The normal rule, and what the reverse charge changes

Under the usual VAT model, the supplier charges VAT on a sale, collects it from the customer, and pays it to the tax authority. The customer, if VAT-registered, later reclaims that VAT as input tax. That round-trip works well domestically, but it becomes awkward across borders: a supplier in one country would otherwise have to register for VAT in the customer's country and remit tax there. The reverse charge removes that friction. Instead of the supplier charging and remitting the VAT, the customer accounts for it directly in their own country, at their own country's rate.

In practice this means the supplier issues an invoice with no VAT added, and the customer records the transaction as if they had charged themselves VAT. The customer enters that VAT as output tax (tax they owe) and, where they are entitled to full recovery, the same figure as input tax (tax they reclaim). The two usually cancel, which is why the headline cash effect is frequently zero — but the transaction is still reported, and the obligation is real.

When does the EU reverse charge apply?

The most common trigger is the general place-of-supply rule for B2B services. Since 2010, the place of supply of most services between businesses is the country where the customer is established, not the supplier. When the supplier and customer are in different EU member states and both are taxable persons, the customer accounts for the VAT under the reverse charge. Typical examples include consulting, software and SaaS sold to a business, marketing, design, legal and accounting services, and licensing of rights.

The reverse charge also appears in several other situations that member states may apply:

• Domestic anti-fraud measures. Some member states apply a domestic reverse charge to sectors historically exposed to fraud — for example construction services, supplies of certain electronics (mobile phones, integrated circuits), gas and electricity to traders, and emissions allowances.
• Goods installed or assembled in the customer's country, and certain supplies of gas, electricity, heat, and cooling, can fall under reverse-charge rules.
• Purchases from suppliers outside the EU are often handled by the customer self-accounting for VAT, which is closely related in effect.

There are important exceptions to the general B2B rule. Services connected with land or property are taxed where the property is located; admission to physical events is taxed where the event takes place; passenger transport and restaurant services have their own rules. For those, the reverse charge may not apply even between two businesses, so always check the specific place-of-supply rule for the type of service.

Why it exists

The reverse charge solves two problems at once. First, it spares suppliers from having to register and file VAT in every member state where they have business customers — a major simplification for cross-border trade in services. Second, it reduces a category of fraud known as missing-trader (carousel) fraud, where a supplier collects VAT from a buyer and then disappears without remitting it. If no VAT changes hands on the sale because the buyer self-accounts, that particular fraud route is closed. This is why member states are allowed to extend the domestic reverse charge to specific high-risk goods and services.

The cash-flow effect

For a fully taxable customer who can recover all their input VAT, the reverse charge is usually cash-neutral: they declare, say, EUR 1,900 of VAT on a EUR 10,000 service at a 19% rate as output tax, and reclaim the same EUR 1,900 as input tax in the same return. Net VAT paid on that line: zero. The supplier never touches the VAT at all and simply books a EUR 10,000 net sale.

It is not always neutral, though. If the customer cannot fully recover input VAT — for example a bank, an insurer, a charity, or a business with exempt activities — the self-accounted VAT becomes a real cost. The same is true for a business below the registration threshold that nonetheless has to account for reverse-charge VAT on services it buys from abroad. For those buyers, the reverse charge increases the effective price of the service by the VAT they cannot reclaim.

What to put on the invoice

A compliant reverse-charge invoice for a cross-border B2B service generally needs to:

• charge no VAT and show the net amount only;
• display both the supplier's and the customer's VAT identification numbers;
• include an explicit note that the reverse charge applies, such as "Reverse charge — VAT to be accounted for by the recipient", ideally referencing Article 196 of Council Directive 2006/112/EC (the wording can differ by member state);
• be reported by the supplier on any required recapitulative statement (an EC Sales List or its national equivalent).

Before treating a sale as reverse-charge, validate the customer's VAT number — the EU's VIES system is the usual way to confirm a number is active. If you cannot obtain a valid VAT number, the customer may have to be treated as a private (B2C) consumer, in which case you may need to charge VAT, potentially under the One-Stop-Shop rules for digital and other services. Getting the status right at the start determines whether VAT is charged at all.

How this relates to the calculator

The calculator on this site adds or removes a single VAT or sales-tax rate from an amount. With the reverse charge, the supplier's invoice carries no VAT, so there is nothing to add on the sale itself. The figure that matters is on the customer's side: they apply their own country's rate to the net amount to work out the VAT they must self-account for. You can model that here — pick the customer's country, choose "Add tax", and enter the net invoice amount to see the VAT they will declare (and, if fully recoverable, reclaim).

This guide is general information, not tax advice. Reverse-charge rules, invoice wording, and exceptions vary by member state and change over time. Confirm the treatment of a specific supply with the relevant tax authority or a qualified adviser. Rates as of 2026-06. European Commission — VAT