Zero Rated Invoice Format

[Sullivan Maurer]

Taxablepersons (VAT-registered businesses) doing business in the EU are subject to a single set of basic EU-wide VAT invoicing rules and, in certain areas, national rules set by the individual Member State.

An invoice is required for VAT purposes under EU rules for most business-to-business (B2B) supplies and for certain business-to-consumer (B2C) transactions. There may also be specific national rules on transactions requiring an invoice.

For B2B supplies, a business must issue an invoice whenever goods or services are supplied to another business or a non-taxable legal entity (e.g. local authorities, associations etc. that do not charge VAT), except:

Once all the information above is included on an invoice (depending on the case and EU Member State), the invoice acts as proof that allows the business to deduct VAT in the EU Member State concerned. No EU Member State may prevent this by requiring extra information in the invoice.

A tax invoice must be issued when your customer is GST registered. Your customer needs to keep this tax invoice as a supporting document to claim input tax on its standard-rated purchases. In general, a tax invoice must be issued within 30 days from the time of supply.

Your GST-registered customer (subject to the fulfilment of the input tax claiming conditions) can only claim input tax based on the amounts stated in the tax invoice issued by you, the supplier. Please note that you must use approved exchange rates for GST purpose (PDF, 185KB) for the conversion.

Your GST-registered customer needs to keep this customer accounting tax invoice as a supporting document to account for the output tax on this supply on your behalf, as well as to claim the input tax on this purchase.

An invoice must be issued for an exempt supply of investment precious metal (IPM). The GST: Guide on Exemption of Investment Precious Metals (IPM) (PDF, 397KB) lists the information you must include on an invoice issued for an exempt supply of IPM.

You should ask for a receipt when you make a purchase for business purposes whether you pay by cash or cheque. The receipt serves as proof of payment made to and received by your supplier. You may receive the receipt in paper form or in electronic form from the supplier.

The number and date of the original tax invoice should also be shown on the credit note. If you are unable to do so (e.g. because returned goods cannot be identified with a particular tax invoice), you must maintain other documentary evidence that you have accounted for GST on the original supply.

You should also check that GST was correctly accounted for on the original transactions in your earlier returns before making the adjustments. If GST was not accounted for correctly, you need to correct the errors made for the earlier returns. For credit notes issued relating to customer accounting supplies, you may refer to our e-Tax Guide on GST: Customer Accounting for Prescribed Goods (PDF, 575KB) to learn how the adjustments should be made.

You should only issue a debit note to request for payment for transactions where no GST is charged (e.g. internal billings within the same company), or to suppliers from whom credit is due.

For all other standard-rated supplies to GST-registered customers, you must issue a tax invoice or simplified tax invoice (where the total amount payable including GST does not exceed $1,000). This enables your customer to support his input tax claims.

A record of all credits received from your suppliers must be kept. If you normally issue debit notes to suppliers from whom credit is due, the debit notes must show the same details required for credit notes.

Self-billing is a billing arrangement between a GST-registered supplier and a GST-registered customer, where the customer, instead of the supplier, prepares the supplier's tax invoice/ customer accounting tax invoice and sends a copy to the supplier. Please refer to the samples of the self-billing tax invoice (PDF, 93KB)

In some industries (e.g. publication industry), the business arrangement is such that customers, instead of the supplier, will determine and verify the final value of the goods delivered or the services rendered to them. Hence, it is more convenient for the customer, rather than the supplier, to issue the tax invoice/customer accounting tax invoice.

This guide explains how the Canadian goods and services tax/harmonized sales tax (GST/HST) applies to non-residents doing business in Canada. It provides guidelines to help you determine whether you are carrying on business in Canada, information on GST/HST registration requirements, and instructions on how to charge, record, calculate, and remit the GST/HST. It also provides detailed information about the GST/HST as it applies to specific business activities carried on by non-residents of Canada.

This guide does not include information on the special rules for selected listed financial institutions (SLFI). If you are an SLFI, see Guide RC4050, GST/HST Information for Selected Listed Financial Institutions.

Charity means a registered charity or registered Canadian amateur athletic association for income tax purposes, but does not include a public institution. A charity can issue official donation receipts for income tax purposes.

Commercial activity also includes a supply of real property, other than an exempt supply, made by any person, whether or not there is a reasonable expectation of profit, and anything done in the course of making the supply or in connection with the making of the supply.

Exempt supplies means supplies of property and services that are not subject to the GST/HST. GST/HST registrants generally cannot claim input tax credits to recover the GST/HST paid or payable on property and services acquired to make exempt supplies.

Fiscal year means the tax year of the person, or where a person has elected to change their fiscal year, the period that the person elected to be their fiscal year. Where the person is a selected listed financial institution that is either an investment plan or a segregated fund of an insurer, it generally means a calendar year.

Input tax credit (ITC) means a credit that GST/HST registrants can claim to recover the GST/HST paid or payable for property or services they acquired, imported into Canada, or brought into a participating province for use, consumption, or supply in the course of their commercial activities.

Person means an individual, a partnership, a corporation, the estate of a deceased individual, a trust, or a body that is a society, a union, a club, an association, a commission or other organization of any kind.

Property means any property, whether real or personal, movable or immovable, tangible or intangible, corporeal or incorporeal, and includes a right or interest of any kind, a share and a chose in action, but does not include money.

Public institution means a registered charity for income tax purposes that is also a school authority, a public college, a university, a hospital authority, or a local authority determined by the Minister of National Revenue to be a municipality.

Registrant means a person that is registered or required to be registered for the GST/HST, but generally excludes a person that is registered or required to be registered under special rules applicable to digital economy businesses unless that person registered under those special rules begins carrying on business in Canada, requiring them to register under the regular rules that apply to most persons.

Small supplier means a person whose revenue (along with the revenue of all persons associated with that person) from worldwide taxable supplies was equal to or less than $30,000 ($50,000 for public service bodies) in a single calendar quarter and over the last four consecutive calendar quarters. The calculation excludes consideration attributable to the sale of goodwill of a business, supplies of financial services, and supplies by way of sale of capital property.

Zero rated supplies are supplies of property and services that are taxable at the rate of 0%. This means there is no GST/HST charged on these supplies, but GST/HST registrants may be eligible to claim ITCs for the GST/HST paid or payable on property and services acquired to provide these supplies.

The goods and services tax (GST) is a tax that applies to most supplies of goods and services made in Canada. The GST also applies to many supplies of real property (for example, land, buildings, and interests in such property) and intangible personal property such as trademarks, rights to use a patent, and digitized products downloaded from the internet and paid for individually.

The participating provinces harmonized their provincial sales tax with the GST to implement the harmonized sales tax (HST) in those provinces. Generally, the HST applies to the same base of property (for example, goods) and services as the GST. In some participating provinces, there are point-of-sale rebates equivalent to the provincial part of the HST on certain qualifying items. For more information, see Point-of-sale rebates.

GST/HST registrants who make taxable supplies (other than zero-rated supplies) in the participating provinces collect tax at the applicable HST rate. GST/HST registrants collect tax at the 5% GST rate on taxable supplies they make in the rest of Canada (other than zero-rated supplies). Special rules apply for determining the place of supply. For more information, see Place-of-supply rules.

Almost everyone has to pay the GST/HST on purchases of taxable supplies of property and services (other than zero-rated supplies). However, in some situations, individuals registered under the Indian Act, Indian bands and band-empowered entities are relieved of paying the GST/HST on taxable supplies. In addition, some groups and organizations, such as certain provincial and territorial governments, do not always pay the GST/HST on their purchases. For more information, see Guide RC4022, General Information for GST/HST Registrants.

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