TABLE OF CONTENT

What Is a VAT Invoice? —The Ultimate Guide

If you’re a business owner, you’re probably familiar with the notion of invoices. Being an accounting document issued by a seller to a buyer, the invoice’s primary purpose is to request payment for the purchased goods or services.

Now, what about a VAT invoice? What is it exactly? And what does VAT stand for? In this piece, we’ll provide a comprehensive guide on the VAT invoice meaning, the purpose of its use, and ways of its creation. Stay tuned for details.

VAT Invoices Defined & Explained

Let’s start with what VAT stands for. A value-added tax, often shortened to VAT, is a tax imposed on almost all goods, services, and other taxable supplies purchased and sold for consumption. So, what does VAT mean on an invoice? It’s simple: It means the invoice issued within a sale that’s subject to VAT tax. With that said, a VAT invoice is a particular type of invoice that includes a sales tax on it.

The US government doesn’t charge a federal value-added tax and allows each state to manage its sales taxes individually. However, if your US-based business sells products and/or services to customers in the EU, getting the gist of collecting VAT and thus ensuring that all the must-pay taxes are sorted out should be among your vital priorities.

In many ways, VAT invoices are similar to their standard counterparts structure-wise. Both docs verify the details of the deal, as well as serve as requests for payment. However, there are several distinctions between them. For instance, unlike standard bills, VAT invoices need to feature data about sales tax. Additionally, only businesses registered for VAT can issue VAT invoices.

Now that we’ve covered the VAT definition, let’s touch upon its purpose. Just like other taxes, the main mission of VAT is to fund the government via business-raised revenue. The data provided on a VAT invoice is the foundation for establishing your VAT liability on the supply of the products or services in question. This type of tax is a must-pay and should be dealt with in a timely manner.

When VAT Invoices Are Used

Does your operation involve selling taxable goods or services to VAT-registered businesses? Perhaps, your business sells taxable and VAT-exempt products? Then you’re obliged to provide an invoice with VAT in lieu of a common invoice. VAT charge invoicing isn’t needed under the following circumstances:

your operation suggests selling VAT-exempt goods/services only, such as sporting activities or medical treatments;
you give certain goods away as gifts;
your client uses a self-billing arrangement;
your client isn’t registered for VAT.

With that said, even if your business sells one single type of product subject to a VAT rate, VAT registration and, therefore, VAT invoicing are a must. Bear in mind that you should send a VAT invoice only if you and/or the client you’re working with is VAT registered. These are the steps you need to follow to charge business value-added tax:

Register your company for EU VAT.
Confirm customer data.
Charge VAT like a pro.
Issue a VAT invoice.
Submit quarterly VAT returns.

How to Create a Tax Invoice: A Step-by-Step Guide

Read about tax invoice meaning. What Must be Included in a Tax Invoice?

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How to Create a VAT Invoice

Knowing how to create a VAT on an invoice is important. Knowing how to do it in the speediest and most effective way is paramount. Did you know that there are dedicated digital invoicing platforms that feature pre-designed document templates, along with a treasure trove of tools that help you automate your invoicing processes? With a platform like this, your chances of finding the most suitable invoice sample and customizing it in a flash to suit your most intricate needs get a mighty boost.

If you equip yourself with a reliable invoicing platform, you’ll enjoy the following major perks:

heaps of your treasured time saved;
error-proof files;
secure cloud-based file storage;
paperless equals green and money-saving;
the possibility to access and work on your docs on the go.

With all that said, invoicing online is among the key strategies for keeping your business successful and your cash flow high. Here are some major perks digital invoicing comes with:

Major Perks Digital Invoicing
Effortlessness	digital billing is easier for you and your customers compared to manual file processing
Billing in a flash	it’s fast, it’s easy, and it’s automated
Precious time saved	say goodbye to paper-based document management and save lots of money along the way
Lower risk of files getting lost	documents sent via regular post can easily get lost or damaged, while digitally sent files will stay safe and sound in your records
Improved monitoring possibilities	no more excuses for not paying you, because e-invoicing comes with a clear digital record of when your docs are sent
On-the-go accessibility	cloud-based invoicing platforms allow for limitless access to all your files irrespective of your whereabouts

Invoicing is time-consuming, that’s a fact. Therefore, if you know how to automate the entire operation and make it as easy as possible, we recommend that you make the most of that knowledge. With top-notch modern technology known as digital invoicing platforms, you are bound to succeed in scaling your business and taking your administrative affairs to the next level.

How to Create an Invoice

Learn how to create a bill and, what to include in it to get a speedy payment

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What Information Is Included on a VAT Invoice

Wondering what must be included on a VAT invoice? Here are the main must-incorporate elements:

unique ID;
your company name and contact details;
your VAT registration number;
document issue date;
client name and contact details;
itemization of products/services rendered.

Payment terms, credit terms if applicable, as well as contact data for billing queries are also among the vital requirements of a VAT invoice. If you’re currently on the prowl for an excellent sample of tax invoice for your business, sticking with a solid online invoicing platform with a breadth of templates is your best bet.