What is VAT reverse charge on an invoice?

VAT reverse charge shifts the obligation to account for VAT from the seller to the buyer. Instead of charging VAT on the invoice, the seller issues a 0% VAT invoice with a "Reverse charge" note. The buyer self-assesses the VAT in their own tax return. This applies to most B2B cross-border services within the EU.

When do I use reverse charge on invoices?

Reverse charge applies to most B2B services sold to a VAT-registered business in another EU member state. The buyer must have a valid VAT identification number. The seller must verify the buyer VAT number via the VIES system and include a reverse charge reference on the invoice.

Guide

VAT reverse charge invoicing.

When to apply reverse charge, what to write on the invoice, and how your invoicing software should handle it.

Last updated: June 4, 2026

What reverse charge means.

Normally, the seller charges VAT on the invoice and remits it to their tax authority. With reverse charge, the seller does not charge VAT. Instead, the buyer accounts for the VAT in their own tax return.

The invoice shows the net amount with 0% VAT and includes a note such as "VAT reverse charge applies" or a reference to the relevant directive (Article 196, VAT Directive 2006/112/EC).

This mechanism exists to simplify cross-border B2B transactions within the EU. Without it, a Dutch freelancer selling services to a German company would need to register for German VAT.

When reverse charge applies.

Cross-border B2B services

Most services sold to a VAT-registered business in another EU member state use reverse charge. The "place of supply" rules (Article 44) mean the service is taxed where the buyer is established. The buyer self-assesses.

Buyer must have a valid VAT number

Reverse charge requires the buyer to be VAT-registered. You must verify their VAT number via the VIES (VAT Information Exchange System) before applying it. If the buyer is not VAT-registered, you charge your local VAT rate.

Does not apply to B2C

Reverse charge is a B2B mechanism. If your customer is an individual consumer (no VAT number), you charge the applicable VAT rate. For digital services to consumers, OSS (One-Stop-Shop) rules apply instead.

What the invoice must show.

Your VAT number Must be on the invoice

Buyer VAT number Must be on the invoice and verified via VIES

VAT rate 0% (reverse charge)

VAT amount Not applicable or EUR 0.00

Reverse charge note "VAT reverse charge" or reference to Article 196

Net amount Full invoice amount excluding VAT

Total amount Same as net amount (no VAT added)

Reverse charge in InvoiceScript.

InvoiceScript supports reverse charge as a tax category. When you create an invoice for a cross-border B2B customer with a valid EU VAT number, you can apply a reverse charge tax rate. The invoice shows 0% VAT with the correct annotation.

The PDF template includes the reverse charge note and the buyer's VAT number. The UBL XML export uses the correct tax category code (AE for reverse charge) so the file validates against EN 16931 rules.

InvoiceScript supports multiple tax rates per invoice, so you can mix standard-rated and reverse-charge line items when needed.

VAT-ready invoicing

Cross-border invoicing, sorted.

Reverse charge, multiple VAT rates, correct UBL XML tax codes. Built in.

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