What is a Reverse Charge Invoice?
Written by Arnon Shimoni
✓ Expert
Last updated on:
A reverse charge invoice is an invoice with no VAT on it, because the customer, not the supplier, accounts for the tax. It's the standard way a business in one EU country bills a business in another for services, and it's how most cross-border SaaS, API and platform revenue in Europe is invoiced.
The supplier charges the net amount, states the customer's VAT number, writes "Reverse charge" on the document, and reports the sale. The customer declares the VAT in its own return and, if it has full deduction rights, deducts the same amount in the same return. No cash moves for VAT, and the supplier never has to register in the customer's country.
At a glance | Reverse charge invoice |
|---|---|
Who pays the VAT to the tax authority | The customer |
Most common case | B2B services between two EU countries (Articles 44 and 196 VAT Directive) |
Mandatory wording | The words "Reverse charge" (Article 226(11a)) |
Customer's VAT number | Mandatory on the invoice, validated via VIES |
VAT rate and amount | Omitted. Show the net taxable amount only |
Whose invoicing rules apply | The supplier's own Member State (Article 219a) |
Deadline | 15th of the month following the chargeable event (Article 222). 10 days from 1 July 2030 |
Simplified invoice allowed | No |
When the reverse charge applies
The reverse charge moves the liability for VAT from supplier to customer. In the VAT Directive it applies in several situations, three of which matter for a software or platform business.
Cross-border B2B services inside the EU. Under Article 44, a service supplied to a business customer is taxed where the customer is established. Under Article 196, when the supplier isn't established there, the customer is liable for the VAT. A French company selling a subscription to a Spanish company issues a reverse charge invoice. This is the general rule for B2B services and covers software, SaaS, API access, consulting, advertising and most other digital supplies.
Services to customers outside the EU. The place of supply is outside the EU, so no EU VAT is due. Strictly this is "outside the scope" rather than a reverse charge, but the invoice looks the same: no VAT, and a statement explaining why. Many businesses write "VAT not applicable, Article 44 VAT Directive" or similar. Whether the customer owes tax locally depends on their country.
Domestic reverse charge. Member States apply the reverse charge to specific domestic sectors with fraud history: construction, scrap metal, mobile phones, emissions certificates, gas and electricity to traders. Each country lists its own. If you're not in those sectors it won't affect you.
The reverse charge does not apply to B2C. A consumer can't account for VAT. Cross-border B2C digital services are taxed in the consumer's country at that country's rate, and you report the VAT through the One Stop Shop.
What a reverse charge invoice must contain
A reverse charge invoice is a full invoice under Article 226 with three adjustments.
Item | On a reverse charge invoice |
|---|---|
Customer's VAT identification number | Mandatory. Without a valid number you have to charge VAT at your own country's rate |
The words "Reverse charge" | Mandatory. English is accepted in all Member States for cross-border invoices. Many suppliers add the legal reference, for example "Reverse charge, Article 196 VAT Directive" |
VAT rate and VAT amount | Omitted. Article 226a lets a non-established supplier leave out the rate, amount and unit-price breakdown and show the taxable amount by nature and extent of the services instead |
Everything else | As on any full invoice: issue date, sequential number, supplier VAT number, both parties' names and addresses, description, supply date or period, net amount |
Some countries require the statement in the national language of the supplier's Member State as well as in English. Showing both costs nothing.
Validating the customer's VAT number
The reverse charge depends on the customer being a taxable person in another Member State. The evidence for that is a valid VAT identification number, checked against VIES, the EU's VAT Information Exchange System. If the number is invalid, inactive or belongs to a different legal entity, the supply is treated as B2C and you owe VAT at your own country's rate, retrospectively, out of the price you already collected.
Check the number at onboarding and keep the VIES confirmation. For recurring billing, recheck periodically. Numbers are deregistered when companies close or merge, and the supplier bears the risk.
Reporting
A reverse charge invoice doesn't disappear from your VAT return. The supplier reports the sale in its periodic return as an intra-EU supply of services and lists the customer's VAT number and total in the EC Sales List (recapitulative statement). From 1 July 2030, under ViDA, the recapitulative statement is replaced by transaction-level digital reporting fed by the e-invoice itself, which is why the 2030 rules also shorten the issuance deadline to 10 days.
The customer self-assesses the VAT at its local rate and deducts it in the same return if entitled. For a fully taxable business the net effect is zero. For a bank, insurer or other partly exempt business it is a real cost, which is why those customers care about the rate in their country rather than yours.
Common mistakes
Charging home-country VAT to a foreign business customer. The customer can't reclaim it through its normal return and will dispute the invoice.
Omitting the customer's VAT number. The invoice doesn't support the reverse charge, and the tax authority can assess VAT on the supplier.
Applying the reverse charge to a consumer or an unvalidated number. Same result: supplier owes the VAT.
Treating a non-EU customer as "reverse charge". Harmless on the invoice, but the reporting is different: it goes outside the scope of EU VAT, not on the EC Sales List.
Hard-coding the wording per customer. Tax treatment follows the billing entity's country, the customer's country and the customer's status, all of which can change. It should be computed per invoice.
Where Solvimon fits
Solvimon determines the tax treatment of every invoice from the billing entity's country and the customer's country, validates VAT numbers against VIES, and adds the intra-EU reverse charge note, the non-EU note, or the EU–UK note to the invoice as a tax note automatically. Because the reverse charge is decided at invoice time rather than stored as a flag on the customer, a customer that moves, merges or loses its VAT registration is invoiced correctly without anyone updating a setting. If your finance team is still checking reverse charge wording by hand before invoices go out, talk to one of our experts.
FAQ
What exact words do I have to put on the invoice?
"Reverse charge". That phrase is prescribed by Article 226(11a) and accepted across the EU. Adding the article reference and the national-language equivalent is good practice.
Do I show a 0% VAT rate?
No. A reverse charge supply is not zero-rated. Leave the VAT rate and amount off, or show the VAT amount as not applicable, and state the reverse charge.
Can a reverse charge invoice be a simplified invoice?
No. Articles 220a and 238 exclude supplies where a non-established supplier's customer is liable for the VAT, whatever the amount.
What if my customer has no VAT number yet?
Charge VAT at your own country's rate. When they obtain a number you can issue a credit note and a new reverse charge invoice if your Member State allows the correction.
Does the reverse charge apply to UK customers after Brexit?
For services, a UK business customer is outside the EU, so no EU VAT is charged and the UK customer applies its own reverse charge under UK rules. The invoice looks the same: net amount, customer's UK VAT number, a statement that VAT is to be accounted for by the recipient.
By when must a reverse charge invoice be issued?
By the 15th of the month following the chargeable event. From 1 July 2030, within 10 days.
This page was checked against the VAT Directive and European Commission guidance in October 2026. It is a general explanation and doesn't replace advice from your tax adviser.
Related
EU invoice requirements. The full field list and the special-wording cases.
Invoice issuance deadline. The 15th-of-the-following-month rule and what replaces it.
Simplified invoice. Why it's never available for reverse charge supplies.
Multi-entity billing. Invoicing from the right legal entity in each country.
E-invoicing. Where the 2030 intra-EU e-invoice and reporting rules come from.
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