Reverse charge VAT: invoicing EU customers without VAT
Selling services or goods to a business in another EU country? Then you often invoice without VAT, provided you do it correctly.
A German client wants to hire you for a web design project. Or you sell software licenses to a Belgian entrepreneur. In both cases you can probably invoice without VAT — via the so-called reverse charge mechanism. But there are conditions, and the most common mistakes cost money.
What is reverse charge?
With the "reverse charge" mechanism, VAT responsibility shifts from supplier to customer. You send an invoice without VAT; your customer calculates the VAT from their own country themselves in their return.
The idea: it prevents a Dutch entrepreneur from first paying VAT to you and then having to request a refund in Germany. Inefficient and fraud-prone.
Conditions for reverse charge on EU services
The three main conditions:
- Your customer is a business (not a private individual). No VAT number = consumer = you charge regular Dutch VAT.
- Your customer is established in a different EU country than you.
- Your customer's VAT number is valid according to VIES.
VIES check: always do it
VIES is the European database where you can validate VAT numbers: ec.europa.eu/taxation_customs/vies. Enter your customer's number — if you get "Valid" back, you can invoice without VAT.
If the customer gives you a VAT number that turns out to be invalid, and you have invoiced without VAT, then the tax authority can still claim 21% VAT from you. Reason to always check and keep the VIES confirmation.
What must be on your invoice?
- Your business details + your Dutch VAT number
- Customer details + their EU VAT number (complete, with country code)
- Amounts excl. VAT
- VAT rate: 0%
- Mandatory note: "VAT reversed" or "VAT reversed — Article 138 VAT Directive"
- Preferably also: "Reverse charge" for clarity
When does it NOT apply?
- Private individuals in EU. A German consumer does not use reverse charge. You invoice Dutch VAT (or, for digital services above €10,000/year, local VAT via the OSS scheme).
- Real estate work. Construction work in Germany on a German property? Then you pay German VAT.
- Restaurants, events. Services delivered "on the spot"; VAT of the country of performance.
- Passenger transport. Own rules per route.
VAT return: in which section?
On your VAT return, these revenues go in section 3b (intra-community supplies). Additionally, you must submit a separate ICP statement each quarter — that is a list of EU customers with their turnover and VAT number.
Practical: how to set it up
In Invoisio you add the VAT number to the customer card. We validate it automatically via VIES and — with a valid EU number in another country — automatically activate reverse charge on all invoices for that customer. The correct text, the correct rate, and the ICP reporting comes automatically in the return export.
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