The basic mechanism
For many cross-border B2B services, the business customer accounts for VAT in its own country. The supplier issues an invoice without charging that VAT and includes the required reverse-charge wording.
For German domestic transactions, reverse charge applies only to defined categories. It is not a general option businesses may choose.
Checks before invoicing
Confirm that the customer is acting as a business, validate the VAT ID where relevant and determine the place of supply. Keep the evidence with the invoice records.
- Customer legal name and address match.
- VAT ID validation is documented.
- Service description shows what was supplied.
- Invoice contains the required reference to reverse charge.
Where mistakes become expensive
Charging German VAT when another country has taxing rights can create repayment and correction work. Omitting VAT without meeting reverse-charge conditions can leave the supplier paying VAT out of the amount already received.
Frequently asked
Does reverse charge mean no VAT is paid?
No. The customer normally declares output VAT and may deduct input VAT under its local rules.
Do I always need the customer VAT ID?
For intra-EU B2B treatment it is important evidence and often a substantive requirement. The full facts still matter.
What wording belongs on the invoice?
The invoice should clearly state that the tax liability shifts to the recipient; the exact wording depends on the transaction.
This guide is general information on German tax law, not advice on your individual case. Rules and figures change with each tax year.