Reverse charge VAT: calculation examples

Short intro: Reverse charge shifts VAT accounting from the supplier to the customer. The supplier does not charge VAT in the normal way. Simple sentence, many accounting footnotes, because civilization chose forms.

What reverse charge VAT means

Under reverse charge, the supplier issues an invoice without charging VAT; the customer accounts for VAT under the applicable rules. It only applies in specific cases.

What changes in the calculation

The invoice amount may equal the net amount. VAT does not increase the amount paid to the supplier, but the customer still considers the VAT in its own VAT records.

Formula

• Supplier invoice total = Net amount
• Notional VAT = Net amount × Rate / 100
• If fully deductible: output VAT and input VAT may offset

Practical example

For a €1,000.00 service at 22%, the supplier does not add €220.00 VAT to the invoice. The customer calculates €220.00 VAT under the reverse charge mechanism.

Checks before invoicing

Check transaction type, parties, country, required wording and the VAT code in your invoicing software. Software is obedient, not wise. A tragic but familiar distinction.

Practical numerical examples

• Ordinary sale: €1,000.00 + VAT €220.00 → total €1,220.00.
• Reverse charge: invoice €1,000.00 with no VAT charged; notional VAT €220.00 accounted for by the customer.
• If fully deductible: output VAT €220.00 and input VAT €220.00 may have no cash effect.

FAQ

Does reverse charge mean zero VAT?

No. It means VAT is not charged by the supplier and is accounted for by the customer.

Does reverse charge apply to all B2B sales?

No. It applies only in specific cases.

Which rate should I use in the calculator?

Use the rate that would apply to the transaction, while remembering VAT may not be charged on the supplier invoice.

Recommended internal links

• B2B vs B2C VAT
• VAT invoice calculation
• VAT formula
• Reverse VAT calculator
• EU VAT rates

Careful tax disclaimer

VAT rates and treatments can change, and exceptions may apply. Before using a calculation on an invoice or return, check the current rate, country and transaction type from updated sources.