Reverse Charge VAT Invoice: Wording, Examples and Rules (UK/EU)
How to issue a reverse charge VAT invoice in the UK and EU: when it applies, required wording, VAT numbers and worked examples for services and construction.
Quick answer: A reverse charge VAT invoice is an invoice on which the supplier does not charge VAT because the customer must account for it on their own VAT return. It shows a net total with no VAT added, includes both parties' VAT numbers where required, and carries clear wording such as "Reverse charge". It is used mainly for cross-border business-to-business services and for specific domestic sectors such as UK construction.
This guide explains when the reverse charge applies in the UK and EU, what a reverse charge invoice must show, the wording to use, and two worked examples. For the general rules of a full VAT invoice, start with our VAT invoice guide; this article goes deeper on reverse charge only. You can add the wording and VAT numbers in the notes and tax fields of our free invoice generator.
Important: This article is general information, not tax advice. VAT rules, wording requirements and reporting obligations differ between the UK and each EU member state and change over time. Confirm your treatment with HMRC, your national tax authority or a qualified VAT adviser before relying on it.
What the reverse charge is
Normally the supplier charges VAT, collects it from the customer and pays it to the tax authority. Under the reverse charge, that obligation shifts to the customer. The customer calculates the VAT on the purchase and declares it as output tax on their VAT return. If they are entitled to full recovery, they usually claim the same amount as input tax on the same return, so the net cost is often nil. They still have to report it.
The same mechanism works in reverse when you are the buyer. A VAT-registered UK business that buys most B2B services from a supplier outside the UK receives an invoice with no UK VAT on it, and must itself account for UK VAT on the purchase on its return, then reclaim it as input tax to the extent it is entitled. If you receive reverse charge invoices, make sure your bookkeeping records the VAT on both sides rather than ignoring the invoice for VAT purposes.
The mechanism exists for two main reasons. Cross-border, it saves foreign suppliers from registering for VAT in every customer's country. Domestically, it is used in sectors prone to "missing trader" fraud, where a supplier collects VAT and disappears before paying it over.
When the reverse charge applies
| Situation | Typical treatment | Who accounts for VAT |
|---|---|---|
| EU business supplies most B2B services to a business in another EU country | Reverse charge under the general place-of-supply rule | Customer, in their country |
| UK business supplies most B2B services to an EU business | Outside the scope of UK VAT; customer self-accounts locally | Customer, in their country |
| UK business buys most B2B services from a supplier outside the UK | Reverse charge on the UK VAT return | UK customer |
| UK construction services covered by the domestic reverse charge | Domestic reverse charge (since 1 March 2021) | Customer, if VAT- and CIS-registered and not an end user |
| UK sales of specified goods such as mobile phones and computer chips above HMRC's value limit | Domestic reverse charge | Customer |
| Some EU domestic sectors (varies by country, e.g. construction, scrap metal, emissions allowances) | National domestic reverse charge | Customer |
Business-to-consumer sales generally do not use the reverse charge, because consumers are not VAT-registered and cannot self-account. Exceptions to the general B2B services rule also exist, for example for some services connected with land and admission to events, which can be taxed where they physically take place.
Intra-EU goods are a related but different mechanism
When a VAT-registered business ships goods to a VAT-registered business in another EU member state, the supplier usually treats the sale as an exempt intra-Community supply and the customer accounts for acquisition VAT. It works similarly in practice, but the invoice wording differs (commonly "Exempt intra-Community supply"). Goods moving between Great Britain and Northern Ireland, and between Northern Ireland and the EU, follow special rules under the Windsor Framework, so take advice for those.
What a reverse charge invoice must show
A reverse charge invoice is a full VAT invoice with a few key differences:
- Your name, address and VAT registration number.
- The customer's name, address and VAT registration number, which is essential for intra-EU B2B services.
- A unique sequential invoice number and the invoice date, plus the supply date if different.
- A clear description of the goods or services, quantities and unit prices.
- The net amount, with VAT shown as 0 or not charged, and the amount payable excluding VAT.
- Reverse charge wording that explains why no VAT is charged.
- For the UK construction reverse charge, HMRC guidance also asks for the VAT rate and the amount of VAT the customer must account for, shown separately and not added to the total.
Validate EU customer VAT numbers before invoicing, typically through the European Commission's VIES service, and keep evidence of the check. Our guide to the tax ID on an invoice covers VAT number formats in more detail.
Reverse charge invoice wording examples
For intra-EU services, the VAT Directive requires the invoice to carry the mention "Reverse charge" (member states may accept the equivalent in their own language). HMRC offers example wording for the UK construction reverse charge. Commonly used phrasing includes:
- Intra-EU B2B services: "Reverse charge" or "Reverse charge: Article 196, Council Directive 2006/112/EC".
- UK supplier, B2B services to an EU customer: "Outside the scope of UK VAT. Reverse charge: customer to account for VAT in their country."
- UK construction reverse charge: "Reverse charge: customer to account for VAT to HMRC" or "Reverse charge: S55A VATA 94 applies".
- Intra-EU goods: "Exempt intra-Community supply" with the relevant legal reference used in your member state.
Treat these as starting points. The exact form required, and whether a legal reference is expected, depends on where you are registered.
