How does VAT work for expenses?

Last updated: March 31, 2021

With Xolo Go: when making a business related purchase from an EU vendor and you provide your Xolo Go billing details (legal entity name, address and VAT number) to the vendor, then reverse charge e.g. 0% of VAT applies. In general reverse charge applies when buying digital services and professional services within EU.

When making a business related purchase from an Estonian vendor and you have submitted your Xolo Go billing details (legal entity name, address and VAT number) to the vendor, then the purchase price includes 20% of Estonian VAT. However, the Estonian VAT will be refunded to you after you have uploaded the paid document to Xolo Go dashboard and after the expense has been reimbursed to you.

For example, the expense document states price €50 + 20% VAT = €60, then the VAT (€10) will be refunded to your Xolo Go account after the expense reimbursement, so that the net cost for you is still €50.

Without Xolo Go: if you are based e.g. in Germany as a private individual without having the VAT registration there, and buy digital services from a US company, the seller has to charge the German VAT % on top of the net price. Thus, as the purchase was made as a private individual, then reverse charge (0% VAT) was not applied.

Sounds complex? Don't worry!

Xolo will take care of the math and relevant reporting. Your task is to use the Xolo Go provided billing details when needed and upload related expense documents to Xolo Go dashboard. Please note that you will find the billing details including your Xolo Go VAT number on your self-service dashboard under Profile > My Profile.

Please note that Xolo only reclaims VAT from Estonian tax authorities, not from foreign tax authorities.

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