Invoices
VAT and tax handling
Understand domestic VAT, zero-rated, and EU reverse charge on invoices.
Updated: 2026-02-18
Before you start
- Business settings configured with VAT number if applicable
- Understanding of your VAT registration status
Open related features
Tax handling options
Each invoice can be configured with one of three tax treatments. The correct choice depends on your VAT registration status and the location of your client.
- Standard VAT — Apply a percentage VAT rate to the invoice total. Used for domestic sales within your country when you are VAT-registered.
- Zero-rated — No VAT charged. Used when the supply is exempt from VAT (for example, certain financial services or exports outside the EU to non-business customers).
- EU Reverse Charge — Used when selling B2B services to a VAT-registered business in another EU member state. The VAT liability shifts to the buyer. The invoice shows "VAT: Reverse Charge" and includes both parties' VAT numbers.
When to use EU Reverse Charge
Use EU reverse charge when all three conditions are met: (1) You are VAT-registered in your EU member state, (2) Your client is a VAT-registered business in a different EU member state, and (3) The service qualifies as a business-to-business supply under the EU VAT directive.
The invoice must include your VAT number, your client's VAT number, and the text "Reverse charge" or equivalent in the document. Numwisely adds this automatically when EU Reverse Charge is selected.
Setting a default VAT rate
In Invoice Settings, you can configure a default VAT rate (for example, 24% for Finland, 19% for Germany, 20% for the UK). This default is pre-filled when creating a new invoice but can be overridden per invoice.
If you serve clients in multiple countries with different VAT obligations, set the most common rate as default and adjust per invoice when needed.
VAT and non-VAT registered businesses
If your business is not VAT-registered, all invoices should use Zero-rated or no tax treatment. Do not add VAT to invoices if you are not VAT-registered — collecting VAT you cannot remit is a compliance violation in most jurisdictions.
Consult a local accountant to confirm your VAT registration requirements before enabling VAT on invoices.