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VAT basics

What Should You Know About VAT Invoicing Before You Start Selling Internationally?

If you are new to selling across borders, you might find confusing the regulative aspects of VAT as well as its accounting. In this article, 1stopVAT team will explain why it is important to check company VAT number when trading internationally and will talk about the formal requirements for VAT invoices. It is essential to learn this information before starting to issue your VAT invoices as submitting incorrect data to tax authorities can result in repercussions.

Elements of a VAT invoice

There are two types of VAT invoices: full invoice and its simplified version. In different countries, the requirements for VAT invoices can vary. Usually, there are no limits to the extent of how many details are provided in an invoice; therefore, it is better to fill in more information rather than not enough.

Companies operating in the EU are obliged to include the following information in their full VAT invoices:

  • General information: date of issue; a unique number of identification
  • Customer’s information: VAT identification number if the client is subject to submitting VAT returns; full name and address
  • Details about the supplier: full name and address, VAT number
  • Transaction details: quantity, type and other information about the goods or services provided; date of transaction or payment completion; unit price of goods or services exclusive of tax and special discounts and similar
  • VAT details: VAT rate applied, VAT amount, breakdown of VAT amount payable by VAT rate/exemption

When issuing a simplified invoice, only the information about the supplier and the transaction details are required. In this type of invoice, the VAT amount payable does not need to be calculated; only the rate applied can be included.

If your client has not provided you with their identification details, you might want to find VAT registration number of your client online. You can do that by entering the company’s official name into one of the available search engines. There are also several hotlines in the EU and outside of it provided by the revenue authorities that can help find a VAT number needed. In the UK, Her Majesty’s Revenue and Customs agency powers such a hotline that operates during the business hours.

Why should you always check company VAT number on the invoice you received?

If you have already succeeded to find VAT registration number of your supplier or client and are not sure if it is correct, you should consider checking its validity.

Usually, entrepreneurs do not have much time to double-check the information of every invoice they submit or receive. However, incorrect data submitted to the tax authorities can result in failure to get VAT returns accepted or in a worse scenario, it could lead to fines if the regulators think that false information was provided deliberately.

To spare yourself the worrying about potential hazards of submitting incorrect information, you can quickly and easily check the validity of any European VAT number using the VIES VAT number validation system, provided by the European Commission. To confirm the VAT number, you will only need to choose the member state of the number holder and enter the number itself.

Similarly, you can also use registries of VAT numbers established by several countries outside the EU. For example, in Australia, the search engine is part of the ABN Lookup platform. If you must find a VAT number and verify it in a country that does not have a handy online tool, the easiest choice is to call or email a country’s customs agency or the responsible tax institution.

Alternatively, you might want to consider using one of the available online search tools created by financial consultancies that provide data about VAT numbers across countries. Keep in mind that in some cases, the service is not free of charge or requires registering in the database to access the information.