EU VAT reverse charge for freelancers: when to invoice without VAT

The basic rule: where is a service taxed?

For most services, EU VAT follows a simple split:

• Business customers (B2B): the service is taxed where the customer is established (Article 44). If that is another EU country, you do not charge your own country's VAT; the customer self-assesses it under the reverse charge.
• Private customers (B2C): the service is generally taxed where you are established (Article 45), so you charge your normal domestic VAT, with important exceptions for digital services described below.

Some services follow special rules whatever the customer type, for example services connected with land or buildings, admission to events, passenger transport and restaurant services. Check these before applying the general rule.

When does the reverse charge apply?

For a typical freelance service such as consulting, software development, design, marketing, writing or translation, the reverse charge applies when all of these are true:

1. You are a business established in one EU country and supply a service taxed under the general B2B rule.
2. Your customer is a business (a taxable person) established in a different EU country.
3. You have evidence of business status, normally a valid VAT number you have checked in VIES, kept with the date of the check.

Each country has its own name for the reverse charge: Steuerschuldnerschaft des Leistungsempfängers (Germany, § 14a UStG), inversión del sujeto pasivo (Spain), autoliquidation (France) and btw verlegd (Netherlands).

What a reverse-charge invoice must show

On top of the normal invoice details, a reverse-charge invoice should include:

• your VAT number and your customer's VAT number;
• the net amount, with no VAT charged (shown as €0.00 VAT);
• the words "Reverse charge" (Article 226(11a)); many freelancers add the local phrase and "Article 196 VAT Directive";
• the date of supply and a clear description of the service.

Article 196 invoice wording & templates

Under Article 226(11a) of Directive 2006/112/EC, you must explicitly mention the reverse charge mechanism on the invoice. To ensure audit-readiness across the EU, include the explicit Article 196 reference:

The invoicing rules of your own country (the supplier's) decide the required mention. Each country has its own short statutory phrase; the sentences below contain it plus a reference to Article 196:

Reporting: VAT return and EC Sales List

Reverse-charge sales still have to be reported. You declare them in your periodic VAT return, in the line for EU services not taxed domestically, and in the recapitulative statement (EC Sales List), which lists each customer's VAT number and the amount:

Filing frequencies and deadlines differ by country, and totals should match the VAT return. National tax authorities cross-check these lists with the customer's declarations.

Consumers, digital services and the OSS

Selling to private individuals in other EU countries works differently. For most freelance services to consumers you charge your own country's VAT. For electronically supplied services (for example downloads, online courses delivered automatically, software or SaaS), telecommunications and broadcasting, VAT is due in the customer's country once your EU-wide cross-border B2C sales of these services and distance sales of goods exceed €10,000 a year.

Instead of registering in every country, you can declare that foreign VAT quarterly through the One-Stop Shop (OSS) in your home country. Below the threshold you may keep charging your domestic VAT. Custom work delivered by email, such as a designer sending a logo, is generally not an electronically supplied service, because it involves substantial human input.

Clients outside the EU (including Switzerland, the UK & the US)

For B2B services under the general rule, a customer established outside the EU (such as the UK, the US or Switzerland) means the supply is generally outside the scope of EU VAT, so you invoice without VAT. There is no VIES number to check, so keep other evidence that the client is a business, such as a company registration, a local tax number or a signed contract. Some countries expect a note on the invoice, and the customer may owe VAT in its own country.

A non-EU address alone does not make every supply zero-rated. Consumers outside the EU, special services and use-and-enjoyment rules in some member states can change the result.

The reverse charge on what you buy

The rule also works the other way. When you buy a service from a supplier in another country who charges no VAT, such as a software subscription, advertising or a subcontractor, you usually self-assess your country's VAT on it. With full deduction rights you declare and deduct it in the same return, so the net cost is zero, but it must still appear on the return.

How SoloTreasury records VAT treatment

1. Configure your VAT position. In the Control Center, set your country, whether you charge VAT, your OSS status and your cash or accrual timing.
2. Review the suggested treatment. Smart Invoicing suggests a VAT treatment in column F from the client country, VAT ID and your settings; you confirm it or choose another from the dropdown. Column L calculates the standard rate for the invoice date and column R suggests an invoice note.
3. Capture purchases. In the Expense Ledger, column K records reclaimable VAT, W flags a foreign supplier that charged no VAT, and X calculates the reverse-charge VAT.
4. Trust the checks, then verify. Row checks flag invalid treatment or rate data and a missing VAT ID on a reverse-charge row.

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