German VAT section 13b explained: a practical reverse-charge example

For an ordinary taxable domestic supply, the supplier invoices its fee plus VAT and owes that tax. In a qualifying reverse-charge transaction, the recipient becomes liable. It must classify the transaction, calculate the applicable tax and account for it in the relevant tax filings.

Common categories include certain cross-border services and certain construction or building-cleaning services. Their conditions differ. For domestic construction services, one relevant issue is whether the recipient sustainably provides corresponding services itself. Not every building job qualifies, and not every foreign invoice falls under section 13b.

A German agency purchases business consultancy from an ordinarily taxed Irish supplier. Assume the general B2B place-of-supply rule puts the service in Germany, no German establishment of the supplier participates, and no exemption or special place-of-supply rule applies. The fee is €1,000 and German VAT is 19% in this illustration.

The agency pays €1,000 to the supplier and accounts for €190 German reverse-charge VAT. If all conditions for full input VAT recovery are met, it also deducts €190 input VAT. The tax amounts then offset, but the transaction still needs to be recorded and declared.

The result is not automatically zero if the service supports activities that exclude input VAT deduction. With no recovery entitlement in the example, the €190 remains a tax burden. Mixed use may require apportionment. The statutory conditions determine this, not the invoice’s label.

A business using Germany’s small-business exemption can also owe recipient VAT on a qualifying purchase. Exemption of its own turnover does not automatically remove this obligation. If the service exclusively supports its exempt section-19 turnover, the corresponding input VAT is generally not deductible. Both the supplier payment and the tax payment then belong in the cash forecast.

Where German invoicing rules apply, section 14a(5) UStG requires the wording “Steuerschuldnerschaft des Leistungsempfängers” for the recipient-liability cases it covers, without separately stating VAT. Cross-border invoices require a check of the applicable invoicing jurisdiction; an English notice may read “Reverse charge”.

A missing notice does not automatically cancel a statutory tax liability. Equally, printing a notice does not turn an ordinary supply into reverse charge. Incorrectly charged VAT needs professional review and, where necessary, an invoice correction. Do not simply process it as ordinary deductible input VAT.

Keep the classification with the transaction. A reviewed template can help with recurring services, but changes in supplier, service or use require reassessment. These steps organize the review; they do not constitute automatic tax clearance.

accuno supports invoice-data capture and a controlled handover to accounting or a German tax advisor. An extracted supplier address or tax amount does not establish the place of supply or the recipient’s relevant status.

Keep the contract, invoice and classification together. Agree the appropriate posting code with your advisor. This preserves the explanation for why an invoice with no VAT shown nevertheless appears in VAT processing.