Glossary

VAT Invoice (Full Tax Invoice)

A VAT invoice is the full invoice a VAT-registered seller issues for a sale to a business, carrying the details the law lists (a sequential number, both parties’ VAT numbers, the taxable amount and VAT at each rate) so the customer can deduct the VAT it was charged.

Also called: full VAT invoice, full tax invoice, tax invoice, Article 226 invoice

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Definition

In VAT, the invoice is not just a request for payment. It is the document the tax system runs on. The seller’s invoice records the output VAT it owes, and the same invoice in the customer’s hands is what allows the customer to deduct that VAT as input VAT. The EU VAT Directive makes the link explicit: to deduct, a business “must hold an invoice” drawn up under the Directive’s invoicing rules. HMRC calls the VAT invoice “the primary evidence” a business customer needs to recover the VAT you charged.

Because a tax authority checks one party’s claim against the other’s return, the content of a VAT invoice is set by law. In the EU the list is Article 226 of Directive 2006/112/EC: ten details on every invoice, plus specific mentions such as “Reverse charge” when the customer, not the seller, accounts for the VAT. The UK keeps its own, very similar list in VAT Notice 700. Countries outside Europe that use a VAT or GST usually have a full tax invoice with much the same contents.

The full invoice is the default for sales to businesses. A simplified tax invoice, with fewer fields, is allowed only for low-value sales or sales to consumers, within limits each country sets. For a company billing business customers through Stripe, the full invoice is the one to check field by field, because a Stripe invoice covers most of the list by default and leaves a few fields to you.

Key points

+A VAT invoice is the customer’s evidence for deducting input VAT, so its contents are set by law.
+In the EU, Article 226 of the VAT Directive lists the required details; the UK’s list is in VAT Notice 700.
+Core fields: date, a unique sequential number, both parties’ names and addresses, the seller’s VAT number, the taxable amount and VAT at each rate.
+When the customer accounts for the VAT, the invoice must show the customer’s VAT number and the mention “Reverse charge”.
+For reverse-charged cross-border services in the EU, the invoice is due by the 15th day of the month after the supply.
+Stripe shows account and customer tax IDs and can print “Reverse charge”, but account tax IDs can’t be changed once an invoice is finalized.

The details Article 226 requires

Article 226 opens with a ceiling as well as a floor: “only the following details are required for VAT purposes.” Every VAT invoice in the EU carries the first ten, and the rest apply when their case does.

On every invoice: (1) the date of issue; (2) “a sequential number, based on one or more series, which uniquely identifies the invoice”; (3) the seller’s VAT identification number; (4) the customer’s VAT identification number where the customer is liable for the VAT or receives an intra-EU supply of goods; (5) the full name and address of seller and customer; (6) the quantity and nature of the goods, or the extent and nature of the services; (7) the date of the supply, where it differs from the invoice date; (8) the taxable amount per rate or exemption, the unit price exclusive of VAT, and any discounts not already in the unit price; (9) the VAT rate; and (10) the VAT amount payable.

When the case applies: (7a) “Cash accounting” for a seller on a cash accounting scheme; (10a) “Self-billing” where the customer issues the invoice; (11) a reference to the exemption, for an exempt supply; (11a) “Reverse charge” where the customer is liable for the VAT; margin scheme mentions for travel agents and second-hand goods; and the tax representative’s VAT number, name and address where a representative is liable.

Two neighbors of Article 226 round out the picture. Article 229 says member states “shall not require invoices to be signed.” Article 230 lets the amounts be in any currency, “provided that the amount of VAT payable or to be adjusted is expressed in the national currency of the Member State.”

Reverse-charged sales: what changes on the invoice

A SaaS company outside the EU selling to an EU business usually charges no VAT. The customer accounts for it under the reverse charge. The invoice still matters, and it changes in three ways.

It must carry the customer’s VAT number, under point (4), and the mention “Reverse charge,” under point (11a). The European Commission’s guidance puts it the same way: “If the customer is liable for tax (i.e. under the reverse-charge procedure): the words ‘reverse charge’.”

It can leave out the VAT. Article 226a lets a seller that is not established in the member state where the tax is due, invoicing a customer that is liable for the VAT, omit points (8), (9) and (10) and instead show the taxable amount by reference to what was supplied.

And it has a deadline. Under Article 222, an invoice for services “for which VAT is payable by the customer pursuant to Article 196” must be issued “no later than on the fifteenth day of the month following that in which the chargeable event occurs.” For other supplies, member states may set their own limits.

