Reverse-charge VAT: when and how

What does reverse charge mean?

Normally you charge VAT and pay it over. Under the reverse charge that obligation moves to your customer. You invoice without VAT; your customer reports the VAT and, with full recovery rights, deducts it in the same return. For such a customer the net effect is nil.

When does it apply?

The reverse charge is not optional. It applies where the law says so. The main cases:

• Doing business abroad, such as services to a business in another EU country.
• Subcontracting and staff hire in construction, shipbuilding, cleaning and landscaping.
• Waste and scrap materials.
• Mobile phones, chips, games consoles, laptops and tablets, under conditions.
• Certain supplies of real estate and forced sales.
• Gold, emission rights, gas and electricity certificates and telecom services between businesses.

What goes on the invoice?

State "btw verlegd" (VAT reverse-charged) and your customer’s VAT identification number. Do not charge VAT. All other invoice requirements still apply.

Reporting it in your return

If you reverse-charged VAT to a Dutch customer, report the turnover in section 1e. If VAT was reverse-charged to you, report it in section 2a and, where you can recover VAT, deduct it as input VAT in section 5b. Cross-border transactions use other sections.

Common mistakes

• Charging VAT when the reverse charge is mandatory: you then owe that VAT and your customer cannot deduct it.
• Leaving the customer’s VAT ID off the invoice.
• Applying the reverse charge to a private customer: that is not possible.
• As the customer, forgetting to report the reverse-charged VAT.

Not sure it applies?

Whether a transaction falls under the reverse charge depends on the exact conditions. Send us a sample invoice and we will tell you what is required.