Contractors' Questions: How to invoice clients in the EU?
Contractor's Question: I am having problems invoicing companies in other EU nations. I have been following the guidelines provided by Business Link. However as a freelancer without a VAT number, I've been sending invoices with a zero VAT amount when billing clients on the Continent. I used to add my national insurance number on the invoices, but this has been interpreted in other countries as my VAT number, causing frustration to my clients' accountants and for me, needing cashflow.
I was even contacted by one accountant, working with one of my customers in the EU, who told me that as a non-VAT registered sole trader, I shouldn't issue invoices at all. She said that I should issue another type of document, stating that I have provided a service and stating the amount. She said at least that was the law in their country, and as that country is in the EU, the law is applicable in every other member country, including the UK, or so she claimed. If I can't get reliable advice on how to proceed, would it be best for me to pay an accountant to help with these troubling invoices to EU-based clients?
Expert's Answer: In your case, I presume that you, the freelancer, are providing services rather than goods. Based on the guidance on the Business Link website, an invoice for a non VAT registered sole trader providing services must contain the following information:
- A unique identification number. This can be any number that identifies the invoice such as 'Invoice 001'
- The sole name or any business name being used, along with the address where any legal documents can be delivered and contact information
- The company name and address of the customer being invoiced
- A clear description of the services being charged for
- The date the services were provided
- The date of the invoice
- The amount(s) being charged
- The total amount owed
This is all the information you should state on your invoice. You should not state VAT as a nil rate; nor state your national insurance number as this will confuse your client into thinking you are VAT registered resulting in your invoices being rejected.
You also mention that one of your client's accountants has contacted you and asked you not to send invoices. What is likely meant here is not to send VAT invoices, which is an invoice showing the VAT details of a sale, such as the VAT due to the relevant tax authority. It is quite possible that this accountant is interpreting your invoice as a VAT invoice due to the VAT amount being stated as nil, along with your national insurance number. Provided future invoices you issue only state the details mentioned, you should have no further problems. If you do, point the accountant or anyone with queries toward the Business Link website.
Drafting invoices is something which you can deal with easily enough yourself. However if in the future you do have the requirement to register for VAT, the services of an accountant would be helpful; especially if you continue to provide services in the EU.
The expert was Nick Stevenson, compliance advisor at
Freelance World, a tax and accountancy specialist for freelancers.