- VAT is an indirect tax on consumption where sellers add VAT to sale price and transfer money to tax authority
- Reverse charge mechanism shifts responsibility for reporting and paying VAT from supplier to customer
- In reverse charge transactions, customer pays VAT in VAT return instead of supplier adding it to sale price
- EU VAT directive differentiates between intra-community transactions and domestic transactions for applying reverse charge mechanism
- In intra-community supplies, liability of paying VAT on purchase is reversed from buyer to seller
Source: invopop.com
Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.
