Reverse charge

The reverse charge shifts the obligation to account for VAT from the seller to the buyer. On most cross-border B2B services, the seller invoices without charging VAT and the business customer self-accounts for it in their own VAT return — declaring output VAT and, usually, reclaiming it as input VAT at the same time.

What the invoice must show

• 0% VAT (or no VAT charged) on the reverse-charged lines.
• The customer’s VAT number, as evidence they are a business.
• Statutory wording such as “Reverse charge: customer to account for VAT”.

In the UK and the US

• UK: since Brexit, B2B services from a UK seller to an EU business are generally outside the scope of UK VAT, and the EU customer accounts for VAT under the reverse charge. Services bought into the UK from abroad are reverse-charged by the UK business. A domestic reverse charge also applies to construction services under CIS.
• US: there is no federal VAT, so the reverse charge doesn’t apply to US sales tax. The nearest equivalent is use tax, which a buyer self-assesses when a seller didn’t collect sales tax.

Why it matters

Charging VAT when the reverse charge applies overbills the customer; omitting the wording or the VAT number leaves the seller liable. The decision depends on both parties’ countries and VAT status — and the invoice must then carry the right fields every time.

How Fynex does it

Fynex invoices enforce the reverse-charge fields: when a document is reverse-charged, the customer’s VAT number and the legal notice are required, so the statutory wording can never be dropped. See Invoicing & Collections.