VAT & GST Invoice Guide: Requirements & How to Create One

If your business is registered for VAT (Value Added Tax) or GST (Goods and Services Tax), the invoices you issue must meet specific legal requirements. A standard invoice and a VAT invoice look similar, but a tax invoice has additional mandatory fields — and getting them wrong can mean your clients can't reclaim tax, which creates real problems in a business relationship.

Who Needs to Issue VAT/GST Invoices?

You need to issue a tax invoice when:

• Your business is registered for VAT or GST in your country
• You are selling to another VAT/GST registered business (B2B)
• You are selling goods that are subject to tax at a non-zero rate

If you are below the registration threshold in your country, you do not charge VAT/GST and do not need to issue a tax invoice. You simply issue a regular invoice.

Required Fields on a VAT/GST Invoice

In addition to the standard invoice fields, a valid tax invoice must include:

• The words "Tax Invoice" or "VAT Invoice" clearly displayed
• Your VAT/GST registration number
• The client's VAT/GST number (required for B2B transactions in most countries)
• The tax rate applied (e.g. 20% VAT, 10% GST)
• The tax amount in currency (e.g. VAT: £40.00)
• The net amount (before tax)
• The gross amount (after tax)
• A description of the goods or services sufficient for tax purposes
• The date of supply (when goods/services were delivered — may differ from invoice date)

How to Calculate VAT/GST Correctly

The calculation depends on whether your prices are quoted inclusive or exclusive of tax.

Adding tax to a net (excluding tax) price:

Working out the tax from an inclusive (gross) price:

If your price already includes tax, you extract the tax amount using the VAT fraction: divide the gross price by (1 + tax rate), then subtract to get the net.

VAT/GST Rates & Rules by Country

Requirements and rates vary significantly by country. Here is an overview of the major systems:

Simplified vs Full VAT Invoices

Many countries allow a "simplified" tax invoice for smaller transactions. In the UK, for example, a simplified VAT invoice can be used for supplies totalling £250 or less — it doesn't need to show the net amount and can just show the gross price with a statement that the price includes VAT at a specified rate.

For anything above the simplified threshold, or for B2B transactions where the client wants to reclaim VAT, you must issue a full tax invoice with all required fields.

Reverse Charge and Cross-Border Invoices

When you invoice a VAT-registered business in another country (particularly within the EU), the reverse charge mechanism often applies. This means:

• You do not charge VAT on your invoice
• The client accounts for the VAT in their own country
• Your invoice must include a note such as: "VAT reverse charge applies" or "Reverse charge: customer to account for VAT"
• You must include both your VAT number and the client's VAT number

If you sell to businesses in other EU countries and omit the reverse charge notation, you may be required to charge VAT unnecessarily — which your client will then dispute.

Common VAT Invoice Errors

• Missing VAT number — your client cannot reclaim input tax without your registration number on the invoice
• Applying wrong rate — some goods and services have reduced or zero rates. Charging the wrong rate creates compliance issues for both parties
• Not separating net and tax amounts — showing only the total is not sufficient for a valid tax invoice
• Incorrect date of supply — tax liability often depends on the date goods or services were provided, not when the invoice was raised
• Issuing a proforma instead of a tax invoice — a proforma does not count as a VAT record

Create a VAT/GST Invoice Free

Our Tax Invoice template includes dedicated fields for your VAT/GST number, the client's tax number, separate tax rate and amount fields, and produces a properly formatted PDF that meets standard requirements in most countries.