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How does the reverse charge on VAT work?

The European Union introduced the reverse charge on VAT to simplify the tax reporting process for businesses. This mechanism shifts the burden of recording a VAT transaction from the seller to the buyer for cross-border supplies, eliminating the need for suppliers to register for tax in multiple EU countries. The buyer records both input and output VAT charges, canceling both entries, and reducing expenses. The reverse charge on VAT only applies to business-to-business transactions and is aimed at reducing bureaucratic costs and preventing criminal activity such as missing trader and carousel fraud. VAT4U offers an automated cloud platform to simplify the VAT recovery process.

Source VAT4u


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