RemotePad Logo

What is an Employer of Record

Hire globally with an EOR

What is a Global PEO

An efficient global hiring solution

What is a PEO

Hire locally with a PEO

Our Methodology

Why you can trust our guides

Work Visas

How to apply for a work visa

Digital Nomad Visas

Get a digital nomad visa

Outsource Recruitment

How to outsource recruitment

Hire Globally

Find international talents

The Startup Hiring Guide: How to Recruit and Hire A+ Talent

Best Employer of Record (EOR)

Discover the best EOR companies

TOP 10 PEO Companies

Find the best PEO

TOP 10 Payroll Providers

The best payroll companies

Employee Relocation Services

Relocate employees globally

1. Horizons

Best Global EOR

2. Remote

Best EOR for Compliance

3. Deel

Best EOR Platform

4. Papaya Global

Best EOR for Payments

1. Horizons

Best Global PEO

2. ADP TotalSource

Best for Flexibility in Benefits

3. Rippling

Best Combined PEO and HRIS

4. Skuad

Best PEO Software for Tech Hiring

2 min read

How to Calculate VAT for international contractors

How to Calculate VAT for international contractors
2 min read

How to Calculate VAT for international contractors

Key Takeaways

  • Accurately calculating VAT for international contractors requires identifying the applicable VAT rate, determining the taxable amount, calculating the VAT amount, establishing VAT payment responsibility, and reporting and remitting VAT to the appropriate tax authority.
  • To avoid confusion or disputes, it’s important to specify VAT calculations in contracts and include clauses that clarify the applicable VAT rate, taxable amount, VAT responsibility, and reporting and remitting requirements.
  • Consulting professional advice and staying up-to-date with relevant VAT laws and regulations can help international contractors maintain compliance and avoid potential fines or penalties.

Navigating the world of Value Added Tax (VAT) as an international contractor can be daunting. With various tax laws and rates across different countries, ensuring compliance is essential to avoid fines or penalties. In this post, we’ll guide you through the key steps to accurately calculate VAT for international contractors, making this complex task more manageable.

Step 1: Pinpoint the Applicable VAT Rate

Each country has its own VAT rate, which may differ depending on the type of goods or services provided. Start by identifying the VAT rate relevant to your project. For instance, in the EU, different VAT rates apply to goods and services, while some may be exempt from VAT altogether.

Step 2: Identify the Taxable Amount

The taxable amount is the money subject to VAT. For example, if you offer services to a client for €1,000 with a 20% VAT rate, your taxable amount would be €1,000.

Step 3: Calculate the VAT Amount

After determining the taxable amount, calculate the VAT by multiplying it by the applicable VAT rate. In our previous example, the VAT amount would be €200 (€1,000 x 0.20).

Step 4: Establish VAT Payment Responsibility

VAT payment responsibility can fall on either the client or the contractor, depending on the contract and the service location. To avoid confusion or disputes, clearly outline who is responsible for VAT payments within the contract.

Step 5: Report and Remit VAT

Once you’ve calculated the VAT amount, report and remit it to the appropriate tax authority. This may require registering for VAT in the service-providing country and submitting periodic VAT returns.

Sample VAT Calculation Clauses:

To clarify VAT calculations in contracts, consider including clauses like these:

VAT rate: “The applicable VAT rate for the services provided under this agreement shall be [insert percentage].”

Taxable amount: “The taxable amount for the services provided under this agreement shall be calculated based on [insert pricing structure].”

VAT responsibility: “The [buyer/seller] shall be responsible for paying VAT in accordance with the relevant VAT laws and regulations.”

Reporting and remitting VAT: “The [buyer/seller] shall report and remit all VAT amounts to the relevant tax authorities in a timely manner in accordance with the relevant VAT laws and regulations.”


Accurately calculating VAT as an international contractor can be challenging, but by following these steps and ensuring compliance with all relevant laws and regulations, you can avoid potential fines or penalties and maintain a thriving business. Remember to specify VAT calculations in your contracts and consult professional advice when necessary.

What did you think of this article?

Click on a star to rate it!

Average rating 0 / 5. Vote count: 0

No votes so far! Be the first to rate this post.

At RemotePad, Lech draws on his professional experience to write about employment taxes and payroll (both remote, and in-office). Lech holds a Bachelors’ degree from the University of Kent, a Master of Arts (MA) from Kings College London, and professional payroll and tax qualifications. He has 20 years experience advising on all manner of tax and business planning matters.