When do I issue a reverse-charge invoice for an EU sale?
For a business-to-business sale to a VAT-registered customer in another EU member state, VAT is generally not charged by you — the customer accounts for it under the reverse-charge mechanism. The invoice must carry both VAT numbers and a note stating that reverse charge applies. If the customer has no valid VAT number, the sale is normally treated as B2C and VAT is charged. Rules differ by country and change, so confirm the specifics with your accountant.
The decision tree
- Is the customer in another EU member state?
- Do they have a valid VAT number in that state?
- Is the supply one where reverse charge applies?
Three yeses means no VAT on your invoice and a reverse-charge note. Any no usually means VAT is charged — and which rate depends on rules that differ by country and by what you sell.
Why it should be derived, not remembered
Getting it wrong costs in both directions. Charging VAT that should not have been charged irritates the customer and complicates their return. Not charging VAT that should have been charged leaves you owing it.
The customer record already knows the country and the VAT number. Deriving the treatment from those two fields removes the decision from the moment of invoicing, when nobody is thinking about it.
Reporting
Reverse-charge sales are declared as their own group. A tax summary that mixes them into standard sales makes the return harder to prepare and harder to check.
This is not tax advice
Rules differ by member state and change. This describes how the documents work, not what you owe. Confirm the specifics with your accountant.
Checklist
- Are customer country and VAT number recorded as fields, not notes?
- Are VAT numbers validated before an invoice is issued?
- Does the invoice carry the required reverse-charge wording?
- Are reverse-charge sales reported as their own group?
Frequently asked questions
What is reverse charge?
A mechanism where the buyer, not the seller, accounts for VAT. It is used for many cross-border B2B supplies within the EU.
What must a reverse-charge invoice contain?
Both parties’ VAT numbers and an explicit statement that the reverse-charge mechanism applies. The exact wording required varies by member state.
What if the customer has no VAT number?
The sale is generally treated as B2C and VAT is charged at the applicable rate. Validating the number before issuing matters.