VAT Special: Reverse charge procedure

What is the reverse charge procedure about?

§ Section 13b UStG stipulates that the tax liability for certain cross-border and purely domestic transactions is transferred to the recipient of the service. The supplier may invoice "net" and the recipient must declare the VAT to the tax office themselves. If the recipient is entitled to deduct input tax, there is no payment burden for him.

The aim of this reverse charge procedure is to avoid tax fraud. However, due to the fact that the regulations have not yet been fully harmonized, companies often face practical problems with the cross-border reverse charge procedure. The standardization from mid-2028 through the so-called ViDA initiative is intended to remedy this. But even in purely domestic reverse charge cases, there are often uncertainties in practice, for example when it comes to the question of what actually constitutes a construction service or scrap.

Legal basis in the VAT Directive and the UStG

The cross-border reverse charge procedure

• Difference between residency and registration.
• Purchasing work supplies and services from abroad.
• Provision of services abroad (delivery of goods, work/assembly deliveries, services).
• Planned changes due to the ViDA initiative as of 01.07.2028.

The domestic reverse charge procedure

• Transfer of tax liability for construction services (including definition of construction services, handling of the VAT 1 TG certificate and differentiation from construction withholding tax).
• Delivery of scrap and waste (including offsetting against disposal services).
• Supply of certain metals.
• Supply of cell phones, tablets and integrated circuits.
• § 13b UStG for e-charging.

Individual questions

• Correct invoicing (VAT number, e-invoicing obligation, information texts).
• Reporting obligations for the domestic and cross-border reverse charge procedure (advance VAT return and ZM).
• Requirements and timing of input tax deduction in the reverse charge procedure.
• Consequences of incorrect application or non-application of the reverse charge procedure.
• Non-objection rule.
• Current case law and administrative directives.