The UK version

HMRC’s VAT Notice 700 requires a VAT invoice “whenever you supply standard-rated or reduced-rated goods or services to another VAT-registered person,” normally within 30 days of the tax point. Its list closely tracks Article 226: a sequential number, the time of supply, the date of issue where different, the seller’s name, address and VAT registration number, the customer’s name and address, a description, and for each description the quantity, the VAT rate and the amount payable excluding VAT. Two UK-specific items stand out: the rate of any cash discount offered, and the total VAT, which must be “expressed in sterling” whatever currency the invoice is in.

A UK seller may issue a simplified invoice instead only if the supply is £250 or less and the customer agrees. Above £250, or whenever the customer asks for one, it must be a full VAT invoice. In March 2024 HMRC also removed the reason for a zero rate or exemption from the list of required details.

Mapping a Stripe invoice to the list

Much of Article 226 is on a Stripe invoice without any setup: the issue date, a unique invoice number, your business name and address, the customer’s name and address, a description and quantity for each line, and, with Stripe Tax, the rate and tax. The fields to check are the ones Stripe can’t guess.

Numbering. Stripe offers two schemes: sequential for each customer, with a prefix per customer, or sequential across the account. Stripe says “European Union member countries and the United Kingdom typically require account level sequencing,” and that it picks a default by the country of your Stripe account. A US account defaults to customer-level numbering, so a US company billing EU or UK businesses should review that choice before the first invoice.

Your VAT number. Add it as an account tax ID. Stripe says “both the account and customer tax IDs display in the header of invoice and credit note PDFs,” and account tax IDs can’t be added, changed or removed once an invoice is finalized.

The customer’s VAT number. Store it as a customer tax ID. Stripe validates EU VAT numbers with VIES, but the invoice “includes the customer tax ID whether or not it’s valid,” so a failed check doesn’t keep a bad number off the PDF.

The reverse charge mention. Stripe Tax applies the reverse charge automatically when a business tax ID is present and the jurisdictions call for it. When a customer’s tax status is set to reverse, Stripe says “the invoice and receipt PDF includes the text ‘Reverse charge’.”

VAT in local currency. Stripe’s invoices display a converted tax amount when the filing currency differs, but “don’t display the taxable amount in the filing currency or the exchange rate used for the conversion.” Stripe tells sellers to check with an adviser whether that meets local rules.

Anything else, such as an exemption reference, goes in the footer or in custom fields (up to four, shown in the invoice header). Both are locked once the invoice is finalized.

One supply, one invoice

Point (2) of Article 226 requires a number that “uniquely identifies the invoice.” The practical consequence for a business that bills in Stripe and keeps its books in QuickBooks is simple: the Stripe invoice is the VAT invoice. If the QuickBooks record of the same sale is also emailed to the customer, the customer holds two documents with different numbers for one supply, and either one could be used to claim the same input VAT.

Keep the Stripe invoice as the document customers receive, and keep the Stripe invoice number on the QuickBooks record so the two can be matched. When a sale is corrected, issue a Stripe credit note against the original rather than a fresh invoice, so the correction refers to the invoice it changes.

Frequently asked questions

What must a VAT invoice include?

In the EU, Article 226 of the VAT Directive requires the date, a unique sequential number, the seller’s VAT number, both parties’ names and addresses, a description and quantity, the supply date if different, the taxable amount and unit price exclusive of VAT, the VAT rate and the VAT amount. Reverse-charged sales also need the customer’s VAT number and the words “Reverse charge.”

What is the difference between a VAT invoice and a simplified invoice?

A full VAT invoice identifies both parties and sets out the taxable amount and VAT in detail, because a business customer uses it to deduct VAT. A simplified invoice drops most customer details and is only allowed in limited cases, such as UK supplies of £250 or less with the customer’s agreement, or EU invoices of 100 EUR or less under Article 220a of the VAT Directive.

When must a VAT invoice be issued?

For EU cross-border services where the customer pays the VAT under the reverse charge, Article 222 requires the invoice by the 15th day of the month after the supply. For other supplies, member states set their own limits. In the UK, a VAT invoice is normally due within 30 days of the tax point.

Is a Stripe invoice a valid VAT invoice?

It can be, if you set it up. Add your VAT number as an account tax ID, store customers’ VAT numbers as customer tax IDs, and check the numbering scheme, since Stripe says the EU and UK typically require account-level sequencing. Stripe prints “Reverse charge” when a customer’s tax status is set to reverse, but doesn’t show the taxable amount in the filing currency.

Does a VAT invoice have to show VAT in the local currency?

Usually the VAT amount, yes. The EU VAT Directive lets an invoice be in any currency provided the VAT payable is expressed in the member state’s national currency, and HMRC requires the total VAT in sterling. The prices and totals themselves can stay in the currency you bill in.

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