Wednesday, 2 November 2022, 4 minute read
For businesses in the UK, invoicing EU companies has recently become a little more complicated. Following Brexit, there are a number of new factors to consider when invoicing European companies. To request and receive payments from the EU smoothly, quickly and legally, it’s important to understand how invoice requirements have changed since the UK left the EU in 2020.
In today’s article, we’ll be covering all the key things you need to know when invoicing EU companies as a UK business - including whether to charge VAT, what information to include in your invoice, what currency to charge European businesses in, and the best way to accept payments from EU countries.
How do you invoice EU companies from the UK?
Firstly, check that the European country you are sending your invoice to is one of the 27 EU member states, or part of the European single market. If you’re invoicing Switzerland from the UK, for example, you’ll need to remember that although it is not an EU member state, it is still part of the European single market, so the same rules will apply.
If the European country you’re invoicing is part of the EU or single market, you’ll need to follow the requirements below.
What information should you include in your invoice?
When invoicing international clients from the EU, make sure you’ve included all of the UK’s basic invoice requirements:
The date the invoice is being issued
A unique and sequential invoice identification number (e.g. ‘001’, ‘002’, ‘003’, etc)
Your company’s full name, registered address and company registration number
The EU company’s full company name, registered address and registration number
A brief description of the goods/services delivered
The quantity of the goods supplied/services delivered
The date you supplied the goods or services
The total amount to pay
The date when payment is due
Once you’ve included all of this required information, you can add any other relevant information to your invoice. This might include your business’ contact details, a message to thank your customer for working with you, or a Crezco payment link or QR code to receive instant GBP payments.
Should you charge VAT on European invoices?
Rules around charging and registering for VAT have changed considerably since Brexit, as businesses based in Great Britain (England, Scotland, and Wales) can no longer apply the Reverse Charge to EU sales. The Reverse Charge moves the responsibility for the recording of a VAT transaction from EU sellers to EU buyers for that good or service, and before Brexit it reduced the obligation for UK companies selling to EU companies to register for UK VAT.
That said, if your business is not required by law to register for UK VAT, you still don’t need to charge VAT when invoicing the EU company, or reference it anywhere on the invoice.
If you are required to register for UK VAT, you should include the following on all invoices sent to EU countries:
Your company’s VAT number
Your EU customer’s VAT number
VAT rate charged
Taxable amount per rate
Total VAT payable
Equivalent VAT in pounds sterling (if your invoice is in a different currency)
Whether you need to charge VAT on invoices to European companies will also depend largely on whether you’re selling goods or providing services.
If you’re providing a service to an EU company with an EU VAT ID, you generally do not need to charge VAT, but there are still some invoicing and reporting requirements you will need to bear in mind. If the EU company you are invoicing does not have a VAT identification number, you may need to charge UK VAT - unless a specific exemption applies.
If you’re selling goods to EU companies, you may be subject to UK VAT, or local VAT in the EU country you’re selling to. Some supplies of goods may be ‘zero rated’ (meaning they are items that the government charges VAT on, but the rate is currently set at zero). When selling goods to EU companies, we recommend seeking expert VAT guidance to ensure you are charging the correct amount of VAT for the correct items.
Do keep in mind that there are exceptions to many of these rules, and it is very important to seek professional advice if you are unsure whether you should register for VAT, or of the UK’s VAT invoicing requirements. HMRC has published guidance on whether you need to register for UK VAT on their official government website.
What currency should you use in your invoices to EU companies?
When invoicing EU companies, you can use any currency that you have previously quoted your client for.
This means that whether you’re invoicing Spain from the UK, or invoicing an Irish company (which also uses the Euro), you can still charge your customers in pounds sterling.
This is often worth doing, as when you invoice EU companies in GBP, you decrease the risk of losing money to high exchange rates. When you invoice in Euros or another EU currency, your bank may charge you high rates to change the money you receive into GBP.
It’s also important to note that if UK VAT applies, you must show this tax on your invoice in pounds sterling, and not in any other currency.
How can you save money on invoicing EU companies as a UK business?
When charging EU companies for goods in pounds sterling, you can use a digital payments solution like Crezco, which lets European clients pay you quickly, securely and directly into your bank account.
When you include your unique Crezco payment link in your invoices to EU clients, you’ll receive your funds from EU customers the second the payment is authorised - resulting in a frictionless experience for both parties. Crezco’s use of open banking and award-winning proprietary risk tools (Sentinel) will also keep payments from EU companies safe and secure.
Crezco can help
Crezco was built for use by companies of all sizes, and is a great choice for freelancers and small businesses sending invoices to EU countries, as it’s free to create and share your unique payment link across multiple channels (such as SMS, social media and email) and invoices (we integrate with your favourite accounting software).
More information on how to invoice EU clients from the UK
Lat but not least, keep in mind you may also have to apply for an export licence in the uk.
For more detailed information on how to invoice EU companies as a UK business, we recommend the following resources:
Take a look at these invoice templates (with UK invoice requirements)
Learn more about how to invoice EU companies with Crezco’s account-to-account payments solution
Good luck, and happy invoicing!
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