EU, abroad & reverse charge · 5.1

What is Reverse Charge (§ 13b UStG)?

Short answer

Under the reverse-charge mechanism, tax liability is reversed: not the service provider, but the customer owes the Umsatzsteuer (VAT). This happens primarily when your GmbH purchases services from companies abroad, or when it provides services to businesses in the EU.

Key points

Your GmbH purchases (most common case)

A foreign company issues you an invoice without German Umsatzsteuer.
Your GmbH calculates the Umsatzsteuer itself and reports it in the advance VAT return (Umsatzsteuervoranmeldung).
At the same time, it deducts the amount as Vorsteuer (input tax). At the end of the day, you usually pay nothing, but you must report it.
Kleinunternehmer (small business owners) also report the tax, but are not allowed to deduct it as input tax.

Your GmbH sells to EU businesses

Your invoice contains no Umsatzsteuer; your customer taxes it in their own country.
More on this in the next video.

There are also domestic reverse-charge cases, for instance with construction services. They are rare for digital business models.

Legal basis

§ 13b UStG§ 15 Abs. 1 Nr. 4 UStG§ 3a Abs. 2 UStG

Continue

Next video: How do I invoice a company in the EU?
Related: Google, Meta, AWS: Why Do I Report VAT on Them?

With Pluto

Pluto detects reverse-charge invoices and enters them correctly into your advance VAT return.

Try it for free

← Back to topic