You are now a master of invoicing your customers based in the same country as you - but what happens when you sell a product or service to customers in another EU country?
If you’re confused about what you should include on an invoice to a foreign country, then don’t be! We will help you make sure your invoices include all the required information and follow the rules of invoicing to another EU country.
An invoice has certain requirements that you must abide by, to ensure you are understood by your customers. The invoice format must include the necessary information to make it a legal document, and the relevant legislative references for the correct VAT (value-added-tax) treatment.
The first thing you need to do, is check if you are a typical entrepreneur, and if you have a VAT number which allows you to transfer taxes collected on your sales to the tax authorities. If this is the case, then you also need to check if your customer is an individual or micro-entrepreneur, or a company.
Your customer is an individual or micro-entrepreneur in another EU country
If your customer located in another EU country is an individual or has the title of micro-entrepreneur, then you need to register there and charge the applicable VAT in that country, just like you would if it you were issuing an invoice in your own country.
Mandatory information to be included on all invoices:
- Your name and address
- The name and address of your customer
- Your (supplier’s) VAT identification number
- Date of invoice issuance
- Unique invoice number
- Description of goods or services supplied (including quantity and price)
- VAT amount payable - or the information needed to calculate it e.g. amount excluding VAT, VAT rate (percentage), and total amount (including VAT)
Your customer is a company in another EU country
If your customer is a business or company located in another EU country, then you do not have to charge VAT on the invoice, and your invoice should therefore appear without any VAT.
In this case, a reverse charge occurs, provided that both companies are VAT registered. A reverse charge means that when you invoice your customers, they are responsible to pay the VAT according to the rates that apply in their home country. In addition, you should comply by including all other required information on the invoice.
Extra information to be included on the invoice for companies in the EU:
- Your intra-community VAT number
- The VAT number of your customer (and full name and address)
- Exempt VAT transaction - a reference to the appropriate legislation exempting VAT, or to any other reference indicating it’s exempt Articles 217-240 VAT Directive - the basic set of EU invoicing rules, and in certain areas - national rules set by the individual EU country
- Mention reverse charge procedure (customer liable to pay VAT)
EU invoices with an invoicing software
An additional aspect to consider when issuing an invoicing to a foreign EU country, is that it is advisable to issue the invoice in the language that your customer can understand.
If you are a UK business issuing an invoice to a customer in Germany - by sending the invoice in German you are making it easier and faster for your customer to process it, by minimising the risk of confusion and misinterpretation. Furthermore, they will also appreciate your efforts of adjusting to and considering their preferences.
You can also choose whether to activate VAT in your account settings, depending on whether your business is VAT registered. If your VAT is activated, then you can add VAT directly to your invoices, and even adjust the VAT rates for different products, services or contacts. You can also easily disable the VAT function and enter the legislative references in the section under Terms.