With reverse-charge VAT the supplier does not charge VAT; the customer has to declare it instead. You see it in certain domestic schemes and with business services inside the EU.
When you reverse-charge to your customer
State on the invoice that the VAT is reverse-charged, and show your customer’s VAT number. You do not charge VAT yourself. In your administration you record the invoice with the type ‘VAT reverse-charged to the customer’, so the amount is reported separately in your return.
When the VAT is reverse-charged to you
The purchase invoice then shows no VAT. You declare the VAT yourself in the return and may deduct the same VAT in the same return as input VAT, provided you are entitled to it. So you pay nothing extra on balance, but the amounts must be in both boxes.
What to keep
- The invoice stating the reverse charge.
- The VAT number of the customer or supplier.
- For supplies or services inside the EU: the details for the ICP statement.
In Moonlight Bookkeeping you choose the VAT type per invoice. Reverse-charged VAT is shown separately and cancels itself out where the rules require it. You see how it ends up in your VAT return per box.
This guide is general information, not tax advice. Check the current rules for your situation with the tax authority or your bookkeeper.