A buyer messages: "Can you send me a VAT invoice for this order?"
The instinct is to open a template, type their name in, and send it. That is often the wrong move, and occasionally it produces a document that misstates who accounted for the tax.
The reason is that on most EU and UK consumer sales, Etsy is the one that collected the VAT, not you. Marketplace facilitator rules make the platform the deemed supplier for a large share of cross-border and imported orders. The VAT the buyer paid went to Etsy and from Etsy to the tax authority. It never touched your account, and an invoice from you claiming to have charged it says something untrue.
So the first question is never "what does an invoice look like". It is "whose sale was this, for VAT purposes".
This is a description of how the paperwork generally works, not tax advice. Thresholds, rates and registration rules change and vary by country. If real money depends on the answer, ask an accountant in your jurisdiction.
Who actually made the sale
Three situations, and they produce three different documents.
1. Etsy collected the VAT as deemed supplier. Common for imported goods and for cross-border sales into the EU and UK. The buyer's VAT receipt is Etsy's, available in their Etsy purchase history. What you can give them is a commercial invoice or order confirmation — a record of the transaction that does not claim you charged VAT.
2. You are the supplier and you are VAT registered. Typically a domestic sale in your own country, above your registration threshold. You charged the VAT, you account for it, and you issue the full VAT invoice. If the customer is a VAT-registered business, they are entitled to one and you must provide it.
3. You are the supplier and you are not VAT registered. You issue an invoice with no VAT line and no VAT number, because there is none to state. It is a perfectly valid document — it is simply not a VAT invoice, and it must not look like one.
The failure mode is issuing a type 2 document for a type 1 sale. The buyer's accountant then tries to reclaim VAT against your number for tax you never remitted.
What a full VAT invoice must contain
The details vary between countries, but the core list is stable across the UK and EU:
| Field | Notes |
|---|---|
| Invoice number | Sequential, unique, no gaps by design |
| Date of issue | And the supply date if it differs |
| Your name and address | The trading entity, not the shop name alone |
| Your VAT number | Only if you have one |
| Customer name and address | Required for a full VAT invoice |
| Customer VAT number | Required for reverse charge |
| Description of goods | Enough to identify what was sold |
| Net amount per rate | Excluding VAT |
| VAT rate and amount | Split by rate if the order mixes them |
| Gross total | What the buyer paid |
Two of these cause almost all the trouble.
The customer's address. Etsy gives you a shipping address, which is not necessarily the buyer's billing address, and for a digital download there may be no address at all. If a business customer wants a full VAT invoice, ask for their billing details rather than guessing from the shipping label.
The customer's VAT number. You cannot apply the reverse charge without it, and you should validate it. The EU's VIES service checks EU numbers and the UK has its own service for GB ones. A number that does not validate means you charge VAT normally.
Reverse charge, in plain terms
For a business-to-business sale to a VAT-registered customer in another EU member state, you do not charge VAT. The customer accounts for it in their own country at their own rate, on both sides of their return, usually netting to nothing.
The invoice shows:
- Your VAT number
- Their VAT number
- A VAT amount of zero
- A statement that the reverse charge applies
The wording does not have to be poetic. "Reverse charge: VAT to be accounted for by the recipient" is enough, and its absence is one of the most common defects on a small business's invoices.
It only applies when all three are true: the customer is a business, they are VAT registered in a different member state, and you have their valid number. A consumer in France buying a poster is not a reverse charge sale, however much they would prefer to be.
Why numbering matters more than it looks like it should
An invoice number is not a database id. It is a legal sequence, and the entire reason for it is auditability: a tax inspector reading 1, 2, 3, 5 wants to know what happened to 4.
Two rules follow, and they are stricter than most sellers expect.
Never reuse a number. If invoice 7 was raised in error and you delete it and let the next sale take 7 again, two different sales now carry invoice number 7 — one in your records, one in a buyer's. That is genuinely worse than a gap, because the gap is explainable and the duplicate is not.
