Invoices for freelancers
Freelancers have a few particularities when it comes to invoicing, especially around withholding tax when billing other businesses. Here's what you need to know.
Details you can't skip
In addition to the mandatory details of any invoice, as a freelancer you should state your full legal name (not just your trading name) and your personal tax ID.
Withholding tax
When a freelancer invoices a business (not an individual), income tax withholding often applies, depending on the country. This amount is subtracted from the total, since the client business pays it directly to the tax authority on your behalf.
Example calculation with withholding
Taxable base: £1,000. VAT (20%): £200. Withholding tax (e.g. 20%): −£200. Total to collect: 1,000 + 200 − 200 = £1,000 (figures vary by country and rate).
When withholding doesn't apply
If you invoice an individual (not a business or professional), withholding tax generally doesn't apply — only the corresponding VAT.
Create your freelancer invoice
With PreFactur you can add these notes in the invoice's terms or notes field, and VAT is calculated automatically.
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