VAT reverse charge

VAT reverse charge, also known as tax shift, is an anti-fraud measure that applies to the sale and purchase of specific goods and services. These are typically electronic items of high value such as mobile phones.

The reverse charge procedure requires that the customer is liable to account for the VAT on the sale, and is applicable:

• between VAT taxable persons
• for goods where the VAT exclusive value of the supply is above a de minimis limit. For example, £5,000 in the UK. 5,000 EUR
• where the goods and services are bought and sold for business use

The customer will account for the vendor's output VAT, but will reclaim the exact same amount as input VAT.