As a general rule, VAT is due by the supplier and deducted by the customer. However, when the reverse charge applies, VAT is both due and deductible by the customer, who reports the VAT amount as output and input VAT in the VAT return. If there are no deduction limits, reverse charge has a nil effect for the client.
The rules on domestic reverse charge change from country to country and make it difficult for foreign businesses to comply with the correct VAT treatment. This section explains the reverse charge rules on supplies made by non-established companies and B2B reverse charge on services. Regarding the B2B rule and its EU wide application, we are also including information about Use and enjoyment rules, these rules can exceptionally deviate the general place of supply rules. Finally, we have also included a section on reverse charge on specific goods and services, as most member states foresee this regime for certain items that are often subject to VAT fraud.