The reverse charge procedure is a tried and tested method of VAT processing that is used primarily in international trade and in certain industries. But what exactly does this mean and how can foreknown support companies?

What is the reverse charge procedure?

With the reverse charge procedure, VAT is not paid by the supplier but directly by the recipient of the service to the tax office. This reduces the administrative burden for the supplier and minimises the risk of tax evasion. This procedure is particularly widespread in cross-border business transactions within the EU.

Activate and manage reverse charge in foreknown

To enable smooth processing of your tax obligations in foreknown, we now support the reverse charge procedure. This function can be activated individually for each company so that users can decide flexibly whether and when they want to use this procedure.

This setting is automatically adopted by the company when offers, orders and invoices are created, but can be customised for individual documents if required. It also ensures that the reverse charge procedure is correctly mapped in the e-invoice.

Extension of the document templates

With the new reverse charge functionality, the base templates for offers, orders and invoices have also been extended. As soon as the reverse charge procedure has been activated for a document, a corresponding note is automatically displayed in the respective documents. This ensures transparency towards business partners and fulfils legal requirements.

Note: If you use customized templates in your foreknown instance, you need to extend these freemarker template using the new property "offer|order|invoice.reverseCharge", if you like to add a note about the reverse charge procedure. Download the base templates to find a reference implementation.

Conclusion

The use of the reverse charge procedure can be activated in foreknown with a single click, thus ensuring legally compliant invoicing for this use case as well.

Links to Documentation