Term
What is reverse-charge VAT (btw verlegd)? Meaning and explanation
Reverse-charge VAT (btw verlegd) means the customer, not the supplier, declares and pays the VAT; the invoice then shows no VAT amount but the statement 'btw verlegd' (VAT reverse-charged).
Definition
Reverse-charge VAT (btw verlegd) means the customer, not the supplier, declares and pays the VAT; the invoice then shows no VAT amount but the statement 'btw verlegd' (VAT reverse-charged).
Also known as: Btw verlegd, Verleggingsregeling, Reverse charge, Verlegde btw
Under the reverse-charge mechanism, the obligation to pay VAT shifts from the supplier to the customer. The supplier invoices without VAT and states 'btw verlegd' and the customer's VAT number. The customer declares the VAT in its own return and, if entitled to deduction, deducts it as input VAT in the same return. Well-known situations are subcontracting in construction and services from businesses in other EU countries.
For a firm, reverse-charge VAT is a recurring point of attention. An invoice without VAT can be reverse-charged, but also exempt or zero-rated, and those situations are treated differently in the return. If reverse-charge VAT is not booked as such, the VAT due is missing from the return, or VAT is deducted that was never declared.
Autoboeker recognises reverse-charge VAT as part of VAT recognition, for all four connected packages. It detects whether a supplier is within or outside the EU, checks VAT numbers via VIES and flags deviating VAT codes and missing VAT. This prevents an invoice without VAT from being silently booked at 0%. International VAT situations and ICP are supported as well.
Example
A painting company works as a subcontractor for a contractor and invoices 10,000 euros stating 'btw verlegd'. The contractor declares the 2,100 euros of VAT itself and deducts it at the same time.
FAQ
Questions about reverse-charge VAT (btw verlegd).
Among others, for subcontracting in construction, for certain supplies such as mobile phones and computers above a threshold, and for services from a business in another EU country to a Dutch business.
With reverse charge, VAT is due, but the customer declares it. With the zero rate, no VAT is due, for example on exports outside the EU.
Further reading
Related in the knowledge base.
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