A VAT invoice is an invoice that states the VAT separately, so the buyer can see what tax was charged and reclaim it where they are entitled to. It shows the net amount, the VAT amount per rate and the total, alongside the details of both parties. In this article you can read what makes an invoice a valid VAT invoice, how the VAT breakdown works with a worked example, and when an invoice carries no VAT at all.
Two things to pin down. The requirements below follow the EU invoicing rules, with Dutch rates as the example; the percentages and some formalities are set nationally, so check your own tax authority for the figures that apply to you. And note the shorthand: ex VAT or excluding VAT means the price before tax, while incl. VAT is the amount you actually pay. On a business invoice the net amount is the one that matters for your books, because the VAT is a separate item you either owe or reclaim.
Looking for something more specific? If you are building an invoice from scratch, see how to make an invoice. If your invoice carries no VAT because it was shifted to the customer, read the VAT reverse charge. And for the bookkeeping side, see recording VAT. Want the breakdown straight away? Go to the worked example.
Table of contents
What is a VAT invoice?
A VAT invoice is simply an invoice that meets the formal requirements and states the VAT as a separate item. That separation is the whole point: it is what allows your customer to reclaim the tax and what allows both of you to report the right figures. An invoice that only shows one gross total may still be a bill, but it is not something a business can reclaim VAT on. So the difference between an invoice and a VAT invoice is not the transaction; it is whether the document carries the information the tax rules ask for.
What makes a VAT invoice valid?
| Invoice number and date | A unique, sequential number and the date of issue |
| Both parties | Your name and address and those of your customer |
| Your VAT number | And your customer’s, on cross-border supplies within the EU |
| What you supplied | A description and quantity of the goods or services |
| Date of supply | When the goods or services were delivered |
| Amounts per VAT rate | The net amount and VAT amount for each rate applied |
| Total payable | The gross amount including VAT |
The row that causes the most trouble is the second to last. If several rates apply, each needs its own subtotal, because one combined VAT figure cannot be split back reliably. That is also the row an auditor checks first.
A worked example: the VAT breakdown
Suppose you invoice a customer for consultancy at the standard 21% rate and a book at the reduced 9% rate. The breakdown then looks like this:
| Line | Net | Rate | VAT |
| Consultancy, 10 hours | € 1,000.00 | 21% | € 210.00 |
| Reference book | € 100.00 | 9% | € 9.00 |
| Subtotal excluding VAT | € 1,100.00 | ||
| VAT total | € 219.00 | ||
| Total payable | € 1,319.00 |
Notice what a single combined VAT line would cost you here. If the invoice only said “VAT € 219.00” without the split, neither party could tell how much belonged to the 21% rate and how much to the 9% rate, and the VAT return asks for exactly that. Working backwards from € 219 is impossible without knowing the mix, which is why the breakdown per rate is a requirement rather than a courtesy.
When does an invoice carry no VAT?
- Exempt activities: certain services, such as healthcare and education, fall outside VAT altogether.
- Zero rate: exports and some supplies carry 0%, so VAT is charged at nil rather than not charged.
- Reverse charge: the VAT is due from your customer instead of you, and the invoice says so.
- Small business schemes: in some countries a small supplier is outside the VAT system and charges none.
A second example: an exempt invoice
Suppose you are a physiotherapist invoicing five treatments of 100 euro. That service is exempt, so the invoice looks like this:
| Line | Quantity | Amount |
| Physiotherapy treatment | 5 | € 500.00 |
| VAT | none: exempt supply | |
| Total payable | € 500.00 |
Three things to notice. There is no rate and no VAT amount, and therefore no net subtotal either: the amount is the amount. What there is, is the reason, because without it your customer cannot tell whether this is an exemption, the zero rate or a reverse charge. And the price has not dropped: had the same treatment been taxable at 21%, the invoice would have shown € 105 of VAT and a total of € 605.
The bill arrives on the purchasing side. Buy a laptop at 1,000 euro net as an exempt business and you pay 1,210 euro and book the whole amount as cost. A colleague with taxable supplies reclaims that 210 euro and is left with 1,000 euro of cost. The same device is therefore 21% more expensive for you, and that is what an exemption actually does.
Exempt, zero-rated or reverse charged?
These three look identical on the invoice, because in all three cases the VAT column is empty, and they are treated completely differently in the books. With an exemption no VAT is due and you cannot reclaim VAT on the related costs either. With the zero rate VAT is due at 0%, and you keep the right to deduct your input VAT. With a reverse charge the VAT is still due in full, only by your customer. So an empty VAT column is not a conclusion; it is a question about which of the three applies.
Four common mistakes
- One VAT total for several rates. The € 219 from the example above, unusable because the split is missing.
- Leaving the VAT number off. On a cross-border supply within the EU that invalidates the treatment, and your customer cannot reclaim.
- Saying “no VAT applicable” without a reason. State which of the three situations applies, because the wording is what makes it defensible.
- Treating a proforma as a VAT invoice. A proforma is a quotation in invoice form. It carries no right to reclaim, however complete it looks.
Reading the VAT off your invoices
On the receiving side, the VAT breakdown is exactly the part that costs time. Someone has to look at each invoice, work out which lines carry which rate, and enter the amounts separately. TriFact365 recognises your purchase invoices and prepares a booking proposal in your own portal, with the net amount, the VAT amount and the VAT code per line, including invoices where the VAT column is empty because it was reverse charged. After your check and approval the entry goes to your accounting package with the document alongside it. Read more about automated invoice processing.
Frequently asked questions
A VAT invoice is an invoice that states the VAT separately, so the buyer can see what tax was charged and reclaim it where entitled. It shows the net amount, the VAT per rate and the total.
A unique invoice number and date, both parties’ details, your VAT number, a description of what was supplied, the date of supply, the net and VAT amounts per rate, and the total payable.
Each rate gets its own subtotal. Invoice 1,000 euro at 21% and 100 euro at 9% and you show 210 and 9 separately, a net subtotal of 1,100, VAT of 219 and a total of 1,319 euro.
Ex VAT, or excluding VAT, is the price before tax. Incl. VAT is the amount you actually pay. For your books the net amount is the relevant one, because the VAT is a separate item you owe or reclaim.
Either the activity is exempt, the zero rate applies, the VAT has been reverse charged to you, or the supplier falls under a small business scheme. The invoice should say which.
With an exemption no VAT is due and you cannot deduct VAT on related costs. With the zero rate VAT is due at 0% and you keep your right to deduct. On the invoice both look the same.
No. A proforma is a quotation in invoice form and carries no right to reclaim, however complete it looks. You need the final invoice for that.
It recognises your purchase invoices and prepares a booking proposal with the net amount, the VAT amount and the VAT code per line, including invoices with an empty VAT column. After your check the entry goes to your accounting package.
In closing
A VAT invoice is an ordinary invoice that happens to carry the information the tax rules require, and the breakdown per rate is the part that does the work. Get that right and your customer can reclaim, your return reconciles, and nobody has to work backwards from a single total. And if the VAT column is empty, say why, because that one line decides how both sides book it.
