REVERSE-CHARGE VAT
Last updated: June 2026
THE SHORT ANSWER
The very quick and generalised answer here is that if you're selling services, in particular to a VAT-registered business in an EU country, then yes, reverse-charge VAT probably applies. But (there's always a "but"!) there are certain situations it doesn't apply to, and you run the risk of needing to register for VAT in the foreign country. If you're selling to consumers, it's very likely a registration is needed.
Outside the EU, it varies. Some countries have either a reverse-charge mechanism or similar, some don't.
REVERSE-CHARGE VAT BASICS
Reverse-charge VAT is when you transfer the responsibility for the VAT to your customer. Normally, you would "charge" VAT to your customer. With reverse-charge, your customer "charges" themselves the VAT, and then claims that VAT.
Normally, VAT works like this:
Price + VAT = Total Amount Paid
- For businesses, VAT is normally "tax neutral". The VAT paid is not a cost, as the VAT can be claimed as a credit, so VAT in = VAT out.
- For consumers, VAT is a cost. The VAT paid is a cost to them, as they can't claim a credit.
That difference is the whole reason the reverse-charge can work for businesses but doesn't for consumers: businesses can account for the VAT and claim it back, consumers can't.
REVERSE-CHARGE VAT - WHEN IT'S UNLIKELY
01
Place of supply rules
Place-of-supply rules decide which country's VAT applies. For most B2B services the general rule puts the supply where the customer is: which is exactly what allows the reverse-charge mechanism to work.
But some services follow special rules instead: services connected to land or buildings (taxed where the property is), admission to events, restaurant and catering, passenger transport, and short-term hire of transport. For these, the supply is taxed where the property, event or activity is, not where your customer is, so the reverse charge doesn't apply, and you may need to register for VAT there.
02
Selling to consumers
The reverse charge needs a business customer who can account for the VAT themselves. A private consumer can't, so when you sell to consumers, the reverse charge doesn't apply.
Depending on what you sell and where, you'll either charge your own country's VAT or have to register in the customer's country. (For digital services to EU consumers, the One-Stop Shop lets you register once and report all your EU sales through a single return, instead of registering country by country.)
03
Countries that don't have reverse-charge rules
The reverse charge is mainly an EU mechanism. Outside the EU, some countries have an equivalent and some don't. Where there's no reverse charge, the country might require you to register for VAT or GST, might apply a withholding VAT, or might not tax the service at all. It's hard to generalise: it's country by country.
04
When you have a taxable presence in the other country
VAT has its own rules, separate from income tax. You can have a taxable presence for VAT (a "fixed establishment") even when you don't have a permanent establishment for income tax. If you have a fixed establishment in your customer's country that's involved in the supply, the reverse charge may not apply, and you account for the local VAT yourself. Always check the VAT position separately from the income tax position.
Getting the reverse charge wrong cuts both ways.
If you assume it applies when it doesn't, and you didn't charge VAT that you should have, the foreign tax authority can come after you for it, with penalties and interest, and recovering it from your customer after the event is possible (depending on your contract) but likely awkward.
On the other hand, if you assume you need to register for VAT when you didn't, then you've unnecessarily subjected yourself to considerable time, cost and effort.
Getting it wrong is a real headache. Tax awareness is key here: check the VAT situation before you sign, so you price and invoice it correctly the first time.
And don't forget to make sure you've done the paperwork. Even when the reverse charge means you charge no VAT, you usually still have to verify your customer's VAT number, and within the EU, report the sale on an EC Sales List (a recapitulative statement that lists your customer's VAT number and the value of the supply). No VAT to pay doesn't mean nothing to do or to report.
FREQUENTLY ASKED QUESTIONS ABOUT REVERSE-CHARGE VAT
When is reverse-charge VAT applicable?
If you're selling general services without a local presence, generally reverse-charge VAT applies. There is no reverse-charge VAT when you're selling to consumers. If you're selling services related to immovable property, events or passenger transport, it's more likely that reverse-charge VAT won't apply and you may need to register for VAT in the other country.
My customer provided me with the VAT number, do I really need to check?
Yes.
It's on you to check the VAT number is valid. In the European Union, you can check the VAT number using VIES. Outside the European Union, many countries have their own tools and sites so you can verify VAT numbers.
What if I don't have my customer's VAT number?
Then you should ask. The onus for proving that reverse-charge applies to the transaction is on you, so you need to satisfy yourself that your customer is VAT registered, and as such, that you can transfer the VAT liability to them. You should retain these records to support your VAT reverse-charge treatment.
Does the VAT reverse-charge apply outside the European Union?
Although primarily an EU concept, many countries have adopted VAT reverse-charge principles. Sometimes it's only relevant if the customer cannot claim a full VAT credit, to ensure that VAT is collected. It's country specific, so you need to check country by country.
What should be on the invoice?
You invoice without showing a VAT amount. In general, you should show your customer's VAT number and your own VAT number, as well as a note that the VAT reverse-charge applies.