Reverse charge: when the VAT liability shifts to the customer

As of September 2026.

What is the reverse charge procedure?

The reverse charge procedure, in German Steuerschuldnerschaft des Leistungsempfängers, inverts the normal responsibility for VAT. Ordinarily the supplier charges the VAT, collects it from the customer and remits it to the tax office. Under reverse charge it is the recipient who owes the tax instead (§ 13b UStG).

The purpose is to protect the tax revenue. With foreign suppliers in particular, and in fraud-prone sectors, it would be difficult for the German tax office to collect the tax from the supplier. Collecting it from the recipient, who is assessed domestically anyway, is far simpler.

For the supplier this means invoicing net, with no rate and no tax amount. For the recipient it means calculating the tax themselves and declaring it.

When does reverse charge apply?

The cases are listed exhaustively in § 13b UStG. These matter most for freelancers and small businesses:

Selected reverse charge cases under § 13b UStG, as of September 2026.

Who owes the tax is governed by § 13b (5) UStG: in the cases of subsection 1 and subsection 2 nos. 1 to 3 it is the recipient, provided they are a business or a legal person. For construction work and building cleaning an extra condition applies: the recipient must themselves regularly provide such services, evidenced by a tax office certificate valid for at most three years.

Excluded are, among others, passenger transport, admission to trade fairs, exhibitions and congresses in Germany, and catering on board (§ 13b (6) UStG).

How do I write a reverse charge invoice?

Three things set it apart from a normal invoice:

1. No VAT shown. The invoice states only the net amount. § 14a (5) sentence 2 UStG expressly disapplies the rule on showing VAT separately.
2. The mandatory note. The invoice must contain the words "Steuerschuldnerschaft des Leistungsempfängers" (§ 14a (5) sentence 1 UStG). The wording is prescribed; "Reverse charge" on its own is not sufficient under German law.
3. All other mandatory fields of § 14 UStG still apply: invoice number, date, description of the supply, addresses and so on.

For cross-border services to businesses elsewhere in the EU two further requirements apply: the invoice must state both your VAT identification number and the customer's, and it must be issued by the 15th day of the following month (§ 14a (1) UStG). For a purely domestic case under § 13b (2) UStG, by contrast, § 14a (5) UStG requires only the note, not both numbers.

You can build the invoice itself with the invoice generator from Mein MwSt-Rechner: every mandatory field of § 14 UStG, as a free PDF. Add the sentence "Steuerschuldnerschaft des Leistungsempfängers" in the notes field.

How does the recipient account for the tax?

The recipient works the tax out from the net amount and declares it in their VAT return. In the same step they deduct the same amount as input VAT under § 15 (1) sentence 1 no. 4 UStG, provided they have a full right of deduction.

The net result is then no VAT payable. Declaring it is nonetheless mandatory even though the two amounts cancel out. Failing to do so risks back payments and interest. The input VAT guide explains how the VAT payable arises overall.

Reverse charge on services supplied to other EU countries

If you supply a service to a business in another EU state, § 3a (2) UStG shifts the place of supply to where the recipient runs their business. No German VAT arises; the customer owes the tax in their own country.

Example: you are a designer in Hamburg and invoice a business in the Netherlands 2.000,00 €. The invoice shows 2.000,00 € net, no rate, no tax amount, both VAT IDs and the note "Steuerschuldnerschaft des Leistungsempfängers". The Dutch customer accounts for the VAT in the Netherlands.

A reporting duty comes with it: such services belong in the EC Sales List filed with the Federal Central Tax Office, quarterly by the 25th day after the end of the quarter (§ 18a (2) UStG). Small businesses under § 19 UStG are exempt from the EC Sales List (§ 18a (4) UStG).

Reverse charge on services bought from abroad

This is the case that hits freelancers most often and is missed most often. As soon as you buy advertising, software, cloud services or consultancy from a supplier abroad, you owe the German VAT:

• Supplier elsewhere in the EU, for example Ireland: § 13b (1) UStG
• Supplier in a third country, for example the USA: § 13b (2) no. 1 UStG

Example: you buy services worth 100,00 € net from a software provider in the USA. You declare 19,00 € of VAT under § 13b UStG and deduct the same 19,00 € as input VAT. The VAT payable from this transaction is 0,00 €, but the declaration is still compulsory.

The supplier's invoice typically shows no tax and carries an English reverse-charge note. That is correct and does not change your duty to declare.

Reverse charge and small businesses

This is where the costliest misconception lies. The small-business scheme does not exempt you from the tax liability under § 13b UStG. If you buy a service from abroad as a small business, you owe the German VAT just like any other business.

Two consequences follow:

• No input VAT deduction. Because your own supplies are exempt under § 19 UStG, the input VAT deduction is blocked. The 19 % is a real cost to you, not a pass-through item.
• Filing duty. Anyone who owes tax solely under § 13b (5) UStG has to file a VAT return for it (§ 18 (4a) UStG). The general exemption from filing duties in § 19 (1) UStG expressly does not apply here.

If you buy advertising through foreign platforms as a small business, this is a point to settle with your tax adviser. More on the scheme itself in the small-business guide.

Common mistakes

• Showing VAT by mistake. Anyone who shows VAT on a reverse charge invoice owes that amount in addition under § 14c UStG. The invoice has to be corrected.
• Missing the note. Without the words "Steuerschuldnerschaft des Leistungsempfängers" the invoice is formally incomplete.
• The customer's VAT ID is missing or invalid. For EU supplies it belongs on the invoice and should be validated beforehand.
• Forgetting the EC Sales List. The filing is a separate obligation and is frequently overlooked.
• Not declaring services bought abroad. The classic error with advertising and software invoices from foreign suppliers.

Sources

• § 13b UStG – recipient as the person liable for the tax
• § 14a UStG – additional obligations for special transactions
• § 14c UStG – incorrect or unauthorised statement of VAT
• § 3a UStG – place of supply of services
• § 15 UStG – input VAT deduction
• § 18a UStG – EC Sales List
• § 19 UStG – taxation of small businesses