07, 2021

Being VAT compliant is one of the things that can keep freelancers awake at night. Luckily, there’s a simple way to manage VAT automatically and to even save money with some simple tips. 

Automatic VAT calculation

Adding the correct VAT to your invoices can be a real hassle. This is especially true if you’re residing abroad or doing business with international customers which often complicates things further. 

For this reason, we have created an automatic VAT calculation tool as one of the core features of Xolo Go. All you need to do is add your customer’s information together with their VAT number, specify the amount you expect to be paid to you and we will do all the rest in calculating the correct VAT and adding it to the invoice. 

There are cases when VAT is calculated as 0%. Xolo Go provides you with a valid EU VAT number. If you're invoicing a company that also has a valid EU VAT number, you can benefit from the reverse charge mechanism with a 0% VAT rate. However, if you invoice a customer without a VAT number, then 20% VAT will be automatically added to the invoice. The same applies if the customer has a VAT registration but it is invalid for cross-border transactions within the EU. 

A simple graph about VAT refunds. If both you and your customer have VAT numbers, you'll be refunded. If not, there's no refund.

But you don’t need to keep track of that because Xolo manages any VAT obligations related to your Xolo Go business.

Get a VAT refund 

Xolo Go proves especially useful when you send invoices to other people on the platform. Why?

1. Benefit from the VAT system

If you buy services from another Go user, you get 20% VAT refunded to your account. And the same applies the other way around: if you sell services to another Go user, the VAT charged will be refunded to their account. No VAT, no problem! 

2. Invoicing to a private customer 

In contrast, if you sell services to a private individual that doesn’t have an EU VAT number registration, the person must pay 20% VAT on top of the service fee and it won’t be refunded. So if there’s a person you sell services to but they don’t have EU VAT registration, inviting them to also use the Xolo Go platform could benefit both of you. Your service will be more affordable for the buyer which means there will be less pressure on you to lower your prices. And your customer gains a great way of invoicing for their own freelance efforts. 

3. Pay directly from your Xolo Go account 

In addition, you can also benefit from the direct payment possibility on the transactions within Xolo Go platform. This means that you can directly use your Xolo Go funds to pay for the services of another Xolo Go user. Therefore, you don’t have to withdraw the income to your personal account which makes your taxable income smaller. 

How can you work with other Xolo Go users?

There are a few ways you can work with other Go users to mutually enjoy the benefits of automated VAT calculation and refunds.

  • You can invite any of your cooperation partners to the Xolo Go platform using our referral program. Two great things will come out of this: you earn income from inviting them and your partner gains a great way for invoicing you together with a starting bonus. 
  • You can cooperate with any Xolo users out there by connecting via the Freelance Xchange community

For more information about VAT, take a look at our FAQ or drop as a line at hello@xolo.io.

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Note: The information contained in this document is for guidance only and cannot be considered legal or tax advice.

Freelance Invoicing

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