Cross-Border Legal Billing: How Law Firms Invoice Foreign Clients

What follows describes the structure of cross-border billing — the questions to ask and the shape of the answers. It is not tax advice, and no rate or threshold here should be relied on. Indirect tax rules for services change frequently, differ by the client's status, and turn on facts specific to your engagement.

The practical rule is that the position must be determined per engagement with your own adviser, and then recorded on the invoice so that a year later nobody has to remember why a document was treated the way it was. A system that cannot store the reasoning alongside the document guarantees the reasoning is lost.

Nearly every indirect tax regime decides taxability by reference to a place of supply, and for services that place is frequently not where the lawyer sat.

The common pattern for business clients is that the supply is treated as taking place where the customer belongs, which moves the transaction outside the seller's domestic tax net. Supplies to private individuals frequently follow a different rule. Certain categories — anything connected with immovable property is the classic example — are often fixed to the location of the property regardless of who the client is.

These are patterns, not rules you can apply blind. The point for a practice is that place of supply must be decided and documented at the moment of billing, because the analysis depends on facts that will not be reconstructable later.

Where the supply lands outside the seller's net, many regimes shift the obligation to the customer — the mechanism variously called reverse charge, self-assessment or self-accounting. The seller then issues an invoice with no tax charged but carrying an explicit statement of why, and usually the customer's tax registration number.

Firms lose money on both sides of this. Charging domestic tax on a supply that should have been reverse-charged means the client's finance team bounces the invoice — the visible failure. Failing to charge tax that was due, and discovering it at audit, is the expensive one, since the firm typically cannot recover it from a client years later.

What the invoice must therefore carry is not just the number but the basis: which treatment was applied, and the client's registration where the treatment depends on it.

Billing in the client's currency is a commercial courtesy. Keeping the record in it is a discipline, and the two are frequently confused.

An invoice issued in one currency must keep saying so permanently, alongside the rate used to map it into the firm's reporting currency at the moment of issue. Systems that convert at today's rate produce accounts in which last year's revenue changes every morning — which cannot be reconciled, cannot be repeated to an accountant, and cannot be defended.

Many authorities also want the tax line stated in the local currency even where the invoice is denominated in another, so the tax amount may need to be carried separately rather than derived on demand.

An invoice that satisfies your obligations can still fail at the client's end. Corporate accounts payable functions frequently require a purchase-order reference, the correct legal entity name and address, a tax registration number, and a specific delivery route — often a portal rather than an email address.

None of this is a legal requirement on you. All of it determines whether you are paid in thirty days or ninety. It is worth capturing these requirements at onboarding for any corporate client, as client-level billing instructions, rather than rediscovering them per invoice.

A distinct surprise: some jurisdictions require the paying client to withhold a percentage of a foreign professional fee and remit it to their own authorities. The firm invoices 100 and receives 85, with the balance paid to a tax authority in another country.

Where a treaty applies, that withholding may be reducible or creditable, but only with the certificate the client's side issues — and only if someone asks for it at the time. The operational requirement is to expect the shortfall, record it against the invoice as withholding rather than as a discount or a write-off, and chase the certificate while the payment is recent.

Every issued document carries its own currency and its own conversion rate, frozen at issue. Reporting derives from the document, never from today's market, so a rate movement cannot change last year. The tax line can be carried in a local currency alongside the billing currency, for the authority that requires it.

Tax is ruled per line, and lines can be exempt or outside scope with the treatment stored on the document — so an invoice that is reverse-charged, or mixes a taxable fee with a non-taxable disbursement, records why rather than merely showing a number. Client records hold organizations with their directors and UBOs, so registration details and billing instructions live where the invoice is raised.

Changing the firm's reporting currency is a deliberate, guided operation: Mersal asks whether historical figures were genuinely in the old currency (convert at a stated rate) or the setting was simply wrong (relabel one-to-one), and re-bases reporting without ever altering what a client was charged.