VAT reverse charge

VAT reverse charge is a VAT system where the buyer, not the seller, is responsible for reporting and paying VAT on a purchase. Instead of the supplier charging VAT on the invoice, the buyer calculates the VAT due and reports it both as VAT they owe and VAT they can reclaim on their VAT return. This method helps prevent VAT fraud and simplifies tax for cross-border or certain domestic transactions.

For example, if you buy services from a foreign company, you account for VAT on that purchase yourself rather than the supplier charging it.