A common assumption is that VAT always appears on professional invoices. It doesn’t. There are several situations where issuing an invoice with zero VAT — or no VAT line at all — is not only allowed but required. Knowing which one applies to you prevents both over-charging clients and under-collecting tax you’re liable for.
1. You’re below the registration threshold
This is the most common reason for small business owners and freelancers to issue VAT-free invoices. Every EU country sets an annual turnover threshold below which you are not required to register for VAT and therefore must not charge it.
| Country | Threshold (approx.) |
|---|---|
| Germany | €25,000 |
| Austria | €42,000 |
| Greece | €10,000 |
| France | €37,500 (services) |
| UK | £90,000 |
Below the threshold: invoice the net amount only, no VAT line. In Germany you must add the note “Gemäß § 19 UStG wird keine Umsatzsteuer erhoben” (no VAT charged under the small business rule). Other countries have similar disclosure requirements.
Once you cross the threshold, you must register and start charging VAT from that point forward — you can’t wait until the end of the year.
2. Reverse charge (EU B2B)
If you are VAT-registered and you invoice a business in another EU country, you do not charge VAT. The buyer accounts for it in their own country under the reverse charge mechanism. Your invoice shows 0% VAT and the note that the recipient is liable for the tax.
This applies to both B2B services and goods. The key conditions:
- You are VAT-registered
- Your client is VAT-registered (verify via EU VIES)
- Your client is in a different EU member state
See our cross-border VAT guide for the full detail.
3. Export outside the EU
If you supply services or goods to a buyer outside the EU, there is no EU VAT to charge. Services are generally considered to take place where the buyer is — outside EU territory — so EU VAT does not apply. Goods exported outside the EU are zero-rated.
For services: keep evidence that your client is located outside the EU (a signed contract with their address, their company registration details, or bank transfer records showing a non-EU origin).
For goods: customs export documentation is your evidence.
4. Zero-rated goods and services
Some supplies are zero-rated — they fall within the VAT system (you need to report them) but the rate is 0%. This is different from being out-of-scope or exempt. Zero-rating is country-specific and typically applies to:
- Exported goods
- Certain food items in some countries
- Children’s clothing in the UK
- Printed books in several EU countries
Zero-rated means you charge 0% VAT and show it as a line on the invoice. You are still VAT-registered and still report these supplies to your tax authority.
5. Exempt supplies
Some services are VAT-exempt by law — meaning VAT is simply not part of the transaction at all. Common exempt categories across the EU:
- Medical and healthcare services
- Education (depending on the provider and type)
- Financial services
- Insurance
- Rental of residential property
If your business is fully or mainly in an exempt sector, you may not be able to register for VAT at all — which also means you cannot recover VAT on your own purchases. If you mix exempt and taxable supplies, the rules get complex and an accountant is worth the consultation.
6. Intra-community goods (within EU B2B)
Like services, when you sell goods to a VAT-registered business in another EU country, the supply is zero-rated on your side (your client accounts for acquisition VAT in their country). The same evidence requirements apply: their valid VAT number, proof of transport to another EU country.
What documentation you need
Whatever the reason, keep a record:
| Situation | Documentation to keep |
|---|---|
| Below threshold | Your annual turnover records showing you’re below |
| Reverse charge | Client’s verified VAT number (VIES printout dated on invoice date) |
| Export outside EU | Contracts with client address, bank records, or customs forms |
| Zero-rated | Your national tax authority’s list confirming the category |
| Exempt | Your profession’s regulatory classification or legal basis |
In Billino
Every scenario where VAT should be omitted is handled automatically — you don’t configure tax rules invoice by invoice.
Small business: enable the small business setting in your sender profile. Every invoice is generated with 0% tax and the legally required §19 UStG notice (or the equivalent for your jurisdiction) added automatically.
Reverse charge (EU B2B): add the recipient with their country and mark them as a business. When Billino detects a cross-EU B2B transaction, it classifies it as reverse charge, sets tax to 0%, and writes the “Steuerschuldnerschaft des Leistungsempfängers” clause on the invoice — no manual intervention required.
Outside the EU: add the recipient with their non-EU country. Billino classifies the transaction as International, applies 0% tax, and adds the export clause automatically.
Exempt services: Billino produces a net-only invoice when no tax category is set on the item.
In all cases the output is a correctly formatted, legally compliant invoice. The only input you provide is who you’re invoicing and what you’re selling.
