Reverse charge, explained.

What it is

Normally the seller charges VAT and pays it to the tax office. With the reverse charge the seller invoices without VAT and the customer reports the VAT in their own return. The customer usually deducts the same amount as input tax in that return, so nothing is paid, but both sides are reported.

When it applies

• Sales between businesses in different EU countries. Goods are an intra-EU supply at 0% for the seller; for most services the place of supply is the customer's country and the customer reports the VAT.
• Purchases from abroad. If you buy services from a supplier in another country, you often report the VAT yourself.
• Specific domestic sectors. Many countries use a domestic reverse charge in sectors such as construction.

On the invoice

A reverse-charge invoice shows the VAT numbers of both parties, no VAT amount, and a statement that the reverse charge applies. In an e-invoice this is the VAT category for reverse charge with its reason.

In the books

The seller books revenue without VAT and reports the sale in the right box of the return and, for EU customers, on the EC sales list. The buyer books the VAT twice: once as VAT due and once as deductible VAT.

In erpsoftware.app

The VAT treatment follows from the customer or supplier: country, business or consumer, and VAT number. Reverse-charge sales get the right text and e-invoice category, and reverse-charge purchases are booked on both sides automatically. See VAT return.

This is a general explanation, not tax advice. The exact rules differ per country and per kind of goods or services.