What is a commercial invoice?
A commercial invoice is the primary document in international trade. It is issued by the seller to the buyer and records what the goods are, how many were sold, what they cost, and where they came from. For customs authorities in every country, the commercial invoice is the starting point for assessing duty, applying trade agreement rates, and deciding whether goods can be cleared.
If you are starting out in shipping coordination, a customs broker or freight forwarder will ask you for a commercial invoice on almost every international shipment you handle. Getting it right from the start saves delays, prevents duty miscalculations, and keeps HMRC on side.
This article covers everything you need to know: what a commercial invoice is, what has to go on it, and where people go wrong.
A commercial invoice is a trade document that records a sale between a seller and a buyer across an international border. It is issued by the exporter and given to the importer.
Every country that operates a customs regime requires a commercial invoice for goods clearance. Customs authorities use it to establish three things: what the goods are, where they came from, and what they are worth.
The answers to those three questions determine how much import duty and VAT applies. They also determine whether any trade agreement preference can be claimed, and whether any import controls or licences are triggered.
In the UK, HMRC and the Customs Declaration Service (CDS) rely on the commercial invoice as the primary piece of supporting evidence for an import entry. It is not the declaration itself, that is submitted electronically through CDS, but it is the document that backs everything up.
A commercial invoice is also a legal document. It creates a record of the transaction between buyer and seller. The information on it needs to be accurate, consistent with what was actually shipped, and consistent with the value that appears on the customs declaration.
These two documents are often confused, but they serve different purposes.
A proforma invoice is issued before a sale is finalised. It is a quotation or estimate. It sets out what the goods will cost and on what terms, but it does not confirm that a completed transaction has taken place. Proforma invoices are used to agree pricing before shipment, to open letters of credit, and sometimes for temporary or sample shipments where no actual sale has occurred.
A commercial invoice confirms a completed transaction. Goods have been sold. The invoice is the billing document. It is the one customs authorities want to see.
You cannot use a proforma invoice in place of a commercial invoice on a commercial shipment. If goods have been sold and are crossing a border, you need a commercial invoice. Using a proforma, sometimes done to obscure value, is not acceptable to HMRC and can be treated as a customs offence.
There is one legitimate exception: goods on consignment, samples, or temporary exports where no sale has taken place. In those cases a proforma or a customs value declaration may be appropriate. But for a normal commercial sale, always use a commercial invoice.
When goods arrive at the UK border, your customs broker submits an import declaration through CDS. That declaration includes a customs value, a commodity code, a country of origin, and details of the importer and exporter.
Every one of those figures comes, directly or indirectly, from the commercial invoice. If the invoice is wrong, the declaration is likely to be wrong too. If the declaration is wrong, you are exposed to:
The commercial invoice is also the document a customs officer will examine if goods are selected for inspection. It needs to match the actual shipment. A description that is vague, inaccurate, or inconsistent with what is in the container is a red flag.
There is no single universal template for a commercial invoice. But certain fields are required by HMRC, by importing country customs authorities, and by good practice.
The table below lists each required or strongly recommended field, what it means, and why it matters.
| Field | What It Is | Why It Matters |
|---|---|---|
| Invoice number | A unique reference for this invoice | Needed on the customs declaration; links paperwork together |
| Invoice date | The date the invoice was issued | Determines the applicable exchange rate for duty assessment |
| Exporter name and address | Full legal name and address of the seller | Identifies who shipped the goods |
| Exporter EORI number | Economic Operator Registration and Identification number | Required for customs declarations in the UK and EU |
| Importer name and address | Full legal name and address of the buyer | Identifies the declarant responsible for customs entry |
| Importer EORI number | The buyer’s EORI (if applicable) | Required on UK import declarations; importer is responsible for the entry |
| Description of goods | Clear, specific description of what the goods are | Used to classify the goods and assess duty — must be specific enough for a customs officer to identify the product |
| HS code / commodity code | The Harmonized System code for the goods | Not legally required on the invoice itself, but best practice; supports accurate classification |
| Quantity and unit | Number of units and the unit type (e.g., 500 pairs, 200 kg) | Used to verify goods against the declaration and packing list |
| Unit price | Price per unit in the agreed currency | Core input for customs valuation |
| Total invoice value | Total value of the shipment | Primary basis for customs valuation |
| Currency | The currency in which the transaction is denominated | HMRC converts to GBP using the HMRC exchange rate for the month of entry |
| Country of origin | Where the goods were manufactured or produced | Determines whether preference rates apply; affects duty rate |
| Incoterm | The agreed trade term (e.g., FOB, CIF, DAP) | Determines what costs are included in the invoice price and whether adjustments are needed for customs valuation |
| Delivery terms / port | Where responsibility for the goods transfers | Linked to the incoterm; helps the broker calculate the customs value correctly |
| Payment terms | How and when payment will be made (e.g., 30 days net, letter of credit) | Can be relevant to valuation in related-party transactions |
| Statement of origin (for preference claims) | A text declaration by the exporter that goods meet the rules of origin | Required to claim preferential duty rates under trade agreements such as the UK-EU TCA |
If you are exporting from the UK, your freight forwarder will need all of the above to complete the export declaration. If you are importing into the UK, your customs broker will use the same information to complete the import entry through CDS.
