How to Invoice International Clients: Currency, Tax and Getting Paid

An international invoice can be correct in every domestic sense and still lose you money. The exchange rate moves between issue and payment, a correspondent bank takes a cut in transit, the client withholds a percentage for their own tax authority, or the invoice is rejected because it does not carry a tax number nobody told you about.

None of these are difficult once you know they exist. This guide covers the decisions that actually cost money: currency, exchange rate risk, VAT and the reverse charge, withholding tax, the fields your invoice needs, and which payment rail to use.

This is general information, not tax or legal advice. Cross-border tax depends on both countries, on treaties between them and on your own status — confirm your position with an accountant before relying on any of it.

What to settle before the first invoice

Ask these five questions during onboarding, not after the invoice stalls. Each one is awkward to raise later and trivial to raise now.

• Which currency, and who bears the conversion? Settle this in the quote, not the invoice.
• Are they a registered business, and what is their tax number? This determines your VAT treatment and is often required on the invoice itself.
• Will they withhold tax from the payment? Ask directly. Many clients will not volunteer it.
• How will they pay, and who covers the transfer fees? A wire that arrives short is a collections problem you created.
• Do they need a purchase order or a specific invoice format? Larger organisations often do, and will silently reject anything else.

Which currency to invoice in

Someone has to carry the exchange rate risk, and whoever converts carries it. There is no neutral option, only a choice about who absorbs the uncertainty and what it costs you commercially.

Invoice in your own currency unless there is a reason not to. When you do quote in a client's currency, either build in a buffer of a few percent or add a clause that lets you revisit the rate if it moves materially before payment.

Currency and exchange rate

Fees are stated in [GBP]. Where the Client elects to pay in [USD], the amount payable will be converted at the [European Central Bank] reference rate on the invoice date, which will be stated on the invoice.

If the applicable rate moves by more than [3%] between the date of this agreement and the invoice date, either party may request that the fee be recalculated at the prevailing rate.

All bank charges, including intermediary bank fees, are payable by the Client, and payment must be made such that the full invoiced amount is received in cleared funds.

Exchange rates and who carries the risk

If you invoice in a foreign currency, three separate rates matter and they are rarely the same:

• The rate you quoted at — what you assumed when you priced the work.
• The rate on the invoice date — what your accounts will usually record the sale at.
• The rate when the money lands — what you actually receive.

The gap between the second and third is a foreign exchange gain or loss, and on Net 30 terms with a volatile pair it can comfortably exceed your margin on the job. State the rate and its source on the invoice so the difference is documented rather than argued about later.

Practically: use a named public reference rate (your central bank, or the ECB) rather than "the rate on the day", keep the conversion evidence with the invoice, and if you regularly invoice in one foreign currency, hold an account in that currency and convert when the rate suits rather than on every payment.

VAT, GST and the reverse charge

The rule that surprises people: for most business-to-business services, the supply is treated as taking place where the customer is, not where you are. You generally do not charge your own VAT, and the client accounts for it themselves under the reverse charge.

General position for services. Goods, digital services to consumers and certain sectors follow different rules.

Three conditions usually have to hold before you can zero-rate a B2B cross-border service: the customer must be a business, you must hold and have checked their tax registration number, and you must state the reverse charge on the invoice. Miss the third and the invoice can be rejected even though the treatment is correct.

VAT: 0.00

Reverse charge: customer to account for VAT to the relevant tax authority.

Supplier VAT number: [GB123456789]
Customer VAT number: [DE987654321]
Place of supply: [Germany]

If you need to issue a fully compliant tax invoice, our VAT invoice template and GST invoice generator handle the required fields for each.

Withholding tax: the one that catches people out

This is the cross-border surprise that costs the most and is discussed the least. In a number of countries the client is legally required to deduct a percentage of your fee and pay it to their own tax authority before sending you the rest. You invoice 10,000 and 8,500 arrives. Nothing has gone wrong; the client has complied with their law.

Rates vary widely by country and by type of service, and are commonly somewhere between 10% and 25% on professional or technical fees. It is most often encountered when invoicing clients in parts of Asia, Latin America, Africa and the Middle East, though it exists far more broadly than most freelancers expect.

The money is not necessarily lost. Where your country has a double taxation treaty with theirs, you can usually either reduce the rate at source or claim the withheld amount as a credit against your own tax bill. Both routes need paperwork:

• Ask before you contract — "will any withholding tax be deducted from payments under this agreement, and at what rate?"
• Get a tax residency certificate from your own tax authority. Most treaty relief requires it, and it usually takes weeks to obtain.
• Insist on the withholding certificate — the client's proof of what they deducted and remitted. Without it you generally cannot claim the credit.
• Decide who absorbs it, in the contract. If the fee is meant to reach you net, the agreement must say the client grosses up the payment.

Taxes

All fees are exclusive of any withholding or similar taxes imposed in the Client's jurisdiction.

If the Client is required by law to deduct or withhold any amount from a payment due under this agreement, the Client shall increase the sum payable so that the Supplier receives the full invoiced amount net of such deduction.

The Client shall provide the Supplier with official documentation evidencing any tax withheld and remitted, within [30] days of payment.

What an international invoice must show

Everything a domestic invoice needs, plus the following. Any one of these missing can send the invoice back to the bottom of the queue.

Getting paid: methods, fees and timing

The payment rail materially changes what you receive. On a small invoice the difference between options can exceed your margin.

Indicative costs and speeds. Providers change pricing frequently — check before choosing.

One detail worth knowing about wires: the sender chooses who pays the charges. Under SHA, the default, you absorb intermediary fees; under OUR the sender covers everything. Asking the client to send OUR, and putting "all bank charges payable by the client" on the invoice, is the difference between receiving your invoice total and receiving most of it.

For anything above a few thousand, offering a card or payment link alongside bank details is worth the processing fee — it removes the multi-day approval and initiation process that is where most cross-border delay actually accumulates.

Payment terms that work across borders

Adapt your usual terms rather than transplanting them. Three adjustments:

• Add clearing time. Net 30 domestically is effectively Net 33 to 35 internationally once the wire settles. Either extend the term or state that payment must be received, not sent, by the due date.
• Take a deposit. Cross-border recovery is far harder than domestic — small claims procedures generally do not reach a company in another country, and enforcement is expensive. Being paid something upfront matters more here than anywhere. See our guide to deposits and upfront payments.
• Name the governing law. Say whose law applies and where disputes are heard. It is rarely used, but its absence turns a small dispute into an unanswerable question.

Because recovery is so much harder, the prevention side does more work than usual. Deposits, milestone billing and stopping work on non-payment are your real remedies; courts mostly are not.

For the underlying fundamentals that apply regardless of border, see what to include in an invoice and the complete guide to invoice payment terms.