Invoice generator › Reverse charge

The reverse charge invoice

The mechanism that lets you invoice a business in another EU country without registering for VAT there — and the wording that makes it valid.

What it is

Normally the seller collects VAT and hands it to the tax authority. The reverse charge flips that: you invoice with no VAT, and your business client declares it in their own country. It exists so that a freelancer with clients in six countries does not have to register for VAT in six countries.

For your client it is usually neutral — they declare the VAT and reclaim it in the same return. Which is why a correctly worded reverse charge invoice is never a problem for them, and an incorrectly worded one is.

When it applies

The typical freelance case needs all four of these to be true:

1. You supply a service (the rules for goods differ)
2. Your client is a business, not a private individual
3. Your client is in a different EU member state from you
4. Your client has a valid VAT number that you have checked

Break any one of them and something else applies instead. Client is a consumer: you charge your own VAT. Client is outside the EU: the supply is generally outside the scope of EU VAT, which is a different statement on the invoice. You are outside the EU yourself: you are not charging EU VAT anyway, and your own country's rules govern what you write.

What the invoice must show

Beyond the normal contents, three additions:

• Your VAT number
• Your client's VAT number, printed on the invoice
• A statement that the reverse charge applies. Wording is not fixed across the EU, but it has to be unambiguous

Commonly used forms:

VAT reverse charge — VAT to be accounted for by the recipient
under Article 196 of Council Directive 2006/112/EC.

Reverse charge: customer to account for VAT to the relevant
tax authority.

Your own tax authority may prefer particular wording, and some publish a required form of words. Check yours once, then reuse it. The generator on this page inserts a standard statement when you choose the reverse charge option.

A worked example

You are a designer in Ireland with an Irish VAT number. Your client is an agency in the Netherlands with a valid Dutch VAT number. You are billing EUR 3,500 for a brand identity.

Subtotal                    EUR 3,500.00
VAT (0% — reverse charge)    EUR     0.00
Total due                    EUR 3,500.00

Your VAT no.:    IE1234567X
Client VAT no.:  NL123456789B01

VAT reverse charge — VAT to be accounted for by the recipient
under Article 196 of Council Directive 2006/112/EC.

You also report the supply in your own VAT return in the box for services to other member states, and typically in a periodic statement of EU sales. That reporting is the part people forget: the invoice is only half the obligation.

The three mistakes that make it invalid

1. Not checking the VAT number. Validate it through the European Commission's VIES service on the day you invoice, and save the confirmation. Numbers get deregistered, and if the number was invalid the VAT can become yours.

2. Applying it to a consumer. A private individual cannot self-account. If the client cannot give you a VAT number, the reverse charge is not available and you charge your own country's VAT instead.

3. Showing 0% with no statement. Technically the invoice is incomplete, and practically it will be queried by the client's accounts department — which delays your payment by a week for a missing sentence.

What if my client says they do not know their VAT number?

Then treat them as a consumer until they produce one. This happens with small companies and sole traders below their registration threshold, and it is a legitimate answer — they genuinely may not have a number. In that case you charge your own VAT, which makes you more expensive to them, and there is nothing to be done about it.

Frequently asked questions