Updated May 2026 · 10 min read
Tax on invoices trips up many new freelancers. Do you charge VAT? What rate? What if you're below the threshold? What about international clients? This guide gives you a clear, country-by-country breakdown so you can invoice with confidence.
⚠️ Disclaimer: This is general information, not tax advice. Tax rules change frequently. Always verify with a local accountant or tax authority for your specific situation.
You pay this on your profit (revenue minus expenses). Not shown on client invoices — it's your personal tax obligation.
A consumption tax you collect from clients and pass to the government. Only applies if you're registered (often above a threshold).
15.3% on net earnings — covers Social Security (12.4%) and Medicare (2.9%). Not on invoices, but you owe it quarterly.
Register for VAT when your 12-month rolling turnover exceeds £90K. Below that, registration is voluntary. Once registered, add 'VAT No: GBXXXXXXXX' to invoices.
Under €20K/year? Apply for KOR (kleineondernemersregeling) and write 'Vrijgesteld van BTW o.g.v. art. 25 Wet OB 1968'. Services to EU businesses: 0% with reverse charge (mention ICT-nummer and 'BTW verlegd').
Below €22K/year: Kleinunternehmer — write 'Kein Ausweis von Umsatzsteuer, da Kleinunternehmer gemäß §19 UStG.' Above threshold: add your USt-IdNr. to invoices.
No VAT at federal level. State sales tax applies to goods and some services — varies by state and service type. Most freelance services (consulting, design, writing) are not subject to sales tax in most states. Verify with your state tax authority.
Register for GST when turnover exceeds A$75K. Include your ABN on invoices. For taxable supplies, show the GST amount separately. Registered businesses can claim GST credits (input tax credits) on business purchases.
Every VAT invoice must show these three things as separate line items:
VAT Registration No: NL123456789B01
If you're below the registration threshold (or exempt), you must not charge VAT. Instead, state this clearly on your invoice:
| Country | Text to include on invoice |
|---|---|
| 🇳🇱 Netherlands (KOR) | "Vrijgesteld van BTW o.g.v. artikel 25 Wet OB 1968 (KOR)" |
| 🇩🇪 Germany (Kleinunternehmer) | "Kein Ausweis von Umsatzsteuer, da Kleinunternehmer gemäß §19 UStG" |
| 🇬🇧 UK (below threshold) | "VAT not applicable — not VAT registered" |
| 🇺🇸 USA | Not applicable (no federal VAT) |
| 🇦🇺 Australia (below threshold) | "GST not applicable — not registered for GST" |
Zero-rated (0% VAT) — use reverse charge mechanism
Write: "Reverse charge: BTW verlegd" (NL) or "Steuerschuldnerschaft des Leistungsempfängers" (DE). The client handles VAT in their own country. Include their VAT number.
0% VAT — export of services
Services exported outside the EU are generally zero-rated. Write: "Outside scope of VAT — export of services."
VAT applies at your local rate
Charge your standard VAT rate. Note: if you exceed €10,000 in B2C sales across EU, you may need to register for the EU's One Stop Shop (OSS).
No federal VAT involved
Just invoice in USD or agreed currency. The client handles any local taxes in their jurisdiction.
Chaser Handles VAT on Your Invoices
The Chaser invoice builder supports 0%, 9%, and 21% VAT rates, automatically calculates totals, and includes your VAT number. Then it chases late payments automatically.
Create Your First Invoice Free →No. If you're below the mandatory registration threshold, you cannot charge VAT (unless you've voluntarily registered). Charging VAT without being registered is illegal and you'd owe it to the tax authority regardless.
They're all consumption taxes — different names in different countries. VAT (Value Added Tax) is used in the UK and EU. GST (Goods and Services Tax) is used in Australia, Canada, India. BTW (Belasting over de Toegevoegde Waarde) is the Dutch name for VAT.
Sometimes yes. If most of your clients are VAT-registered businesses, they can reclaim the VAT you charge — so it doesn't affect them. And voluntary registration lets you reclaim VAT on your own business expenses. Talk to an accountant.
You still owe the VAT to the tax authority — you just haven't collected it from your client. You can issue a corrected invoice and ask the client to pay the VAT separately, or absorb the cost yourself. For large amounts, consult a tax professional.
Yes — employees have tax withheld automatically. Freelancers are responsible for calculating and paying their own income tax and self-employment contributions quarterly (US) or annually (EU, with quarterly VAT returns). Keep 25-35% of every invoice in a savings account for tax.
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