Reverse charge: when to invoice without VAT
The reverse charge is the mechanism that lets you invoice a business in another EU country without adding VAT. It is simple to apply and easy to apply wrongly, and the asymmetry matters: if it turns out not to have been available, the tax is reclaimed from you, not from the customer who told you it was fine.
What it actually does
It moves the obligation to account for VAT from the seller to the buyer. You issue an invoice with no tax; your customer declares both the output and the input VAT in their own return, usually netting to zero.
The point is not to give anyone a discount — the buyer is no better off — but to avoid a business having to register for VAT in every country it buys from.
The three conditions
- The customer is a business registered for VAT in another member state. Not a consumer, and not a business that is registered domestically but not for intra-EU transactions.
- You have verified their VAT number. Through VIES, at the time of supply — not once when the account was opened.
- The invoice states that the reverse charge applies. A note such as “Reverse charge — VAT to be accounted for by the recipient” is a formal requirement, not a courtesy.
Miss any one of the three and you have issued an invoice without VAT that you may have to pay VAT on.
Where the liability sits
With you, and this is the part worth internalising. If the VAT number turns out to have been invalid, cancelled, or never authorised for cross-border trade, the tax authority reclaims the VAT from the supplier. It does not chase the customer who supplied the wrong number.
The defence is evidence of due care. VIES returns a consultation number with each successful check; storing it against the invoice is the standard way of demonstrating that you verified at the right moment.
“The customer gave me the number and I believed them” is not a defence. Nor is a check performed two years earlier when the relationship started — registrations get cancelled without anyone telling you.
Where sellers apply it wrongly
- To consumers. The reverse charge is B2B only. A private individual has no VAT return to account for it in, so a cross-border sale to a consumer carries VAT — yours below the €10,000 threshold, the destination’s above it: see OSS or local registration.
- To businesses without an intra-EU registration. A small business may be VAT-registered at home and still not be in VIES. Then it is treated like a consumer for this purpose.
- To customers in the same country. Domestic reverse charge exists, but only for specific sectors — construction, scrap metal, certain electronics — under national rules. It is not the same mechanism and does not follow the same logic.
- To goods that never crossed a border. If stock ships from a warehouse in the customer’s own country, that is a domestic supply there, whatever your own establishment is.
- To sales outside the EU. Those are exports. Different rules, different evidence requirements, different invoice wording.
Goods and services are not identical
For services supplied B2B across borders, the general rule already places the supply in the customer’s country, and the reverse charge follows almost automatically. For goods it depends on physical movement between member states.
The practical difference shows up in evidence. With services you mainly need the customer’s status and number. With goods you also need proof that they actually left your country — transport documents, delivery confirmation, a signed CMR. Tax authorities ask for that proof more often than for anything else, and its absence is a common reason for the exemption being refused.
A workable routine
- Check the number format first — it takes a second and catches the transcription errors that make up most failures. The format checker is built for it.
- Validate in VIES at the time of supply and store the consultation number with the invoice.
- Put the reverse charge note on the invoice, along with both VAT numbers. The invoice generator puts the wording and both numbers where they belong.
- Keep the transport evidence with the same record, not in a separate system.
- Re-validate regular customers periodically. Quarterly is plenty for most.
None of this is difficult; it is only easy to skip. The cost of skipping it is the VAT you did not charge, and you will find out about it long after the margin on that sale has been spent.
Frequently asked questions
Do not apply the reverse charge. Ask the customer to confirm their registration status with their own tax authority. VIES outages do happen, so retry — but issuing without VAT on an unverified number puts the liability on you.
Yes. Both parties’ VAT numbers and an explicit reference to the reverse charge are formal requirements for the exemption. An invoice missing them can be challenged even where the underlying transaction was correct.
No. That threshold concerns cross-border sales to consumers. B2B supplies under the reverse charge sit outside it entirely and do not count toward it.
Generally no — the mechanism assumes a registered supplier making an intra-Community supply. If you sell under a small-business exemption, your situation is different and worth checking with an adviser rather than assuming.