Reverse-charge invoices: how to write them
What changes on an invoice when the customer accounts for the VAT: the wording, the customer’s VAT number, the Peppol tax category and common mistakes.
Updated 15 October 2026
What reverse charge means
Normally the seller charges VAT and pays it to the tax authority. Under reverse charge the roles shift: the seller issues an invoice without VAT and the customer calculates the VAT in its own return, usually deducting the same amount at the same time. The tax is still due, but it is accounted for by the buyer.
The most common case is a business that sells a service to a VAT-registered business in another EU member state. The place of supply is the customer’s country and the customer accounts for the tax there. Several countries also apply reverse charge to certain domestic supplies, such as some building services and scrap metal; those rules are national and vary.
What the invoice must show
Article 226 of the VAT Directive asks for three things on a reverse-charge invoice: the customer’s VAT identification number, no VAT amount for the supply, and the mention “Reverse charge” (point 11a). National law may prescribe the wording in the local language; in Germany, for example, § 14a Abs. 5 UStG requires an indication that the recipient owes the tax, commonly written “Steuerschuldnerschaft des Leistungsempfängers”.
In Draftbill, choose “Reverse charge” as the tax on the line. The line then shows a 0 % reverse-charge category, the tax note field becomes mandatory and the checklist asks for the customer’s tax ID. The tax note is printed on the invoice and written to the Peppol file as the exemption reason.
Reverse charge, exempt and zero-rated are not the same
A zero-rated sale charges VAT at 0 % and the seller keeps the right to deduct input VAT. An exempt sale charges no VAT and may limit the seller’s deduction. A reverse-charge sale charges no VAT because the customer accounts for it. They use different codes in e-invoicing: Peppol uses category Z for zero-rated, E for exempt and AE for reverse charge, and the exemption reason belongs to E and AE but not to Z.
Picking the wrong one is an error with consequences for both parties, so use the category your tax authority names for the supply and write the reason it prescribes.
Checking the customer
Reverse charge on a cross-border sale depends on the customer being a taxable person in another member state. Validate the VAT number in the Commission’s VIES service on the date of the supply and keep a record. A valid number is evidence, not a guarantee: the supply and the customer’s status still have to qualify.
Reporting afterwards
A seller that makes cross-border B2B supplies usually has to list them in a recapitulative statement (EC Sales List) for its own country, in addition to the VAT return. The timing and format are national, so follow your authority’s instructions. Draftbill does not file anything.