1. When do you need to register?
Each country sets a registration threshold — annual taxable turnover above which registration becomes mandatory. The UK threshold is £90,000; Germany's Kleinunternehmer limit is €25,000; Ireland's is €42,500 for services. Distance sellers shipping into the EU cross a single €10,000 EU-wide threshold before OSS registration is required.
Below the threshold you may register voluntarily — useful if your customers are VAT-registered businesses (who can reclaim) or if you have significant input VAT to recover.
2. Issuing compliant VAT invoices
A valid VAT invoice typically must show:
- A unique sequential invoice number and issue date
- Your business name, address and VAT number
- The customer's name, address and (for B2B EU sales) VAT number
- Description, quantity and unit price of each item
- VAT rate applied, VAT amount, and total gross amount
- Currency (and exchange rate for foreign currency)
- Notes such as "Reverse charge" where applicable
3. Reclaiming input VAT
You can reclaim VAT on purchases used for taxable business activities — stock, equipment, software, professional fees. You generally cannot reclaim VAT on purely personal expenses, business entertainment, or purchases tied to exempt activities. Keep digital copies of every supplier invoice for the statutory period (commonly 6–10 years).
4. Filing VAT returns
Most countries file quarterly, though larger businesses file monthly and very small ones may file annually. A return reports output VAT, input VAT, and the net amount owed or refundable. Many jurisdictions now mandate digital submission (UK Making Tax Digital, Italy SDI e-invoicing, Spain SII, France Facturation électronique 2026).
5. Cross-border sales
- B2B inside the EU — apply the reverse charge with both VAT numbers on the invoice. Verify the buyer's number via VIES.
- B2C goods inside the EU — register for OSS once the €10,000 distance-selling threshold is crossed; charge the buyer's local VAT rate.
- Digital services to EU consumers — OSS applies from the first sale; no threshold.
- Exports outside the EU — usually zero-rated, but keep proof of export (commercial invoice, shipping documents).
6. Cashflow tips
- Move collected VAT to a separate account — it is not your money.
- Reconcile VAT monthly even if you file quarterly.
- Use accounting software that tracks input/output VAT automatically.
- Consider the Flat Rate or Cash Accounting Scheme if eligible (UK).