What is the VAT reverse charge?

The fundamental principle of intra-EU VAT accounting is the destination principle – services and goods are generally taxed in the country where they are consumed.

To avoid requiring every business to register in a foreign country for each cross-border transaction, the reverse charge mechanism is used. Under this system, a VAT-liable person from one country can sell goods or services to a VAT-liable person in another country at a 0% VAT rate, and the recipient of the goods or services accounts for the VAT in their home country based on the rates applicable there.

The condition for such transactions is that both the buyer and seller must have valid VAT numbers.