An estimate is a priced proposal for work that hasn't started, sent so the client can agree scope and price before you commit time or materials. Some businesses use “estimate” for an approximate figure and “quote” for a fixed price; whether either one binds you depends on your contract and national law, so say on the document which one you mean. It never becomes an invoice line, but its reference often appears on the invoice later (“As per estimate EST-0042”), tying the bill to what the client approved. Because it isn't an invoice, it creates no VAT: under the EU VAT Directive, VAT becomes chargeable when the supply takes place or a payment on account is received (Articles 63 and 65). Example: EST-0042, valid until 31 October: brand identity, 20 hours at €60, €1,200 excluding VAT, assuming two rounds of revisions. Common mistakes: leaving out an expiry date and the assumptions behind the price, so an old figure stays open indefinitely, and invoicing the estimated total when the work delivered turned out different.
Try it: Estimate generator.