How EU B2B Trade Works: Reverse Charge VAT Explained for Importers

If you're buying goods from a supplier in another EU country, you've probably encountered the phrase "Reverse Charge VAT" on an invoice. It looks like a loophole — no VAT charged? — but it's actually the standard mechanism for intra-EU B2B trade. Here's how it works.

The Basic Concept

In domestic trade, the seller charges VAT and remits it to the tax authority. In intra-EU B2B trade, the VAT obligation is "reversed" — instead of the seller charging VAT in their country, the buyer accounts for VAT in their own country, at their own country's rate.

This means: when Nordic Refreshment (Sweden) sells to a VAT-registered business in France, no Swedish VAT is charged. The French buyer declares the VAT in their French VAT return — but they can immediately reclaim it as input tax, making it effectively a zero-cost transaction from a cash flow perspective.

The Legal Basis

Reverse Charge VAT on intra-EU B2B supplies is governed by Article 196 of the EU VAT Directive (2006/112/EC). You'll often see this referenced on invoices as "VAT 0% — Article 196 EU VAT Directive — Reverse Charge."

What You Need to Make This Work

  • Both parties must be VAT-registered in their respective EU countries
  • The buyer must provide a valid EU VAT number (verified via VIES)
  • The goods must actually cross a national border within the EU
  • The transaction must be between businesses (B2B) — not B2C

What Appears on the Invoice

Our invoices for EU export sales show:

  • VAT rate: 0%
  • VAT amount: €0.00
  • Reference: Article 196 EU VAT Directive
  • The buyer's VAT registration number

What Does NOT Apply

Reverse Charge VAT only applies to B2B transactions within the EU. Sales to:

  • Non-VAT registered buyers (B2C) require regular VAT treatment
  • Buyers outside the EU are handled as exports — different rules apply
  • UK buyers (post-Brexit) face UK import VAT and customs procedures

The Bottom Line

If you're a VAT-registered business in the EU importing from Nordic Refreshment, you won't pay Swedish VAT on your purchase. You'll account for VAT in your own country — and immediately reclaim it. Effectively, the transaction is VAT-neutral for you.

Questions about your specific situation? Consult your local accountant or tax adviser. Ready to start importing? Contact us. Related: Incoterms Guide | How to Import Nordic Drinks

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