June 15, 2022
How does VAT reverse charge work?
Normally you make a sales invoice in which the total amount includes VAT. Your customer then pays the VAT and you as supplier pay it to the tax authorities. Now it is also possible to transfer the VAT to your customer. Then you as a seller do not charge VAT and you as a seller do not have to pay anything to the tax authorities.
How do you reverse charge VAT on the invoice?
A sales invoice with reverse charge VAT looks slightly different. First of all, the amount on the invoice is of course exclusive of VAT. In addition, you must clearly state that the VAT is reverse-charged. For example, you can put "reverse charge VAT" or "VAT reverse charge" on the invoice. The tax authorities also require you to state your customer's VAT identification number on the invoice.
How do you file a tax return in case of reverse charge VAT?
- VAT has been transferred to me.
If VAT is passed on to you in the Netherlands, you must report this in section 2 'reverse charge mechanism in the Netherlands'. Has VAT been transferred to you from suppliers outside the Netherlands? Then you must declare this in Section 4 ‘Supplies/services from abroad to you'.
- You have reverse-charged VAT to a customer.
In the case of a Dutch customer, you indicate this in Section 1e 'Supplies/services taxed at 0% or not taxed to you'. When reverse-charging VAT to a foreign customer you use heading 3 Supplies/services to or in a foreign country'.
So reverse-charging VAT is not that complicated at all. You just need to make sure you prepare the invoice properly and declare the VAT in the correct section.