Startups and New Businesses
What invoice compliance obligations apply to startups issuing their first invoices?
Startups issuing invoices for the first time must comply with applicable VAT registration requirements, invoice content rules, sequential numbering from invoice 001, and where applicable, e-invoicing format requirements for B2B customers in mandated jurisdictions. Many early-stage startups are below VAT registration thresholds and issue invoices without VAT, but must still meet minimum invoice content standards.
When must a startup register for VAT?
VAT registration thresholds determine when a business must start charging VAT:
- UK: GBP 90,000 turnover in any rolling 12-month period
- France: EUR 36,800 for services; EUR 91,900 for goods
- Germany: EUR 22,000 in the previous year and not expected to exceed EUR 50,000 in current year
- UAE: AED 375,000 for mandatory registration; AED 187,500 voluntary threshold
- Ireland: EUR 37,500 for services; EUR 75,000 for goods
- EU distance sales: Once EUR 10,000 threshold of cross-border B2C sales is exceeded, OSS registration needed
Frequently Asked Questions
- What must appear on an invoice issued before VAT registration?
- Pre-registration invoices must not include VAT (it cannot be charged without a VAT number). They must include: business name and address, invoice date, sequential invoice number, description of goods or services, quantity, unit price, total amount. Including the words 'VAT exempt' or 'not VAT-registered' is optional but clarifies to customers why no VAT is shown. When VAT registration is obtained, invoices must be updated immediately.
- Can a startup voluntarily register for VAT below the threshold?
- Yes, voluntary VAT registration is available in most jurisdictions for businesses below the mandatory threshold. Benefits include ability to reclaim input VAT on start-up costs and supplies, which can be significant in capital-intensive early stages. Drawback is the administrative burden of filing VAT returns. Startups expecting significant early capital investment (equipment, IT, professional services) typically benefit from early voluntary registration.