Worked example 1: cross-border B2B services in the EU
An Irish design agency invoices a French company for website work. Both are VAT-registered, the service falls under the general B2B rule, and the agency has validated the French VAT number.
| Description | Qty | Unit price | Net |
|---|---|---|---|
| Website design and build | 1 | €3,500.00 | €3,500.00 |
| Accessibility audit (hours) | 5 | €100.00 | €500.00 |
- Net total: €4,000.00
- VAT: €0.00, with the wording "Reverse charge"
- Amount payable: €4,000.00
The French customer accounts for French VAT on €4,000.00 on its own return. The Irish agency reports the supply on its VAT return and, in most EU countries, on its EC Sales List (recapitulative statement) as well.
Worked example 2: UK construction domestic reverse charge
A VAT-registered plastering subcontractor invoices a main contractor that is VAT- and CIS-registered and has confirmed it is not an end user or intermediary supplier. The work is standard-rated at 20%.
| Description | Amount |
|---|---|
| Plastering labour, Units 1–4 | £6,500.00 |
| Plaster and materials | £1,500.00 |
| Net total | £8,000.00 |
| VAT at 20% to be accounted for by the customer | £1,600.00 |
| Amount payable (excluding VAT) | £8,000.00 |
The invoice carries the wording "Reverse charge: customer to account for VAT to HMRC". Any CIS deduction is a separate calculation on the labour element and is not the same thing as the reverse charge. Our construction invoice guide covers progress billing and retainage on the same kind of job.
Common reverse charge mistakes
- Charging domestic VAT by habit to a foreign VAT-registered business.
- Omitting the wording, which leaves the 0% VAT line unexplained.
- No customer VAT number, or a number that was never validated.
- Applying the reverse charge to consumers or to UK construction end users.
- Confusing reverse charge with zero rating or exemption, which are different treatments; see zero-rated vs exempt VAT.
- Forgetting the reporting side, such as the EC Sales List in the EU or the correct boxes on a UK return.
If a reverse charge invoice is wrong, correct it with a credit note referencing the original rather than editing the issued document. UK sole traders working with EU clients will find more context in how to invoice as a UK sole trader and invoicing international clients. Looking ahead, structured e-invoicing mandates will capture this treatment in machine-readable form; see our e-invoicing guide.
Create your reverse charge invoice now
Open the UK invoice generator, add both VAT numbers, set VAT to 0 for the reverse-charged lines and put the wording in the notes. The Corporate invoice template gives VAT numbers and notes a clear, prominent place, and you can compare other layouts in our invoice templates gallery. Always confirm the treatment with your adviser before sending.
Frequently asked questions
What wording should a reverse charge invoice include?
In the EU, the invoice must carry the mention 'Reverse charge'. In the UK, HMRC guidance for the construction domestic reverse charge gives example wording such as 'Reverse charge: customer to account for VAT to HMRC'. Check current official guidance for the exact phrase that suits your supply.
Do I charge VAT on a reverse charge invoice?
No. You do not add VAT to the amount payable. The customer accounts for the VAT on their own return. Some regimes, such as the UK construction reverse charge, expect the invoice to show the VAT rate and amount the customer must account for, without adding it to the total.
Do I need my customer's VAT number for the reverse charge?
For intra-EU business-to-business services you should show the customer's VAT number on the invoice and validate it, typically using the EU VIES service. It is your main evidence that the customer is a business that can self-account.
Does reverse charge apply to UK businesses selling services to EU customers?
For most business-to-business services, the place of supply is where the customer belongs, so the supply is outside the scope of UK VAT and the EU customer accounts for VAT locally. Exceptions exist, for example for some land-related and event services.
Is reverse charge the same as zero-rated?
No. A zero-rated supply is taxable at 0%. Under the reverse charge, VAT is still due at the normal rate; it is simply paid by the customer instead of the supplier.
Can I use the reverse charge if I'm not VAT registered?
Not in the usual sense, because you cannot issue a VAT invoice without a VAT number. A non-registered UK business supplying B2B services to an overseas customer simply issues a normal invoice without VAT, and the customer may still have to self-account in their own country. Check whether those sales affect your own registration position, and take advice before relying on this.
How does a UK business record a reverse charge purchase on its VAT return?
Generally, you enter the VAT you calculate on the purchase as output tax in box 1 and, if you can recover it, the same amount as input tax in box 4, so the net effect is often nil. How the purchase value goes into boxes 6 and 7 depends on whether it is a service bought from abroad or a domestic reverse charge, so check HMRC's guidance for your case.
What should I do if my customer's EU VAT number fails a VIES check?
Don't apply the reverse charge until the problem is resolved. Ask the customer to confirm the number and their registration status, as typos, recent registrations and deactivated numbers are common causes. If they can't provide a valid number, you may have to treat the sale as a supply to a non-business customer and charge VAT where it is due. Keep a record of every check.
Do UK businesses still file an EC Sales List?
Mostly not. Businesses in Great Britain stopped submitting EC Sales Lists for supplies made from 1 January 2021, after the Brexit transition period ended. Northern Ireland businesses still report certain goods supplied to VAT-registered customers in the EU under the Windsor Framework arrangements. EU businesses continue to file recapitulative statements for intra-EU B2B supplies under their national rules.
Does the reverse charge apply to digital services sold to consumers in the EU?
No. Consumers cannot self-account, so the supplier usually charges VAT at the rate of the customer's country. Many businesses use the EU One Stop Shop (OSS), or its non-Union scheme for suppliers outside the EU, to report and pay that VAT through one registration rather than registering in every member state. Check the thresholds and conditions that apply to your business.
Invoice Creator Editorial Team
Guides on invoicing, cash flow and small-business finance from Invoice Creator, operated by Next Software Development Company. Content is reviewed for accuracy against the fields our own invoice generator produces.
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