The goods description is one of the most important fields on a commercial invoice, and one of the most commonly done badly.
A description like “spare parts,” “machinery,” “clothing,” or “electronics” is not acceptable. It is too vague for customs authorities to classify the goods or assess whether any controls apply.
A good description tells the customs officer exactly what the product is. That means including:
For example: “Men’s woven cotton trousers, 100% cotton, new” is a usable description. “Trousers” is not.
The HS code does not have to appear on the commercial invoice under UK law, but including it is strongly recommended. It signals to the customs broker that you have already identified the correct classification, reduces the chance of mis-classification, and speeds up processing. If you do include it, make sure it is right. A wrong HS code on the invoice that gets copied onto the declaration is a problem, not a shortcut.
If you are not sure of the correct HS code, leave the field blank rather than guessing. Your customs broker will classify the goods. But a vague goods description makes their job harder and increases the risk of error.
HMRC uses the commercial invoice as the primary evidence of the transaction value: the price actually paid or payable for the goods. Under the WTO Customs Valuation Agreement, transaction value is the preferred method for assessing customs value, and it is the method HMRC defaults to in almost all cases.
The customs value is not always the same as the invoice value. It depends on the incoterm agreed between buyer and seller.
HMRC requires the customs value to reflect the cost, insurance, and freight (CIF) to the UK border. That means the price you paid to the supplier, plus international freight costs, plus insurance to the UK port of entry. If your invoice is on a FOB or ex-works basis, your customs broker needs to add freight and insurance costs to arrive at the CIF value. If your invoice is already on a CIF or CIP basis to a UK port, the invoice value may be directly usable.
Under-invoicing is a serious offence. Under-invoicing means declaring a lower value on the commercial invoice than the actual transaction price. This reduces the customs value and so the duty and import VAT payable. HMRC is aware of this practice. Penalties for deliberate under-valuation can be severe, including:
The same applies in the other direction. If you are exporting and your invoice value does not reflect the real commercial price, you are creating a compliance risk for your buyer. You may also have a problem under export controls if the goods are controlled items.
HMRC can and does query invoice values that appear low compared to trade statistics for the product category. If you have a legitimate reason for a low price, such as a genuine sale at a loss or goods being returned to the supplier, make sure you can document it.
If you are exporting from the UK to a non-English-speaking country, some destination customs authorities may require the commercial invoice to be in their national language, or at least to include a translation.
Requirements vary by country. France, Germany, and other EU member states generally accept English commercial invoices. But some countries in Asia, the Middle East, and South America may require a local-language version or a certified translation.
If you are importing into the UK, the commercial invoice can be in any language. But your customs broker needs to understand its contents to complete the declaration accurately. If the invoice is in a language they do not read, provide an English translation. There is no official requirement for it to be certified for import purposes, but accuracy is essential.
For regulated goods, food products, pharmaceuticals, or goods requiring specific certificates, documentation may need to meet stricter requirements, including specific languages or authenticated translations.
When in doubt, ask the destination country’s embassy or your freight forwarder what is expected. Getting language requirements wrong can hold goods at the border.
These are the errors that come up most often when you are new to shipping coordination. Most of them are avoidable.
Vague goods description. “General merchandise,” “parts,” “samples,” or “as per contract” are not descriptions. Write what the goods actually are in plain terms that a customs officer can work with.
