The invoice comes back with a friendly line from accounts payable: please reissue without VAT. Or the other way round, asking you to add the missing 19 per cent. Both happen regularly, and both have the same cause. On a service to a business abroad, VAT does not follow where you sit, it follows where the client sits and what the client is.
Who owes the tax, case by case
The place of supply decides, and for services to businesses it sits at the client's establishment. That produces a short table covering almost every case in UGC.
| Client | VAT on the invoice | What belongs on the invoice |
|---|---|---|
| Business in Germany | Yes, 19 per cent | Standard invoice details |
| Business in the EU with a valid VAT number | No | Both VAT numbers and the reverse-charge note |
| Business outside the EU | No | A note that the service is taxable abroad |
| Private individual in the EU | Yes, 19 per cent | Standard invoice details |
The second row is the one everybody means, and it is tied to conditions. The fourth surprises many: with a private individual it is not the client's residence that counts but your own establishment, and German VAT stays on the invoice.
Why this has nothing to do with preference
You cannot pick which version you issue. Charging 19 per cent to a French agency produces a wrong invoice, and charging nothing to a French private individual does too. Both get noticed, usually by the other side's accounting.
The three conditions of reverse charge
For the tax liability to move to the client, three things have to hold at once. If one is missing, you owe the tax yourself.
- The client is a business. A brand, an agency, a shop: yes. A private individual: no, even inside the EU.
- The VAT identification number is valid. Not "we have one on file", but valid at the time of supply, and that is checked with the Federal Central Tax Office.
- The invoice carries the note. Without the reference to the recipient's liability for the tax, the invoice is formally incomplete.
The check you document
Querying the number is free and takes a minute. What matters is keeping the result, because the review comes later, and then it is not memory that counts but evidence.
A qualified confirmation, which also matches name and address, is the record to file. A dated screenshot is enough in practice, as long as it shows the query.
What has to be on the invoice
The usual mandatory details still apply, and three items are added.
Your own VAT identification number. In this case it replaces the tax number, and it is applied for at the Federal Central Tax Office, free of charge.
The client's VAT number. In full, not abbreviated, in the form that was checked.
The reverse-charge note. It may appear in the language of the invoice. What matters is not the wording but that it is unmistakable that the client owes the tax.
What you leave out
A tax rate. A tax amount. A line reading "0 % VAT", which looks as though you applied a zero rate that does not exist. The amount stands there net, and the note explains why.
The return almost everybody forgets
Anyone supplying businesses elsewhere in the EU additionally files a recapitulative statement, listing those transactions with the client's number.
It has nothing to do with the VAT pre-return and does not replace it. It goes to the Federal Central Tax Office, electronically, on its own deadlines.
And here is the surprise for small businesses: the small-business rule exempts you from VAT on your own invoices, not from this reporting duty. A small business supplying an EU agency still needs its own VAT identification number and still reports the transaction.
When the invoice is already out and wrong
The most common case, and it is repairable as long as you do not wait.
Charged too much. You billed an EU agency 19 per cent although reverse charge applied. The invoice is cancelled and reissued, with both numbers and the note. The client pays the net amount, and the over-stated tax is corrected through your own return. As long as an invoice showing tax is in circulation, you owe the amount shown.
Charged too little. You invoiced without tax although a condition was missing, usually an invalid number. This is where it gets uncomfortable, because the tax has arisen and the client did not budget for it. You claim it, and whether that works depends on the relationship. If it does not, you carry it.
Why speed matters here
A correction inside the same return period is a booking. The same correction a year later is an adjustment that needs explaining, and by then the client is often no longer willing to accept a claim on something they closed long ago.
Sources
- Section 3a UStG, place of supply of services
- Section 14a UStG, additional duties in special cases
- Section 18a UStG, recapitulative statement
- Federal Central Tax Office, VAT identification number
Checked on 8 September 2026. This guide is not tax advice. Where this guide and the official source disagree, the source prevails.
