As an experienced business professional, you’re familiar with the process of sending and receiving invoices from other local companies in your country. However, paying an invoice overseas entails several complications, especially if you’re paying a European company. Without a clear understanding of how things work in European countries, finding your way around can throw up compliance requirements which may be subtle and you may not see upfront.
Not all European countries use the same currency, apart from having various state laws and tax regulations. It’s important to ensure that you don’t lose out when you’re sending money to a European country, so we’ve put together some helpful tips to help you skillfully navigate the country-specific nuances.
Which countries are part of the European Union?
There are 50 countries in Europe, but only 27 of them come together to make the European Union, namely:
- The United Kingdom
- The Netherlands
- Czech Republic
Which European countries use Euros?
Depending on various economic considerations, not every country in Europe has adopted the euro as a form of currency. Here is a list of all the countries that do use the Euro:
What currency should I use to pay an invoice from a European country?
The currency you send money in is decided at the point-of-sale or as per the contract between you and your overseas partner.
If you’re sending money from Canada to Europe in CAD, you might have to pay a conversion fee. However, if you’re sending Euros to Europe, you will not be subjected to any conversion fees, provided of course you already have Euros available. If you have to purchase Euros you again end up paying a conversion cost.
If you have access to a cross-border bank account, you’re able to send Euros directly to your European partners without needing to worry about converting currencies. Many major companies in Europe have cross-border bank accounts, which allow them to send and receive money in foreign currencies. Usually, the fund movement from one currency to another is managed by their bank but they end up paying high conversion fees when using bank accounts with multiple currencies with the same bank.
That being said, if the invoice is in your local currency (CAD), you won’t have to worry about converting your dollars.
What can I expect to see in an invoice from a European company?
Your invoice will include the following:
- Date of issuance
- Invoice number
- Company name & address
- Full name of company owner(s)
- Description of products & services provided: This includes such metrics as pricing and quantities
- Terms of payment agreement
- VAT (Value Added Tax)
VAT is the tax regulation system that oversees all trades in Europe. If you’re new to European policies, this can be pretty confusing. Essentially, VAT stands for Value Added Tax that is added to goods and services that are brought into European countries. This tax is generally applied to goods that are being sold or consumed in Europe. The VAT was created to regulate trade in Europe and ensure that each member country gets its fair share of the tax revenues.
It’s important to mention that not all foreign countries will send you an invoice in English. Which is why you should iron out this potential conflict beforehand by requesting that the company you’re working with sends you an invoice in English.
International Bank Accounts & Payment Methods
Using an international bank account can eliminate any unwanted fees that come along with wire transfers. You’re able to receive various currencies quickly and easily, without having to pay any unwanted fees. Although, very few banks in Canada offer this option and setting up an account can be messy.
By registering with REMITR, you’re saving time and money. For one, REMITR is free of any hidden markups. REMITR charges a transparent flat fee of $5 per transfer, regardless of the amount you choose to send. You can easily use REMITR to make transfers to Europe within the click of a button, at the speed of one business day.
REMITR also offers you the option of holding international accounts in USD and EURO. Using this facility you can easily transfer funds to your international account and then pay your suppliers in double quick time and at negligible cost. Conversely, accepting payments from your customers in Europe and US becomes easy as they can simply do a local bank transfer to your USD / EURO denominated account.
Wire transfers not only cost an exorbitant amount of money but are also tremendously slow. Therefore, choose a provider who can free you from the tangles of wire transfer and make your international payments fast low cost and security.