Reverse-charge VAT invoices: when and what to write

What the reverse charge changes

Under a reverse charge, the supplier generally does not collect the VAT covered by the mechanism. The customer records the relevant output tax and may claim input tax subject to its normal recovery rules. The mechanism is common in cross-border business services, but exceptions and local extensions exist.

The phrase “reverse charge” is an outcome, not a test. Before using it, establish where the supply is treated as made, whether the customer is acting as a business, whether the supply is taxable, and whether a special rule overrides the general B2B position.

What to include on the invoice

Include the normal invoice particulars: unique number, dates, parties, description, values and currency. Add the supplier VAT number and the customer's VAT number when required by the relevant cross-border invoicing rules. Show the taxable value even though the supplier tax collected is zero.

Do not label a reverse-charge supply as exempt. Exemption, zero rating, outside-scope treatment and reverse charge describe different legal mechanisms and can produce different reporting outcomes.

• Supplier and customer identities
• Applicable VAT registration numbers
• Net value by line or tax category
• Supplier VAT collected shown as zero where appropriate
• A clear reference that the customer accounts for VAT

Use wording that is clear and jurisdiction-aware

For EU-style cross-border B2B services, a concise statement such as “Reverse charge — customer to account for VAT” communicates the treatment. HMRC guidance for particular UK domestic reverse-charge regimes gives examples, but wording from one regime should not be copied into another unless its legislative reference applies.

Where a customer requires a local-language phrase or statutory citation, obtain it from the relevant tax authority or adviser. Billr's suggested note remains editable so the invoice can reflect the actual rule instead of a generic slogan.

Review point: Example educational wording: “Reverse charge — VAT to be accounted for by the customer.” Verify whether the applicable jurisdiction requires different text or a legal reference.

Retain the evidence behind the treatment

Keep the customer's registration verification, contract, billing and service-delivery information, and the reasoning used to determine the place of supply. For goods, retain dispatch or export evidence where the chosen treatment depends on movement across borders.

If the customer cannot provide the evidence needed to treat it as a business, do not assume B2B status merely because it uses a company email address. Consumer rules may lead to a different place of supply and tax rate.