VAT invoice requirements: what an EU or UK invoice must show

VAT invoice requirements come down to showing enough detail for a tax authority to check the sale. In the UK, HMRC lists 14 details on a full VAT invoice. In the EU, Article 226 of Directive 2006/112/EC sets the common list. Both require a sequential number, both parties’ details, a clear description, the VAT rate and the VAT amount.

What a VAT invoice is

Value-added tax is charged at each step of a supply chain. A VAT invoice is the document a registered business issues to show it charged VAT, and the document a business customer uses to reclaim that VAT. Because the customer’s reclaim depends on it, tax authorities set out what the invoice must contain.

Three ideas make the rest easier to follow.

• Only VAT-registered businesses issue VAT invoices. If you are not registered, you do not show VAT or a VAT number.
• The invoice is evidence. A missing field can delay a customer’s reclaim and draw questions in an audit.
• There are different versions. A full invoice is the default. Many countries allow a simplified invoice for small amounts, and credit notes correct mistakes. This guide covers the full version.

For the plain definitions, see the glossary entries for VAT and VAT number.

UK: what HMRC says a full VAT invoice must show

HMRC’s VAT trader records manual (VATREC5010) lists the details that must appear on a full VAT invoice. In plain language:

1. A unique sequential number, based on a series, that identifies the invoice.
2. The time of supply, meaning when the goods or services were supplied.
3. The date of issue.
4. Your name, address and VAT registration number, matching your registration certificate.
5. The customer’s name and address.
6. A clear and specific description of the goods or services.
7. The quantity of goods, or the extent of the services, for each item.
8. The unit price of each item.
9. The VAT rate and the amount payable excluding VAT for each item.
10. The total payable excluding VAT.
11. The rate of any cash discount offered.
12. The total VAT chargeable, in sterling.
13. A reference or indication if you use the margin scheme.
14. A reference or indication if the invoice covers a reverse charge supply.

GOV.UK adds a short rule of thumb: show your VAT number and display the VAT separately. If you invoice in another currency, the VAT total still has to appear in sterling.

EU: Article 226 of Directive 2006/112/EC

The EU framework is the VAT Directive, and Article 226 sets the list of particulars that a VAT invoice issued under the Directive must contain. The wording is on EUR-Lex. In summary, it asks for:

• the date of issue and a sequential number that uniquely identifies the invoice;
• the supplier’s VAT identification number, and in certain cases the customer’s;
• the full names and addresses of the supplier and the customer;
• the quantity and nature of the goods, or the extent and nature of the services;
• the date of supply, if different from the date of issue;
• the taxable amount for each rate or exemption, the unit price excluding VAT, and any discounts not already in the unit price;
• the VAT rate applied and the VAT amount payable;
• a reference to the exemption, where VAT is not charged;
• the words “Reverse charge” where the customer is liable for the VAT;
• references to special schemes such as the margin scheme, where they apply.

Two cautions. First, the Directive sets a floor, and each Member State writes its own law around it. Some countries require extra items, such as a specific tax code, a company registration number or a language. Second, the details of simplified invoices, timing and e-invoicing vary by country, so check the authority in the country where the supply takes place or where you are registered.

Reverse charge: when the customer accounts for the VAT

Under a reverse charge, the supplier does not charge VAT. The customer accounts for it on its own return instead. It is common for business-to-business services across borders and for some domestic sectors, depending on the country.

What the invoice must show differs by country.

• EU. Article 226 calls for the words “Reverse charge”. The Court of Justice has taken a strict view in some cases and held that these words cannot always be replaced by a reference to an exemption or another phrase.
• UK. HMRC’s manuals say the supplier must show all the usual VAT invoice information and annotate the invoice to make clear that the reverse charge applies. HMRC says the precise wording is not prescribed in law, and gives examples such as “Reverse charge supply” and “Customer to pay output tax of £X to HMRC.” The reverse charge amount should be shown but not included in the total VAT charged.

See the glossary entry on reverse charge for a short definition.

Worked examples

A UK full VAT invoice

A freelance developer in the UK, registered for VAT, bills a UK company for 10 hours of work at £80. UK standard rate is 20% at the time of writing, which we use here as an illustrative rate. Check the current rate and any reduced rates on GOV.UK.

An EU reverse charge invoice

A consultant in Germany, registered for VAT, bills a business in France for a €2,500 consulting project. The place of supply for this service is generally where the business customer is established, so the French customer accounts for VAT through the reverse charge.

The rules for whether the reverse charge applies are separate from the invoice rules. Confirm the place of supply for your service with the authority in your country.

Common mistakes

• Using one invoice number series for different document types. Keep one unbroken sequence for invoices. Number proformas and credit notes separately. See invoice numbering.
• Forgetting the time of supply. In the UK it is a listed detail, and it can differ from the date of issue.
• Showing a VAT number you do not have. Only a registered business can show one.
• Putting the VAT only in the total. Show the VAT amount and the rate separately.
• Omitting reverse charge wording. The customer needs it to account for the VAT.
• Missing the sterling total. UK invoices in euros or dollars still need the VAT total in sterling.
• Relying on a till receipt. A short receipt rarely carries the fields a customer needs to reclaim VAT.
• Using the wrong rate. Standard, reduced and zero rates differ by product and country.

Checklist for every VAT invoice

• You are registered for VAT where you charge it, and your VAT number is correct.
• The invoice number is unique and follows your sequence.
• The date of issue and the date or time of supply are both clear.
• Your name and address, and the customer’s name and address, are complete.
• Each line has a description, a quantity and a unit price.
• VAT rate and VAT amount are shown separately for every rate used.
• The total VAT appears in the currency your tax authority requires, such as sterling in the UK.
• Any discount, exemption or special scheme is stated.
• Reverse charge supplies carry the right wording and the customer’s VAT number where required.
• You have kept a copy for the period your tax authority requires.

For the general layout of any invoice, read what to include on an invoice.

Where PayToMe fits

The free invoice generator and the sales tax calculator are live today, and both show tax as its own line. Local VAT labels, a client’s VAT number field, reverse charge wording and country-aware formatting are part of multi-currency invoicing, which is in development. You should check every invoice against your own tax authority’s rules.

Sources

This is general information, not tax or legal advice. The UK list comes from HMRC’s manual VATREC5010, and the reverse charge points from VATREC6060 and GOV.UK’s VAT invoice page. The EU framework is Directive 2006/112/EC, Article 226. Each EU country adds its own rules, and the UK rules can change, so confirm the current requirement with the tax authority that applies to you.