VAT Basics for Service Invoices
VAT is applied on the taxable base after any discount. Your invoice should show net amount, tax amount, and gross amount clearly.
Many businesses make mistakes by applying VAT before discounts or mixing rates in a single summary line.
Simple VAT Formula
Use this sequence: subtotal, minus discount, then multiply by VAT rate. Add VAT amount to net base for final total.
- Net base = subtotal - discount
- VAT amount = net base x VAT rate
- Final total = net base + VAT amount
Before You Send the Invoice
Double-check the VAT rate, taxable base, and label used on invoice lines. Keep recurring invoice formats consistent month to month.