VAT issues with EU and international invoicing

Navigating the more technical and nuanced issues when preparing an EU or international invoice


If you’re issuing invoices in a foreign currency, different rules apply depending on whether you’re selling goods or services, plus whether you’re dealing with other businesses or directly with consumers. It may also be necessary to register for VAT or the equivalent sales tax in the country with which you’re trading.

Zero rating international invoices

If you sell goods from the UK to someone in another country, you might need to charge VAT on the sales. However, you can zero rate most items sold outside the EU or those sent to someone who is VAT-registered in another EU country. There are exceptions, such as second-hand goods and means of transportation, so always check. If you’re selling services to a foreign customer who is VAT-registered, you don’t charge VAT, but they pay the sales tax in their own country. This detail should be acknowledged on the invoice. When a service is sold to a customer not registered for VAT, VAT is charged at UK rates.

In instances where the VAT payable is zero, this should also be noted on the invoice. Your invoices are important since they can be used by HMRC as ‘evidence of removal’, demonstrating the goods concerned left Britain. Records should be kept for up to six years, but businesses registered for VAT Mini One Stop Shop (MOSS), the service for firms selling digital services to consumers within the EU, must keep invoices up to ten years.

Distance selling

If you’re selling goods or services to someone who is not registered to pay VAT in another EU country and you’re responsible for delivery, this qualifies as a distance sale and you charge VAT at UK rates in the normal way. However, each EU country has a distance selling threshold – 35,000 euros in many countries including France, Ireland and Italy, but up to 100,000 euros in Germany, Luxembourg and the Netherlands, for example. If the value of your sales to that country exceed that limit, you must register for VAT in the country concerned and charge customers there VAT at the local rate.

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