VAT Reverse Charge: When Your Client Pays the Tax

Reverse charge means the buyer, not the seller, accounts for the VAT on the transaction. It is common in cross-border B2B services and prevents double taxation.

How it works

You issue the invoice without Swiss VAT and add a note that the recipient is liable for the tax under reverse charge. The buyer then reports the VAT in their own country instead of you paying it in Switzerland.

The mechanism moves both the output tax and the input tax to the buyer in a single step. The buyer declares the VAT and, if entitled, reclaims it in the same return.

From your side, the transaction is neutral: you charge no VAT and owe none. Your only job is to document the transaction correctly.

Reverse charge is not a loophole or a waiver. The tax is still collected, just by the other party and in the other country.

• Invoice without Swiss VAT.
• Add a reverse-charge note on the invoice.
• The buyer self-accounts for VAT in their jurisdiction.

When it applies

Reverse charge typically applies to services supplied to foreign VAT-registered businesses, and to certain domestic services like construction work where the recipient is itself VAT-registered.

In Switzerland, domestic reverse charge is used for specific sectors, notably construction and certain staffing services, to reduce fraud in cash-heavy industries.

The common thread is that the buyer is itself VAT-registered. If your customer is a private individual or a non-registered business, reverse charge does not apply.

Cross-border, the mechanism is essentially the default for B2B services. If in doubt, confirm the client’s VAT status before relying on it.

The note matters

The note should state that the supply is subject to reverse charge and that the recipient is liable for the tax. Keep it short, explicit and standardised.

Different countries phrase the reference differently, but the substance is the same. Use wording your client’s tax authority will recognise.

If the note is missing, an auditor may treat the supply as if Swiss VAT should have been charged. That can trigger a reassessment and interest.

Common mistakes

Applying reverse charge to a consumer sale is the most frequent error. It leads to unpaid tax and a correction later.

Failing to verify the client’s VAT number before invoicing is another. An invalid or missing number means you should charge Swiss VAT instead.

Recording reverse-charge sales in the wrong part of your VAT return is easy to do. Your software should have a dedicated category for such supplies.

facturio flags the distinction between domestic VAT, zero-rated exports and reverse-charge sales, so each invoice lands in the correct bucket automatically.