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How to write a VAT reverse charge invoice

When the VAT reverse charge applies, and the wording and details your invoice needs.

The reverse charge moves the VAT duty from you to your customer. Instead of you charging VAT, the customer accounts for it in their own country. It is common for freelancers who sell services to businesses in another EU country.

When it typically applies

For business-to-business services supplied to a customer with a VAT number in a different EU country, the customer usually accounts for the VAT, so you charge none. It does not apply to consumers: a customer without a VAT number is treated as a private person, and your normal VAT rules apply. Rules differ by country and by service, so check yours.

What to put on the invoice

  • Your VAT number and your customer's VAT number. Both should appear.
  • No VAT line, and a total equal to the net amount.
  • A clear note that the reverse charge applies.

TrackLode uses this wording:

Reverse charge: VAT to be accounted for by the customer
(Article 196, Council Directive 2006/112/EC).

Example

INVOICE  INV-0107
Bill to: Beispiel GmbH, Berlin   VAT No.: DE123456789
From: Studio Nord, Athens         VAT No.: EL123456789

Item                           Qty    Rate        Amount
Consulting, 1 Oct - 31 Oct     40     70.00 EUR   2,800.00 EUR

Subtotal                                          2,800.00 EUR
Total                                             2,800.00 EUR

Reverse charge: VAT to be accounted for by the customer
(Article 196, Council Directive 2006/112/EC).

How TrackLode helps

If you are VAT registered and your client is a business with a VAT number in another EU country, TrackLode suggests the reverse charge treatment, sets VAT to zero and adds the legend above. It warns you if either VAT number is missing. The text stays editable. This is general information, so check with your accountant for your case.

Create a reverse charge invoice in TrackLode

Questions

Do I charge VAT with the reverse charge?
No. The invoice shows no VAT, and your customer accounts for it in their own country.
What if my customer has no VAT number?
Then they are treated as a consumer and the reverse charge normally does not apply. TrackLode suggests standard VAT in that case.
Does the reverse charge apply to UK customers?
Not under the EU rule described here. The UK is outside the EU, and TrackLode suggests an outside-the-scope legend for business customers there instead.