Glossary
Tax & invoicing

VAT reverse charge

Under the reverse charge, the business customer accounts for VAT on a cross-border B2B service instead of the supplier.

General information only, not legal, tax, financial or investment advice. Laws, rates and thresholds change often and depend on your situation, so check the official sources below and confirm with a qualified advisor before you act. Last reviewed September 2026.

Definition

Normally the supplier charges VAT and pays it to the tax office. For most cross-border services between businesses in the EU, the reverse charge moves that duty to the customer.12

How it works

When a VAT-registered creator in one EU country invoices a business in another, the creator usually invoices without VAT and notes "reverse charge".3 The business then declares the VAT in its own VAT return and can often deduct it at the same time, so the net cost is often zero.12

What an invoice needs

  • VAT ID numbers of both parties13
  • A note that the reverse charge applies3
  • No VAT amount charged2
  • The creator also reports the sale in its EC Sales List, where required1

Small businesses

Many creators are below their country's VAT registration threshold and do not charge VAT on domestic sales.1 In many EU countries, the invoice must then mention the small business exemption.3 For cross-border B2B services in the EU, the reverse charge still applies, and the creator usually needs a VAT ID.1

How Talentir helps

Talentir sets the VAT treatment on every invoice it issues, based on the tax details each payee provides. See accounting automation

Further reading

Self-billing

Self-billing means the buyer creates the invoice on behalf of the supplier, so creators do not have to write an invoice themselves.

DAC7 (EU platform reporting)

DAC7 makes digital platforms report what their sellers earn to EU tax authorities, including platforms outside the EU with EU-resident sellers.

What is a Merchant of Record?

A Merchant of Record (MoR) is the legal entity that is the counterparty to a transaction and generally carries the tax, invoicing and compliance obligations for it.

Liability in creator payouts

When a creator payout breaks tax or compliance rules, the business that paid can be held responsible. A Merchant of Record can take on much of that liability, within the limits of its contract and the law.

Sources

  1. EUR-Lex: Council Directive 2006/112/EC (VAT Directive), consolidated ↩ ↩2 ↩3 ↩4 ↩5 ↩6

  2. Your Europe: Cross-border VAT ↩ ↩2 ↩3

  3. European Commission: VAT invoicing rules ↩ ↩2 ↩3 ↩4

Tax & invoicing

VAT, invoice and platform reporting rules that apply when you pay people.

Self-billing

Self-billing means the buyer creates the invoice on behalf of the supplier, so creators do not have to write an invoice themselves.

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