German VAT reverse charge

To help reduce the VAT compliance burden for EU companies trading in Germany (and all EU member countries) a VAT compliance simplification mechanism, the ‘reverse charge’, is used.  This allows the recording of any German VAT transactions to be pushed to the recipient of the goods or services.  This then means the foreign supplier has no need VAT register in Germany.

When is the German VAT reverse charge used?

The reverse charge mechanism is applied in the following circumstances:

  • The supply of services to a German VAT registered business (2010 VAT package).
  • Supply and install contracts.
  • Supply of certain types of power.
  • Other various minor goods.

What is the tax point for the German reverse charge?

The tax point (when the VAT is due) for the reverse charge is the end of the month following the month of supply.  However, if the vendor raised an invoice prior to the supply, then it is that date which should be used.

Need help with your German VAT compliance?

Researching German VAT legislation is the first step to understanding your VAT compliance needs. Avalara has a range of solutions that can help your business depending on where and how you trade. 

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