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German VAT Reverse Charge

The "Reverse Charge System" was introduced in Germany following an EU VAT Directive. The Reverse Charge states that the VAT for many kinds of services provided within Germany by a foreign company or provided by a German VAT-registered company to a company in another EU state, is owed by the recipient of the service and not by the service provider. Germany does not use the Reverse Charge System for the delivery of goods (in comparison to many other EU states).

If Reverse Charge is relevant, VAT is not charged on invoices to the recipient. On the invoice there must a clear statement referring to the liability for the VAT payment of the recipient as well as the inclusion of the EU VAT ID No. of the recipient.

The recipient of the service has to calculate, report and pay the VAT (normally this VAT is recoverable for the recipient if he is VAT registered). If a foreign company receives a service which is subject to the German VAT Reverse Charge System, the foreign company must register for German VAT and report the received Reverse Charge Service.

If you have any questions about the German Reverse Charge System or if you require a service, please contact us by email at