Reverse charge invoices in the EU: when it applies and how to word it

Under the reverse charge, the seller does not charge VAT; the customer accounts for it in its own VAT return. It is the normal treatment for services between businesses in different Member States, it is mandatory when its conditions are met, and it fails on details — a missing mention, an unvalidated VAT number.

When it applies

The general place-of-supply rule for services to a taxable person is the place where the customer is established (Article 44 of the VAT Directive). When that customer is in another Member State, Article 196 makes the customer liable for the VAT. The seller therefore invoices without VAT and the customer self-assesses. This is the cross-border B2B reverse charge, and it is not optional.

• The customer must be a taxable person — a business, or a non-taxable legal person identified for VAT — established in a different Member State from the seller.
• The customer's VAT identification number should be valid; check it in VIES and keep the consultation record. Without a valid number the supply is treated as one to a consumer, and the seller's own VAT applies.
• The service must follow the general rule. Services with their own place-of-supply rules — connected with immovable property, admission to events, passenger transport, restaurant and catering, short-term hire of transport — are taxed elsewhere and may not be reverse-charged.
• Goods are different: a B2B dispatch to another Member State is an exempt intra-Community supply under Article 138, with the customer accounting for acquisition VAT. The effect resembles the reverse charge, the legal basis and the mention do not.

Domestic reverse charge

Member States may also apply a reverse charge inside their own borders for specific sectors — construction work, scrap, emission allowances, certain electronics — under Articles 199 and 199a. Which sectors, and whether at all, is a national choice; the invoice then carries the same mention, but the rule is found in national law.

What the invoice must show

• No VAT rate and no VAT amount on the reverse-charged lines — not a rate of 0%.
• The customer's VAT identification number (Article 226(4)).
• The mention "Reverse charge" (Article 226(11a)), in the language of the invoice. A reference to Article 196 is customary and helpful, but the mention itself is what the law requires.
• Everything a full invoice needs anyway: sequential number, date, both parties, the description and amounts.

The mention in other languages

The Directive prescribes the mention in every official language version. The ones EUFactura's customers meet most often:

• German: Steuerschuldnerschaft des Leistungsempfängers
• French: Autoliquidation
• Spanish: Inversión del sujeto pasivo
• Italian: Inversione contabile
• Dutch: Btw verlegd
• Polish: Odwrotne obciążenie
• Czech: Daň odvede zákazník
• Portuguese: Autoliquidação
• Swedish: Omvänd betalningsskyldighet

Reporting

Cross-border B2B services and intra-Community supplies of goods are reported in the seller's recapitulative statement (Article 262), known nationally as the EC Sales List, Modelo 349 in Spain or the Zusammenfassende Meldung in Germany. The customer's VAT number you collected for the invoice is what goes in it.

How EUFactura handles it

When the customer is a business in another Member State with a VIES-validated VAT number and the line is a service, EUFactura suggests the reverse charge, cites Article 196 on the PDF, inserts the mention in the document's language and blocks issuing if the mention is missing. If the VAT number was never validated, the invoice is marked "requires review" with that reason instead of silently charging VAT.