Invoice with VAT
Most invoices between businesses and professionals include VAT. Here's how to calculate and apply it correctly.
When VAT applies
VAT applies to almost all sales of goods and services between businesses, freelancers and individuals, except for specifically exempt activities (certain education, healthcare or financial services).
How to calculate VAT on your invoice
The VAT amount is calculated on the taxable base (the price before tax): VAT = Taxable base × VAT rate. See the full guide in how to calculate VAT.
Example invoice with VAT
Web design service: £800. VAT (20%): £160. Invoice total: £960.
Which VAT rate to choose
It depends on the nature of the product or service: most professional services carry the standard rate, while some sectors like hospitality or certain food items may have reduced rates, depending on the country.
Generate your invoice with VAT for free
PreFactur lets you choose the VAT rate for each line of your invoice or quote, and calculates the breakdown automatically.
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