What does reverse charge VAT mean?

It means the buyer, not the seller, accounts for the VAT on a transaction. The seller invoices without VAT, and the VAT-registered customer self-accounts for it in its own VAT return.

When does the reverse charge apply?

Mainly to cross-border B2B supplies within the EU where the customer is VAT-registered in another member state, and to certain domestic anti-fraud categories. It generally does not apply to sales to private consumers.

Do I charge VAT under the reverse charge?

No. As the seller you issue an invoice with no VAT charged, but you must note that the reverse charge applies and hold the customer’s valid VAT number. The buyer then accounts for the VAT.

Does the reverse charge apply to selling to consumers?

Generally no. Consumers are not VAT-registered and cannot self-account, so B2C sales are handled by charging local VAT or via schemes such as VAT OSS and IOSS for cross-border distance selling.

Glossary

Reverse Charge VAT

Reverse charge mechanism · VAT reverse charge

Reverse charge VAT is a mechanism where the buyer, rather than the seller, accounts for the VAT on a transaction. It is widely used for cross-border business-to-business (B2B) supplies inside the EU: the seller invoices without charging VAT, and the VAT-registered business customer self-accounts for the VAT in its own country.

Last updated: June 2026

Key facts

Under the reverse charge, the buyer accounts for VAT instead of the seller — the tax liability is "reversed" onto the customer.
It applies mainly to cross-border B2B supplies where the customer is VAT-registered, and to certain domestic anti-fraud categories.
The seller issues an invoice with no VAT charged but must reference that the reverse charge applies and hold the customer’s valid VAT number.
It does not apply to typical B2C marketplace sales to consumers, who are not VAT-registered and cannot self-account.

How the reverse charge works

Normally a seller adds VAT to an invoice, collects it from the customer, and pays it to the tax authority. The reverse charge flips this for qualifying transactions: the seller charges no VAT, and the buyer instead records both the output VAT and the corresponding input VAT in its own VAT return. For a fully taxable business customer these two entries usually cancel out, so no cash actually changes hands for the VAT — but the transaction is still properly reported.

The mechanism exists largely to simplify cross-border trade and to combat fraud. By moving the VAT accounting to the customer’s country, it avoids a foreign seller having to register for VAT in every country where it has a business customer, and it closes loopholes that arose when sellers collected VAT but failed to remit it.

When the reverse charge applies

The classic case is a cross-border B2B supply of services or goods within the EU where the customer is a VAT-registered business in another member state. The seller verifies and quotes the customer’s VAT number, issues an invoice without VAT, and notes that the reverse charge applies. The customer then self-accounts for VAT at its local rate.

There are also domestic reverse-charge rules in some countries for specific sectors prone to fraud — for example certain electronics, construction services or carbon trading — where even a local B2B sale shifts VAT accounting to the buyer. These are country- and category-specific, so the exact list varies.

A key boundary is that the reverse charge generally does not apply to sales to private consumers. Consumers are not VAT-registered and cannot self-account, so B2C sales are handled differently — for instance through the seller charging local VAT, or via schemes like OSS and IOSS for cross-border distance sales.

Example

A Dutch wholesaler sells a bulk order to a VAT-registered retailer in Germany. Because it is a cross-border B2B supply and the German buyer provides a valid VAT number, the Dutch seller issues an invoice with no VAT and a note that the reverse charge applies. The German retailer then accounts for the German VAT on the purchase in its own VAT return, typically reclaiming the same amount as input VAT.

Why it matters for marketplace sellers

If you sell B2B across EU borders, the reverse charge lets you invoice business customers without charging VAT, provided you hold and verify their valid VAT number.
It does not cover your normal B2C marketplace sales to consumers — those still need local VAT handled through registration or OSS/IOSS.
You must keep evidence: a valid customer VAT number and the correct invoice wording noting that the reverse charge applies.
Getting the distinction wrong — applying the reverse charge to a non-business buyer, or omitting VAT where it was actually due — creates VAT exposure, so it is worth confirming the rules per transaction type.