Reverse charge VAT
Reverse charge is a VAT mechanism that makes the customer, rather than the supplier, responsible for accounting for VAT on a transaction. It applies only when the relevant legal conditions are met. When the customer is liable under the procedure, EU invoicing rules require the invoice to include the words “reverse charge”; the invoice itself does not establish eligibility.
Why this matters when you invoice
Ordinarily the supplier is liable to pay VAT, but EU rules make or allow the customer to be liable in defined situations. That changes how VAT is presented and who accounts for it. Reverse charge can arise in cross-border and some domestic situations, so location alone is not enough to select it.
What to put on the invoice
After confirming that the customer is liable, include the parties and VAT identifiers required for the transaction and the words “reverse charge”. Do not present reverse charge as a 0% VAT rate: it describes liability, not a mathematical rate.
Record a confirmed customer-liability treatment
A supplier and business customer are in different EU countries. After checking the service, customer status, establishments and place-of-taxation rules, the seller confirms that the customer is liable. The seller prepares the invoice using the confirmed treatment, includes the relevant VAT numbers and adds “reverse charge” rather than treating the phrase itself as proof.
Common mistakes
- Assuming every sale to another EU country uses reverse charge.
- Using a valid VIES result as the entire tax decision.
- Entering 0% VAT when the actual treatment is customer-accounted VAT.
- Adding “reverse charge” before checking place of taxation and customer liability.
Put it into practice
Once you have confirmed the treatment, create the invoice and add the required wording and identifiers. You can check an EU or Northern Ireland VAT number separately through the free VIES checker.
InvoiceCraftly does not determine whether reverse charge applies to a transaction. Confirm the customer liability, place of taxation and required wording before creating the invoice.
Official references
Sources and terminology reviewed 3 September 2026. Next evidence review: 1 December 2026.
Frequently asked questions
Does reverse charge mean the VAT rate is 0%?
No. Reverse charge concerns who accounts for VAT; it is not the same as applying a zero VAT rate.
Does a valid VIES result prove reverse charge applies?
No. A VIES result is one status check. The transaction facts and applicable VAT rules still determine liability and treatment.