European Union Reverse Charge Risks for Non-Resident Suppliers

• Under the EU VAT Directive, the reverse charge can shift VAT liability from the supplier to the customer when the supplier is not established in the Member State where VAT is due.
• The optional reverse charge under Article 194 is highly fragmented across Member States: each country sets its own conditions on the type of supply, the supplier’s establishment/registration status, and the customer’s status.
• Examples show major differences: Germany applies it only to certain goods installed/assembled on site, while France covers all goods; Poland requires the foreign supplier not to be established or VAT-registered in Poland and limits it to customers established in Poland.
• If a transaction meets the conditions, the reverse charge becomes mandatory; errors can trigger denial of input VAT deduction, penalties, late-payment interest, and other assessments.
• Businesses should verify the supply type, customer characteristics, local Member State rules, and invoice wording/legal references before invoicing.

Source: vatdesk.eu

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.

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