When you buy or sell services across borders within the EU, the reverse charge often shifts who accounts for VAT — from the seller to the buyer. Here’s how it actually works.
Last updated: June 2026
Normally, the seller charges VAT and remits it to the tax authority. Under the reverse charge (Umkehr der Steuerschuldnerschaft), the buyer instead self-assesses the VAT — declaring both the output VAT (as if they’d been charged) and the corresponding input VAT (Vorsteuer) on their own return. For a business with full VAT recovery, this is usually VAT-neutral, since the two entries cancel out.
If you’re a German business selling general-rule services (consulting, IT, design, and most professional services) to a VAT-registered business customer elsewhere in the EU, the sale is typically outside German VAT scope, and your customer accounts for VAT under their own country’s reverse charge rules. Your invoice should state "Steuerschuldnerschaft des Leistungsempfängers" (reverse charge applies) and show no German VAT.
If you’re a German business buying services from a supplier in another EU country, you’re typically the one who must self-assess German VAT under the reverse charge — declaring it on your own Voranmeldung. This is a common area freelancers overlook when buying software subscriptions, consulting, or other services from non-German EU suppliers.
Yes, you need to verify their VAT-ID via the EU’s VIES system to confirm they’re a genuine VAT-registered business before treating a sale under the reverse charge.
The specific reverse charge mechanism is primarily an EU cross-border B2B concept, though similar place-of-supply principles (outside German VAT scope for B2B services) often apply to non-EU business clients too, under general place-of-supply rules.
This can result in unpaid VAT and potential penalties on review — reverse charge purchases from EU suppliers should be actively tracked and included in your own VAT return, not just filed away as a normal expense.
Yes, in some specific circumstances (certain domestic transactions like construction services, or specific cross-border goods scenarios), but the general cross-border services rule discussed here is the most common application for freelancers and consultants.
Yes, they still count as part of your turnover for threshold purposes, even though no German VAT is actually charged on the invoice.
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