EU Reverse Charge VAT Invoice Calculator

Understanding the EU reverse charge VAT invoice calculator — concept and principle

Under the EU reverse charge, a supplier who provides services to a VAT-registered business in another EU country normally invoices without VAT, and the customer accounts for the VAT in its own country instead. This calculator shows the invoice total you send, the VAT the buyer must self-account at its local rate, and the standard wording that tells the buyer and the tax authority why no VAT was charged.

No VAT changes hands on the invoice; the buyer reports the $840 in its own country instead.

How it is calculated

Invoice total = net invoice amount (VAT 0% on the invoice)
VAT the buyer self-accounts = net amount × buyer's country VAT rate ÷ 100
Invoice note: "Reverse charge – Article 196, Council Directive 2006/112/EC"

The calculator shows USD by default but works with any currency.

The principle

For most business-to-business services, Article 44 of the EU VAT Directive places the supply where the customer is established. Article 196 then makes the customer, not a foreign supplier, liable to pay that VAT. The buyer reports the VAT as output tax in its own return and, if it is entitled to deduct VAT on its purchases, claims the same amount back as input tax. For a fully taxable business the two entries cancel, so no cash changes hands, yet the transaction is still taxed at the rate of the country where the service is used. This spares the supplier from registering for VAT in every customer's country.

Worked example

Inputs: net invoice $4,000, buyer's VAT rate 21%.
Invoice total: $4,000.00, with VAT shown as 0% and the reverse charge note.
VAT the buyer self-accounts: 4,000 × 21 ÷ 100 = $840.00.
The buyer declares $840 as output VAT and, where entitled, deducts $840 as input VAT.

How to read the result

The $4,000 is what the buyer pays you. The $840 is not paid to you; it is the amount the buyer reports. Article 226 of the Directive requires the invoice to carry the mention "Reverse charge" and the customer's VAT identification number, along with your own. Check the buyer's VAT number in the EU VIES system before invoicing, and remember that such supplies are usually also reported in your recapitulative statement (EC Sales List).

Common mistakes

Applying the reverse charge to a consumer or an unregistered buyer.
Using it for services with special place-of-supply rules, such as those connected with real estate or admission to events.
Treating goods the same way: intra-EU supplies of goods follow separate exemption rules.

Keep in mind: VAT rules have exceptions and national details, and rates change. Confirm the treatment with your tax authority or a tax adviser before invoicing. This is not tax or legal advice.

Frequently asked questions

Does reverse charge mean the transaction is tax-free?

No. VAT is due, but the buyer accounts for it instead of the supplier.

Which VAT rate do I enter?

The rate that applies to the service in the buyer's member state, for example 21% where that is the standard rate.

Do I still issue an invoice?

Yes, with both VAT numbers, a 0% VAT line and the reverse charge mention.

Sources: Council Directive 2006/112/EC on the common system of value added tax, Articles 44, 196 and 226 · European Commission, VIES VAT number validation service

Checked 8 Nov 2026. EU VAT Directive 2006/112/EC, Art. 44 and 196.

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