What is a tax invoice?
By Tim White · Glossary · Last updated
A tax invoice shows the tax charged on a sale (the rate, the amount and usually the seller's tax registration number) so the buyer can reclaim it where the rules allow. In VAT and GST countries it's a specific legal document, and a bill missing the required details can't be used to reclaim tax.
What it usually has to show
Rules vary by country, so check your tax authority's list. The common elements are below. In the US, sales tax works differently and there's no national tax invoice format, though the sales tax line still needs checking.
- Seller name, address and tax registration number
- Invoice number and date
- Description of the goods or services
- Tax rate and tax amount for each rate charged
- Total before tax and total including tax
A worked example
Meridian Studio bills 850.00 for design work plus VAT at 20 percent, which is 170.00, for a total of 1,020.00. A valid tax invoice shows all three figures and Meridian's VAT number, so you can reclaim the 170.00. If the VAT number is missing, or the invoice shows only a total, the reclaim can be refused even though you paid the tax. Ask for a corrected invoice before you file.
Check the tax line
Tax is the figure most often misread or mis-keyed, especially on invoices with two rates. InvoiceJet extracts subtotal, tax and total as separate fields and checks that subtotal plus tax equals the total, so a misread tax amount gets flagged.
Common questions
Is a tax invoice the same as a regular invoice?
Not always. A tax invoice must show tax detail and, in many countries, the seller's registration number. A plain invoice may not.
What's a simplified tax invoice?
A shorter form some countries allow for low-value sales, with fewer required fields. The threshold depends on the country.
Sources
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