Do not create gaps casually. A gap needs an explanation. The clean way to cancel an issued invoice is a credit note that references it and reverses it, leaving both documents in the sequence. Deleting an invoice a buyer already holds leaves them with a document you have no record of.
There is also a concurrency trap worth knowing about if you generate invoices from software. If the code reads the next number, then writes it back, two invoices generated at the same moment can both read 42 — and you get a duplicate or a lost number. The fix is to make the allocation a single atomic database operation rather than a read followed by a write. Any tool that generates invoice numbers for you should be doing this; it is not something you can see from the outside, but it is the difference between a sequence you can defend and one you cannot.
Retention: keep the document, not the recipe
The UK requires six years from the end of the relevant accounting period. EU states typically require five to ten.
The subtle part is what you keep. It is tempting to store the order data and regenerate the PDF whenever it is needed. Do not rely on that. An invoice is a point-in-time record: it shows the prices, the VAT rate, your address and the buyer's details as they were on the day it was issued. Regenerate it two years later, after a price change and an office move, and you produce a document that does not match the one the buyer holds.
Store the issued document, or store a frozen copy of every field that appeared on it. Whichever way, the rule is that the invoice never changes after it is issued.
A practical routine
Before anything else, work out whether Etsy collected the VAT on that order. If it did, point the buyer at their Etsy purchase history for the VAT receipt and offer a commercial invoice for their records.
If you are the supplier and VAT registered, ask for the billing name, address and VAT number rather than lifting the shipping address. Validate the VAT number. Decide domestic, reverse charge, or zero-rated export.
Issue it once. Sequential number, never reused, and stored as issued.
If it was wrong, raise a credit note rather than deleting anything.
Most sellers hit this two or three times a year — an office buying prints for a meeting room, a photographer expensing a piece. It is rare enough that nobody builds the habit and common enough that it is worth having a correct answer ready rather than improvising one under a message that is already two days old.
The short version
- Etsy is the VAT collector on most cross-border and imported orders. Check before you issue anything.
- A full VAT invoice needs your VAT number, the customer's details, net, rate, VAT and gross.
- Reverse charge needs the customer's validated VAT number and an explicit statement on the document.
- Numbers are sequential and single-use. Cancel with a credit note; never delete and reuse.
- Keep the issued document, not the data you could rebuild it from.
Frequently asked questions
Do I have to give an Etsy buyer a VAT invoice?
It depends on who collected the VAT and whether you are VAT registered. In most EU and UK consumer sales Etsy acts as the deemed supplier and collects the VAT itself, so the buyer's VAT document comes from Etsy, not from you. Where you are the supplier of record and you are VAT registered, a VAT-registered business customer can require a full VAT invoice from you and you must provide one.
What has to appear on a VAT invoice?
A sequential invoice number, the date of issue, your name, address and VAT number, the customer's name and address, a description of what was sold, the net amount, the VAT rate and amount for each rate, and the total. Cross-border business sales under the reverse charge must additionally state that the reverse charge applies.
What is the reverse charge?
For a cross-border business-to-business sale within the EU, VAT is accounted for by the buyer in their own country rather than charged by you. You issue the invoice with no VAT, note the customer's VAT number, and state that the reverse charge applies. It only works when the customer is genuinely VAT registered in another member state.
Can I skip an invoice number if I make a mistake?
You should not create gaps deliberately, and you must never reuse a number. Sequential numbering exists so a tax authority can see that nothing has been removed from the series. If an invoice was issued in error, the usual remedy is a credit note that cancels it, not deletion — the cancelled number stays in the sequence with a document attached to it.
How long do I have to keep invoices?
Six years in the UK from the end of the accounting period. Most EU states require between five and ten years, with ten common for anything touching property. Keep the issued document itself, not just the data you could regenerate it from — a regenerated invoice reflects today's prices and details, not the ones on the document the buyer received.