EU-wide trade via Germany: When does the reverse charge procedure apply?

The Reverse charge procedure (reverse charge mechanism) is a special regulation in VAT law that is used in particular for cross-border transactions within the EU. It means that it is not the Performing party (seller)but the Beneficiary (buyer) pays the sales tax in his country.

1 When does the reverse charge procedure apply in Germany?

The reverse charge procedure applies in Germany for certain transactions, in particular:

- Intra-Community B2B deliveries (sale of goods between companies in different EU countries)
- Intra-Community services (e.g. consulting, software development, marketing)
Certain sales in Germany if the recipient of the service is liable to pay VAT in Germany
Supplies and services from foreign companies to German companies

Important:

  • The reverse charge procedure only applies to B2B transactions between two companies subject to VAT.
  • The beneficiary must have a have a valid sales tax identification number (VAT ID).

2. reverse charge for deliveries of goods within the EU

The reverse charge procedure applies to intra-Community suppliesif:
- The seller a Company in an EU country is.
- The buyer a Company in another EU country with valid VAT ID is.
- The goods are physically transported from one EU country to another.

How is the invoice issued?

  • The seller shall provide a Net invoice (without sales tax) from.
  • Reference to the reverse charge procedure (e.g. "tax liability of the recipient of the service").
  • Buyer must charge & pay VAT in his country.

Example:
A company in Germany sells goods to a company in France.

  • The seller in Germany issues an invoice without 19 % German sales tax from.
  • The buyer in France must calculate the French VAT & report it to the tax office.

3. reverse charge for services within the EU

With cross-border services the reverse charge procedure applies if:
Service is provided to a company in another EU country.
- The service recipient is an entrepreneur with a valid VAT ID.
Services fall under the "general clause" of Art. 44 of the VAT System Directive (VAT Directive).

Which services are affected?

  • Consulting services (e.g. legal advice, management consulting)
  • Marketing & advertising services
  • Software & IT services
  • Agency services
  • Leasing of machines
  • Electronic services (e.g. cloud software)

How is the invoice issued?

  • The service provider shall provide a Net invoice (without sales tax) from.
  • Reference to reverse charge, e.g: "Tax liability of the recipient of the service" in accordance with § 13b UStG.
  • The recipient must calculate & report the VAT in his country.

Example:
A Spanish marketing company provides a service for a German company.

  • The Spanish company issues an invoice without sales tax from.
  • The German company must use the German 19 % Value added tax calculate yourself & report to the tax office.

4. reverse charge for foreign companies in Germany

If a Foreign company without registered office in Germany provides a service, the reverse charge procedure applies if:
- The receiver a Companies in Germany is.
- The benefit would be taxable in Germany.
- The Service provider not based in Germany is.

Examples of services for which reverse charge applies in Germany:

  • Construction services for German companies (§ 13b para. 2 no. 4 UStG)
  • Supply of gas & electricity
  • Telecommunications services
  • Certain assemblies & work deliveries
  • Digital services from non-EU providers (e.g. Google Ads, Facebook advertising)

Important for foreign dealers:

  • If you you store physical goods in Germany or sell them to German customersapplies no reverse charge - you must register for VAT in Germany!
  • If you digital services to German private customers sell, the OSS procedure (one-stop store).

5. reverse charge for marketplace sellers (Amazon, eBay, Shopify)

If you are a foreign online retailer via Amazon FBA or eBay goods to Germany, the following applies no reverse charge. Instead, you must:
Apply for a German VAT ID.
Calculate & pay the 19 % sales tax yourself.
- If you have sell a marketplacea Certificate according to § 22f UStG submit.

Exception: If you are a EU dealers via the OSS procedure (one-stop store), you can process German VAT via your home country.

6 When does reverse charge not apply?

  • No reverse charge for sales to private customers (B2C)
  • No reverse charge for storage in Germany (e.g. Amazon FBA)
  • No reverse charge for domestic German transactions

7. reporting & accounting for the reverse charge procedure

For the seller:

  • Issue invoice without VAT
  • Reverse charge in the Advance sales tax return enter (line 41 ELSTER)
  • Intra-Community supply in the Summary declaration (ZM) specify

For the buyer:

  • Calculate VAT in your own tax return & pay it to the tax office
  • If entitled to deduct input tax → the tax can be deducted directly as Deduct input tax

Tip: If you regularly do international businessa Automated tax solution such as Taxdoo, Avalara or Hellotax help.

When do you have to apply the reverse charge procedure?

Intra-Community supplies & services (B2B within the EU)
Services provided by foreign companies to German companies
Certain construction & telecommunications services in Germany
Digital services from non-EU companies to German companies

No reverse charge for sales to private customers (B2C)
No reverse charge if you store & sell goods in Germany (Amazon FBA, Shopify, eBay)

  • No reverse charge for sales to private customers (B2C)

  • No reverse charge if you store & sell goods in Germany (Amazon FBA, Shopify, eBay)

Do you have a specific question about reverse charge for your business model?

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