This article explains why VAT is automatically added to 123-reg invoices.
Value added Tax (VAT) at the current rate is added to 123-reg invoices by default.
123-reg have to charge VAT as we are operating and providing our services from the United Kingdom regardless of your location.
This applies to both EU countries and non-EU countries. This is a ruling by HM Customs and Excise because the service is supplied in the UK and not the country of the ISP or registrant.
You may be able to reclaim VAT in your own country:
non-EU countries: http://www.hmrc.gov.uk/vat/managing/international/nonEU-visits.htm
EU countries: http://www.hmrc.gov.uk/vat/managing/international/EU-visits.htm
Please see the HM Customs & Excise website for details.