Reverse charge in Germany under section 13b UStG: when you owe the VAT

The essentials in brief

• Basic rule: the recipient owes the tax if they are a business or a legal entity (section 13b (5) UStG).
• Typical cases: services of a business from the rest of the EU (para. 1); works supplies and services of a business established abroad (para. 2 no. 1); construction services (no. 4); building cleaning (no. 8); telecommunications services (no. 12).
• Invoice: for services under section 13b (2) the supplier must state "Steuerschuldnerschaft des Leistungsempfängers" (reverse charge) and does not show VAT separately (section 14a (5) UStG).
• Input VAT: the tax under section 13b (1) and (2) is deductible as input VAT (section 15 (1) no. 4 UStG).
• Small businesses: they too owe the tax as recipient (section 13b (5) UStG) and file returns for it (section 18 (4a), section 19 (1) sentence 2 UStG).
• When it arises: for para. 1 at the end of the return period of the service; for para. 2 when the invoice is issued, at the latest at the end of the following month (section 13b (1) and (2) UStG).

What does reverse charge mean?

Normally the supplier owes the VAT and shows it on the invoice. Under section 13b UStG it is the other way round: the recipient owes the tax. In the cases of section 13b (1) and (2) nos. 1 to 3 this applies if the recipient is a business or a legal entity; in some other cases (for example no. 5 letter a, 6, 7, 9 to 11) only if the recipient is a business (section 13b (5) sentence 1 UStG).

Typical cases at a glance

Construction services and building cleaning have a special condition: you owe the tax only if you are a business that regularly provides such services; the law assumes this if your tax office has issued you a time-limited certificate (section 13b (5) UStG). For telecommunications services (no. 12) you owe the tax only if you are a business whose main activity regarding the purchase of these services is providing them and whose own consumption of them is of minor importance (section 13b (5) UStG). Whether your case is on the list is best checked by a tax adviser.

Example: a service from another EU country

You are a business in Germany and buy an advertising service from a business in another EU country. The invoice says 1,000 euros net, no VAT, with the note that the recipient owes the tax.

The example is an illustration. It shows why the reverse charge is usually a zero-sum item for businesses with full input VAT deduction – but you must still report the transaction in the return. More on deduction: input VAT deduction: conditions and exclusions.

What must be on the invoice?

If a business performs a service under section 13b (2) for which you owe the tax under para. 5, it must issue an invoice stating "Steuerschuldnerschaft des Leistungsempfängers". The rule on showing the tax separately does not apply then (section 14a (5) UStG). If the supplier is established in another EU country, the invoicing rules of that state generally apply (section 14 (7) sentence 1 UStG). How an invoice is otherwise built is in mandatory invoice details in Germany.

Input VAT from the reverse charge

The tax for services within section 13b (1) and (2) performed for your business is deductible as input VAT (section 15 (1) sentence 1 no. 4 UStG). As with all input VAT, the exclusions of section 15 UStG apply, for example if you use the service for tax-exempt turnover.

Reverse charge as a small business

As a small business too you can owe the VAT as recipient. For the return periods in which you have to declare this tax you file an advance return, plus the annual VAT return (section 18 (4a) UStG; section 19 (1) sentence 2 UStG leaves this duty untouched). You have no input VAT deduction as a small business, because your turnover is exempt (section 19 (1), section 15 (2) sentence 1 no. 1 UStG). More: advance VAT return for small businesses.

Common mistakes

• Not reporting the tax. Whoever owes the tax must declare it in the return, even if the invoice shows no VAT.
• Forgetting the input VAT. It is deductible under the general conditions (section 15 (1) no. 4 UStG).
• Overlooking the condition for construction and cleaning. The recipient's liability depends on regularly providing such services (section 13b (5) UStG).
• Assuming a small business has nothing to report. As a recipient you owe the tax anyway (section 13b (5), section 18 (4a) UStG).
• Mixing up the timing. For para. 1 the performance counts, for para. 2 the invoice or the following month (section 13b UStG).

How it works with VAT GPT

Reverse-charge invoices from abroad reach your return in three steps:

1. Upload files: your Amazon or eBay CSV reports and your invoices. The AI reads amounts, countries and tax rates.
2. Check the result: if VAT GPT classifies an invoice from a supplier established abroad as reverse charge, it calculates the tax at the German standard rate of the period, enters it as VAT due and as input VAT, and assigns it to the matching fields of the return. You check and confirm.
3. Send: with VAT GPT Pro via ELSTER directly to the tax office.

Everything is in one place: VAT return, annual VAT return, OSS return, EÜR, trade tax and income tax return. With Go you use all Pro features free of charge for 30 days. Get to know VAT GPT or create an account right away.

What VAT GPT does not do

• VAT GPT is not tax advice, for example on whether a transaction falls under section 13b UStG.
• The AI reads amounts, countries and tax rates; you check and confirm the result.

What does VAT GPT cost?

Free (basic features, free of charge), Go (30 days free with all Pro features), Pro €49 per month or €444 per year, each including VAT.

Frequently asked questions

What does reverse charge under section 13b UStG mean? The recipient owes the VAT instead of the supplier (section 13b (5) UStG).

Do I pay reverse-charge VAT if I can deduct it as input VAT? You report it and deduct it again if the conditions are met; with full input VAT deduction no payment remains for the transaction.

What must the supplier write on the invoice? "Steuerschuldnerschaft des Leistungsempfängers" (section 14a (5) UStG).

Does reverse charge apply to small businesses? Yes, a recipient who owes the tax must declare it even as a small business (section 13b (5), section 18 (4a) UStG).

Does section 13b UStG apply only to supplies from abroad? No. Some cases concern domestic turnover too, for example construction services and building cleaning (section 13b (2) nos. 4 and 8 UStG).

When does the tax arise? For para. 1 at the end of the return period of the service, for para. 2 when the invoice is issued, at the latest at the end of the following month.

Further reading

• File a VAT return online in Germany
• Advance VAT return for small businesses in Germany
• Input VAT deduction: conditions and exclusions
• Mandatory invoice details in Germany

Not tax advice: the content does not replace individual advice.

Sources

• Section 13b UStG (in German)
• Section 14a UStG (in German)
• Section 14 UStG (in German)
• Section 15 UStG (in German)
• Section 12 UStG (in German)
• section 18 UStG (in German)
• section 19 UStG (in German)