How do I raise a sales invoice for an EU customer?

Since Brexit, a sale to an EU customer is treated like a sale to any other overseas customer, not as an intra-EU transaction. If you are based in Great Britain, goods sent to the EU are normally zero-rated exports (as long as you keep proof they left the UK), and most business-to-business services fall outside the scope of UK VAT, with your customer accounting for the tax in their own country. You no longer apply the old EU “reverse charge” coding on your side of a goods sale.

Before January 2021, EU sales used the intra-EU rules. You applied the reverse charge, quoted the customer’s VAT number, and reported the sale on an EC Sales List. In Xero that meant coding invoices as “Zero Rated EC Services” or “Zero Rated EC Goods Income.”

Those mechanics no longer apply to Great Britain. EU countries are now treated as the rest of the world, EC Sales Lists are no longer required for GB businesses, and the old “zero rated EC” logic has been replaced by standard export and place-of-supply rules. Northern Ireland is the exception (more on that below).

Goods dispatched from Great Britain to the EU are exports, and you can zero-rate most exports to any destination outside the UK. To do that you must:

• Keep documentary proof that the goods physically left the UK (customs declaration, courier or postal dispatch pack, or commercial export documents).
• Obtain that evidence within 3 months of the sale.
• Retain the records for 6 years.

If you cannot get valid evidence in time, the sale becomes standard-rated and you have to account for UK VAT on it. So your invoice shows no VAT, but the paperwork behind it does the heavy lifting.

For B2B services, the general rule is that the place of supply is where the customer belongs. So a service supplied to an EU business is supplied in that customer’s country and is outside the scope of UK VAT. You do not charge UK VAT; your customer accounts for it under their own local reverse charge.

Two practical points:

• Get evidence your customer is genuinely in business and belongs in the EU. Their local VAT registration number is the strongest proof.
• Some services follow special rules regardless of where the customer belongs, including land-related services, admission to events, and digital services sold to consumers. Check these before you invoice, or ask us if you are unsure.

Whether it is goods or services, a compliant EU sales invoice should show:

1. Your business name, address, and VAT number.
2. The customer’s name, address, and (for services) their VAT number.
3. A unique invoice number and the date.
4. A clear description, quantity, and the net value.
5. No UK VAT charged.
6. For B2B services, a note that the reverse charge applies, for example: “VAT to be accounted for by the customer under the reverse charge.”

The legacy “Zero Rated EC Goods Income” and “Zero Rated EC Services” tax rates are no longer the right choice for GB sales. Goods exports are coded to a zero-rated export rate, and outside-the-scope B2B services are coded so they do not add UK VAT to the return. The exact tax-rate labels in your Xero organisation depend on your setup and Xero’s current UK rate list, so confirm the wording before you post. the specific Xero tax-rate names against your live organisation. This is exactly the kind of thing our outsourced finance department sets up and checks so your VAT return stays clean.

If EU invoices, VAT treatment, or Xero coding are eating your time, our outsourced finance department handles it end to end. Call us on 01454 300 999 or email [email protected].