VAT invoicing rules
EU & national rules
Taxable persons doing business in the EU are subject to:
- a single set of basic EU-wide invoicing rules (Articles 217-240 VAT Directive), and
- in certain areas, national rules set by the individual EU country.
Basic principles of the EU-wide rules
The EU rules can be found in the VAT Directive:
- Electronic invoices are equivalent to paper – national tax authorities cannot require businesses to provide any notification or to receive authorization.
- Businesses are free to issue electronic invoices subject to acceptance by the recipient. However, e-invoicing will become obligatory in public procurement.
- Businesses can outsource invoicing operations to a third party or to the customer (i.e. self-billing), in some circumstances.
- Businesses are generally free to store invoices where and how they like (paper/electronic, in a different EU country to where they are based, etc.)
A detailed explanation of EU-wide invoicing rules is provided in Explanatory notes .
EU rules provide flexibility for EU countries to make national choices. EU Commission publishes the details of the specific provisions approved by each EU country on its website.
When is an invoice compulsory?
An invoice is required for VAT purposes under EU rules in:
- most business-to-business (B2B) supplies
- certain business-to-consumer (B2C) transactions
There may also be specific national rules on transactions requiring an invoice.
In most cases, invoices must be issued by a business whenever goods or services are supplied to:
- another business; or
- a non-taxable legal entity (local authorities, associations etc. that do not charge VAT).
i. Exempt financial & insurance services (Article 135(1)(a)-(g) VAT Directive)
No invoice is required if the service is supplied in another EU country.
However, EU countries may require an invoice where:
- these services are supplied in their own territory or outside the EU and
- the supplier is based in their territory or supplying the services from fixed premises in their territory.
ii. Other exempt transactions (Article 135(1)(h)-(l) VAT Directive, including transactions relating to land)
EU countries may choose not to require an invoice where these transactions are supplied in their territory.
A business must issue an invoice when it supplies certain goods to a non-taxable person (generally a private individual) in these cases:
- distance selling when taxable in another EU country (Article 33 VAT Directive)
- new means of transport supplied to another EU country (Article 138(2)(a) VAT Directive).
Specific national rules
In some EU countries, in certain cases, invoicing obligations may be more - or less - extensive.
- An invoice may be required for supplies to private individuals, other than those listed under B2C transactions section above. In such cases, the invoices do not necessarily need to contain all the information required for full VAT invoices.
- No invoice is required for e.g.:
- certain exempt transactions (covered by Title IX Chapters 2 and 3 VAT Directive), including those mentioned under B2B supplies section above
- some exempt transactions with a right of deduction (‘zero-rated’ supplies).
What information must an invoice contain?
Full VAT invoices
Information required in all cases
- Date of issue
- Unique sequential number identifying the invoice
- Customer’s VAT identification number (if the customer is liable for the tax on the transaction)
- Supplier’s full name & address
- Customer’s full name & address
- Description of quantity & type of goods supplied or type & extent of services rendered
- Date of transaction or payment (if different from invoice date)
- VAT rate applied
- VAT amount payable
- Breakdown of VAT amount payable by VAT rate or exemption
- Unit price of goods or services – exclusive of tax, discounts or rebates (unless included in the unit pri
Extra information required in some cases
- Exempt transactions – a reference to the appropriate (EU or national) legislation exempting it, or any other reference indicating it is exempt (at the choice of the supplier).
- Customer liable for the tax (i.e. under the reverse-charge procedure) – the words ‘Reverse charge’.
- Intra-EU supply of a new means of transport – the details specified in Article 2(2)(b) of the VAT Directive (e.g. for a car, its age and mileage).
- A margin scheme applies – a reference to the particular scheme involved (e.g. ‘Margin scheme — travel agents’).
- Self-billing (customer issues invoice instead of supplier) – the words ‘Self-billing’.
- Person liable for tax is a tax representative – their VAT identification number, full name and address.
- Supplier is operating a cash-accounting system – the words ‘Cash accounting’).
- Date of issue
- Supplier’s VAT identification number
- Type of goods or services supplied
- VAT amount payable – or the information needed to calculate it
- Specific, unambiguous reference to the initial invoice and the details that are being amended (on a credit note, debit note or other document treated as an invoice).
Once an invoice includes all the information described above (depending on the case, and the EU country), it will provide proof to allow a right to deduct VAT in whichever EU country is concerned. No EU country may prevent this by requiring extra information in the invoice.
There is nothing to stop businesses providing additional information on their invoices to that described above.