VAT on Invoice: How to Charge, Show, and Report It Correctly
How to add VAT to an invoice correctly: registration thresholds, invoice requirements, reverse charge rules, and cross-border VAT explained.
When you must charge VAT
Once your business is registered for VAT (GST in some countries), you must charge VAT on every taxable sale to customers in your country. Registration is usually mandatory above a revenue threshold — £90,000 in the UK, €85,000 in most EU countries, varying elsewhere — and optional below it. Voluntary registration can be worthwhile if you sell mostly to other VAT-registered businesses.
What a VAT invoice must include
Your business name, address, and VAT number. The customer's name and address (and VAT number if applicable). Invoice number, issue date, and tax point date. Description of goods or services. Net amount (excluding VAT). VAT rate applied. VAT amount. Gross total (net + VAT). Missing any of these can make the invoice invalid for the client to reclaim VAT.
Multiple VAT rates on one invoice
If your invoice mixes standard-rated, reduced-rated, and zero-rated items, group them by rate and show a subtotal, VAT amount, and gross total for each group before the grand total. A single blended VAT figure is not compliant in most jurisdictions.
Reverse charge (B2B EU cross-border)
When you sell services from one EU country to a VAT-registered business in another EU country, you don't charge VAT — the customer accounts for it on their own return under the reverse charge mechanism. Your invoice must state 'Reverse charge — VAT to be accounted for by the customer' and include both VAT numbers.
Selling internationally
Sales to customers outside your VAT zone are typically zero-rated (you charge no VAT, but the sale still counts toward your reporting). Rules for digital goods and services to consumers are stricter — in the EU, digital B2C sales require charging the customer's local VAT via the OSS scheme. Check your specific country's rules before invoicing internationally at scale.
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