What Is Reverse Charge VAT? A Guide for New Importers

The Simple Version

In a normal domestic sale, the seller adds VAT to the invoice and later pays it to the tax authority. In an EU B2B transaction, this process is reversed: instead of the Swedish seller charging Swedish VAT (25%), you — the buyer in your EU country — account for VAT in your own country's VAT return.

The practical effect: you receive an invoice with 0% VAT. You declare the equivalent VAT on your own VAT return — and immediately reclaim it. Net effect to your business: zero cost.

Why Does This System Exist?

It simplifies cross-border EU trade. If every EU seller had to register for VAT in every country they sold to, it would create massive administrative burden. Reverse Charge moves the VAT obligation to the buyer, who is already registered in their own country.

What You Need to Qualify

• Your business must be VAT-registered in your EU country
• You provide us with your valid EU VAT number (we verify it via VIES)
• The goods cross a national border within the EU
• It's a business-to-business transaction (not B2C)

What Appears on Our Invoice

Our export invoices show: VAT 0%, with the notation "Reverse Charge — Art. 196 EU VAT Directive." Your VAT number appears on the invoice. This is the correct, compliant format for intra-EU B2B supplies.

What You Need to Do

When you file your VAT return, you declare the purchase under the Reverse Charge mechanism. Your accountant or bookkeeper will handle this as a standard entry. If you've never done it before, it's a routine procedure that your accountant will be familiar with.

Questions? Contact us and we'll help clarify. Also read: Full EU VAT Guide for Importers | Incoterms Explained