A VAT invoice (Value Added Tax invoice) is a specific type of invoice required in countries with a VAT system. It is not just an invoice with a tax line — a VAT invoice must include specific legal information to be valid for VAT purposes. Getting it wrong can mean your client cannot reclaim their VAT input credit, which can strain business relationships and cost money.
What Is VAT and Who Needs to Issue VAT Invoices?
VAT (Value Added Tax) is a consumption tax applied at each stage of the supply chain. Businesses registered for VAT charge VAT on their sales (output VAT) and reclaim VAT paid on their purchases (input VAT). If you are VAT registered, you are legally required to issue a VAT invoice for every B2B transaction within your country, and in many cases for cross-border EU transactions.
VAT registration thresholds vary by country:
| Country | VAT Registration Threshold |
|---|---|
| Germany | €25,000/year (Kleinunternehmerregelung below threshold) |
| United Kingdom | £90,000/year |
| France | €91,800/year (goods), €36,800/year (services) |
| Netherlands | No threshold — VAT required from first sale |
| Spain | No threshold — VAT required from first sale |
| Austria | €35,000/year |
Required Fields on a VAT Invoice (EU)
Under EU VAT Directive 2006/112/EC, a full VAT invoice must include:
- A sequential invoice number that creates a unique audit trail.
- The date of issue.
- The tax point (date of supply) — when the goods were delivered or service was performed.
- Your full name or business name and address.
- Your VAT identification number.
- Your customer's full name or company name and address.
- Your customer's VAT number (for B2B cross-border EU transactions).
- A description of the goods or services supplied.
- The quantity and unit price, excluding VAT.
- The VAT rate applied (e.g., 20%, 7%).
- The total VAT amount in the invoice currency.
- The total amount payable including VAT.
Simplified VAT Invoices
For transactions below €100 (or local equivalent), many EU countries allow a simplified VAT invoice that does not require the customer's details. This is commonly used for retail sales and B2C transactions. Check your country's specific rules, as thresholds vary.
Cross-Border EU VAT Invoices
When selling to a VAT-registered business in another EU country (intra-community supply), you typically apply zero VAT under the reverse charge mechanism. Your invoice must:
- Include your VAT number and your customer's VAT number.
- State "Reverse charge" or "VAT reverse charge — Article 44 of EU Directive 2006/112/EC applies" as a note.
- Show the net amount and zero VAT.
German VAT Invoice Requirements (Umsatzsteuerrechnung)
Germany has some specific requirements beyond the EU baseline: invoices must be retained for 10 years. The tax point date (Lieferdatum / Leistungsdatum) must be shown separately from the invoice date if they differ. Small businesses under the Kleinunternehmerregelung (§19 UStG) are exempt from VAT but must include the note: "Gemäß §19 UStG wird keine Umsatzsteuer berechnet."
How to Create a VAT Invoice with BillZoom
BillZoom includes all fields required for a compliant VAT invoice: Tax ID / VAT number for both sender and recipient, date of supply, VAT rate, automatic tax calculation, and IBAN/SWIFT bank details. Simply enter your VAT number in the Tax ID field in your business details.