What is a VAT receipt and why is it necessary for online sellers?

If a company subject to VAT sells goods or services, it must issue VAT receipts. This also applies to sellers who operate on the Amazon trading platform. In the following article, you will learn what every e-commerce merchant should know about VAT receipts, what rules there are to observe and why sellers and buyers benefit from these guidelines.

What is a VAT Receipt?

Each of us deals with VAT receipts on a daily basis. It can be the receipt from the supermarket or the receipt of an order from your company. However, many people do not know that a VAT receipt is also required for purchases on the Internet. If such a letter is not issued by the seller, he can be prosecuted for this and must consequently expect a high fine.

A VAT receipt can be described as a document that must be issued as soon as companies subject to VAT sell goods or services. Different tax rates are initially irrelevant. The receipt can be created in analog or digital form and can take various forms in terms of content. 

The information that a VAT receipt should contain is clearly defined. In addition to the most important data about the seller, the document provides information about the amount of VAT paid on the items. This is especially important for the tax authorities who want to trace the proper course of the transaction.

For companies that wish to deduct the VAT of their business purchases, VAT receipts are also of great importance, as the tax office uses them to determine what amount of money can be refunded to the company.

VAT receipt on Amazon and Ebay

Companies that sell their products via Amazon or Ebay also issue VAT receipts. On the Amazon online platform, these receipts can be found in digital form in the “Orders” folder after logging into your own account. From there, the VAT receipts can be conveniently downloaded and printed out. The receipts are not yet available on the mobile app.

International VAT receipt

The Internet gives us the opportunity to sell and purchase products in different countries. Regarding the VAT receipts issued in this process, there are some points to consider.

For purchases made outside of Great Britain, the monetary amounts shown on the VAT receipt should be in pounds. In addition, the European exchange rate used for currency conversion should also be noted on the receipt. Translation of the remaining content of the document into English is recommended.

If the tax office is not satisfied with the form of the receipt or considers it incomplete, a revision may be ordered. In this case, the seller must issue a new receipt that meets the requirements of the English tax authorities.

Different forms of VAT receipts

In each state there are different types of VAT receipts, which are subject to different laws as well as require the provision of different information. In Great Britain, there are generally three different types of sales tax receipts, each with a different form.

Full VAT Receipt

Normally, a business subject to VAT issues a full VAT receipt when selling goods or services. This must contain at least the following information:

• An invoice number
• The company name of the seller
• The address of the seller
• The date of the invoice
• The full VAT identification number of the seller
• The company name as well as the business address of the seller
• Delivery time of the purchased goods
• The name of the customer
• The customer’s business or home address
• A brief description of the goods and / or services that are the subject of the invoice
• The total amount of the delivery without VAT
• The total amount of VAT charged
• The VAT rate applied
• The total amount including VAT

Simplified VAT Receipt

For sales under GBP 250, it is possible to issue a simplified, less detailed VAT receipt. The following information should be noted on the receipt:

• The company name of the seller
• The address of the seller
• The full VAT identification number of the seller
• The delivery time of the purchased goods
• A brief description of the goods and / or services covered by the invoice
• The total amount of the invoice including VAT
• The corresponding VAT per item

Modified VAT Invoices

With the customer’s consent, the seller can issue a modified VAT receipt for transactions over 250,- GBP. On this receipt, the amounts are stated including VAT instead of stating the VAT separately. The following information must also be added to the receipt:

• The sales tax to be paid for each product (separate information)
• The individual price of each product without VAT
• The prices of all products taxed at the 0% VAT rate
• The prices of all tax-exempt items on the invoice

Electronic Invoices

Complete, simplified as well as modified VAT receipts can be issued not only in paper form, but also electronically. Electronic invoices are becoming more and more popular. Their form and the information they contain do not differ in any way from the analog version. 

In Great Britain, it is not necessary to notify HMRC (HM Revenues & Customs) of the switch to electronic invoicing.

Why do we need a VAT Receipt?

The VAT receipt is important for the customer as well as for the seller for several reasons. On the one hand, the seller is obliged to issue a VAT receipt and must be able to prove this in the event of an inspection by the tax office. If no or insufficient receipts are issued, this usually results in a high fine.

B2B (business-to-business) customers and self-employed individuals require VAT receipts in order to reclaim VAT paid on business expenses from the tax office. By submitting the VAT receipts, HMRC can track exactly how much VAT the company has paid and for which products the VAT refund is eligible.

Summary

The issuance of a VAT receipt is mandatory for all sales of goods and services subject to VAT. The receipt is important for both the seller and the customer. When preparing a VAT receipt, pay attention to the various forms that are permitted and make sure that all important information is included. 

FAQ’s