- This article explains the concept of reverse charge in VAT and its application in various scenarios.
- Reverse charge is a mechanism where the supplier does not charge VAT on the invoice, and the customer pays and deducts VAT simultaneously through the VAT return.
- The client will manually calculate the VAT on the reverse charge invoice and report that amount as input VAT and as output VAT, having a nil effect for the customer’s and supplier’s cash flow.
- Reverse charge applies in different kinds of transactions, both domestic and intra-Community, and requires specific content on the invoice, such as a note indicating that “Reverse charge” applies and the customer’s VAT number.
Source Marosa
Latest Posts in "European Union"
- Blog Luc Dhont: How Can Multinationals Comply with VAT on Transfer Pricing Adjustments Post-ECJ Arcomet?
- ECJ Opinion Sheds Light on VAT for Ancillary Services in German Accommodation Sector
- Briefing document & Podcast – C-409/04 (Teleos): Physical Movement & Supplier Due Diligence Key for Intra-EU VAT Exemption
- EU boosts tax cooperation with Andorra, Liechtenstein, Monaco, and San Marino
- Briefing document & Podcast: ECJ C-271/06 (Netto Supermarkt) – VAT exemption granted if fraud undetectable with due commercial care
