How to write an invoice to a customer in an EU country
This article explores how businesses based in Northern Ireland write invoices to customers in EU countries. After Brexit, Great Britain (England, Scotland and Wales) follow a different set of rules. Please view our article: “Invoicing to EU businesses and VAT considerations after Brexit”.
You’re now a master of invoicing your UK customers - but what happens when you sell a product or service to customers in an EU country?
The first thing you need to do is check if you’re a typical entrepreneur and if you have a VAT number that allows you to transfer taxes collected on your sales to HMRC. If this is the case, then you also need to check if your customer is registered for VAT in their country.
If you’re selling goods to a customer located in an EU country who is an individual or small business that is not registered for VAT, then you would issue an invoice including UK VAT - just like you would if you were issuing an invoice to a domestic customer.
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 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)
If you’re selling goods to a VAT registered business or company located in the EU, then you will zero-rate the VAT.
In this case, the reverse charge occurs, provided that both companies are VAT registered. A reverse charge means that when you invoice your customers, they are responsible for recording 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 VAT registered companies in the EU:
Your intra-community VAT number
The VAT number of your customer (and full name and address)
The mention of reverse charge on the invoice so the customer is aware that they need to account for the VAT
The information above applies to the sale of goods between Northern Ireland and the EU. The cross-border sale of services is treated differently than goods.
The VAT position for services depends on the “place of supply”. The general place of supply rules are:
For B2B sales, the place of supply is where the customer is based
For B2C sales, the place of supply is where the supplier is based
Under the general rule, if your services have a place of supply in the EU, then the reverse charge will apply. If your services have a place of supply in Northern Ireland, then UK VAT would be charged.
There are some exceptions to this rule so it’s best to speak to an accountant if you’re in doubt.
An additional aspect to consider when issuing an invoice to an EU customer is that it’s advisable to issue the invoice in a language that your customer can understand.
If you’re a Northern Ireland business issuing an invoice to a customer in Germany, by sending the invoice in German you’re 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 in adjusting to and considering their preferences.
You can also choose whether to activate VAT in your profile 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.Start invoicing for free