What is a Non-VAT Invoice?

A Non-VAT Invoice is an invoice issued for transactions that are exempt from VAT or where the seller is not registered for VAT. It is used in cases where VAT is not applicable, either due to the nature of the goods or services provided or the seller’s VAT status (such as being below the VAT registration threshold or dealing in VAT-exempt goods/services). The invoice does not contain VAT details because no tax is charged.

What must a Non-VAT Invoice contain?

Key Elements:
  • Document title: "Non-VAT Invoice" or simply "Invoice" with a clear indication that VAT is not applicable.

  • Invoice number: A unique sequential number for the invoice.

  • Invoice date: The date when the invoice is issued.

  • Supply date (if different from the invoice date): When the goods or services were supplied.

  • Seller details: Business name or personal name, address, VAT registration number (if applicable, or a statement indicating that the seller is not VAT-registered).

  • Buyer details: Business name or personal name, address.

  • Transaction details: Description of goods or services, quantity of items sold or the service provided, unit price, total value (net value, as VAT is not applicable).

  • Total amount: The total amount due, which will be the net amount without VAT.

  • Payment details: Bank account number (if payment is by bank transfer), payment terms or due date.

When is a Non-VAT Invoice issued?

A Non-VAT Invoice is issued in the following cases:

  • The seller is not VAT registered because their taxable turnover is below the VAT registration threshold.

  • The goods or services provided are exempt from VAT (e.g., certain financial or educational services).

  • The sale involves non-taxable goods or services (e.g., sales to non-VAT registered individuals or certain charity transactions).

  • The transaction is a B2C (business-to-consumer) sale in a jurisdiction where VAT does not apply.

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Remember:

  • Clearly state that no VAT is charged on the invoice. Use a phrase like "No VAT applicable" or "Exempt from VAT".

  • If you are not VAT registered, mention it explicitly on the invoice, such as “Not VAT registered” or “VAT exemption applies”.

  • Non-VAT invoices should still be issued with a unique sequential number and the date of transaction for record-keeping purposes.

  • Keep track of non-VAT sales for future reference, particularly if you need to switch to VAT registration once your turnover exceeds the threshold.