Wrong or missing country of origin. The country of origin is where the goods were manufactured or produced, not where the supplier is based, not where the order was placed. A UK company that sources goods from Vietnam and re-sells them has goods of Vietnamese origin, not UK origin.
Invoice value does not match the actual sale price. Whether the discrepancy is too high or too low, a mismatch between the invoice and the true price creates a customs compliance issue. Use the real transaction price.
Incoterm is missing or inconsistent with what was agreed. If the invoice says FOB but the freight contract says CIF, your customs broker cannot calculate the correct customs value without further investigation. Agree the incoterm before shipment and make sure the invoice reflects it.
No EORI numbers. Both the exporter and importer need EORI numbers for UK and EU customs declarations. If they are missing from the invoice, the customs broker will have to chase them, which causes delays.
Currency not stated. If the invoice is in USD, EUR, or another currency, HMRC converts to GBP using the HMRC monthly exchange rate. The broker needs to know the currency to do that conversion. Always state it clearly.
Invoice date is wrong or missing. The invoice date determines the exchange rate month used for conversion. A missing or wrong date creates unnecessary complexity on the entry.
Multiple shipments on one invoice without clear referencing. This is not automatically wrong, but your customs broker needs to know which invoice lines relate to which shipment. If you have multiple part-shipments against one order, make it clear which lines are covered by each movement.
Before 31 December 2020, goods moving between the UK and EU member states were intra-EU movements. No customs declarations were required. A delivery note or sales invoice was enough for VAT and accounting records.
Since Brexit, the UK is a third country relative to the EU, and the EU is a third country relative to the UK. Every movement of goods between the UK and the EU is now an international trade transaction. That means:
For businesses that previously traded freely across the UK-EU border, this is a significant operational change. Commercial invoices now need to include all the fields in the checklist above, including EORI numbers for both parties, a goods description that works for customs purposes, and the correct Incoterm.
Claiming preference under the UK-EU Trade and Cooperation Agreement (TCA)
The UK-EU TCA provides for zero tariffs on goods that meet the relevant rules of origin. To claim that zero rate, the exporter must include a statement of origin on the commercial invoice (or on another commercial document accompanying the shipment).
The statement of origin wording for UK exporters is:
“The exporter of the products covered by this document declares that, except where otherwise clearly showed, these products are of UK preferential origin.”
For EU exporters declaring UK-bound goods as being of EU preferential origin, the equivalent EU wording applies.
This statement does not appear on the invoice automatically. You need to add it deliberately. If it is missing, your importer cannot claim the preferential duty rate and may pay duty they did not need to pay.
For higher-value shipments above certain thresholds, the exporter may need to be a Registered Exporter (REX) in the EU system to make the declaration. UK exporters selling into the EU should verify the current threshold and registration requirements with their freight forwarder or the relevant EU customs authority.
Does the commercial invoice have to be on a specific form or template?
No. There is no mandated template. A commercial invoice can be produced on your company letterhead, in your accounts system, or on a standard trade template, as long as it contains all the required fields. Many businesses use their standard sales invoice layout with trade-specific fields added.
Who issues the commercial invoice?
The exporter, the seller, issues the commercial invoice. It is their document confirming the sale. The importer receives it and passes it to their customs broker for the import entry.
Does the commercial invoice need to be signed?
In the UK, no signature is legally required on a standard commercial invoice for customs purposes. But some destination countries require a signed or stamped invoice. Some banks and letters of credit also require a signed original. Check the requirements for the destination country and any payment method you are using.
Can the commercial invoice and the packing list be combined into one document?
In principle, yes, some businesses combine them. But customs brokers generally find it easier to work with separate documents. A combined invoice-packing list can work for simple, single-line shipments. For anything more complex, keep them separate unless your freight forwarder advises otherwise.
What currency should the commercial invoice be in?
Use the currency agreed between buyer and seller, typically USD, EUR, or GBP in UK trade. HMRC converts non-GBP amounts to GBP for duty assessment using the HMRC monthly exchange rate. Always state the currency clearly on the invoice.
How long should I keep commercial invoices?
HMRC requires you to keep customs records, including commercial invoices supporting import declarations, for at least four years from the date of the entry. Many businesses keep them for six years to align with their general document retention policy under UK company law. Digital copies are acceptable.
This article is part of a learning path — return to explore more topics.
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