Introduction
The reverse charge procedure is a regulation in VAT law in which the tax liability is transferred from the supplying company to the recipient of the service. Instead of the supplier paying the VAT to the tax office, the recipient of the service is responsible for calculating and paying the tax.
This procedure is primarily used for cross-border services within the EU, in the construction industry or for certain domestic services. The aim is to prevent tax fraud (e.g. carousel transactions) and simplify tax collection.
The recipient of the service must declare the VAT in their advance VAT return and can - if they are entitled to deduct input tax - claim it as input tax at the same time.
Configuration in foreknown
To set up the ‘Reverse Charge Procedure’ for a customer in foreknown, the following steps must be implemented:
Company Settings
As a customer should generally be billed using the ‘Reverse Charge Procedure’, the ‘Apply reverse charge procedure’ flag can be set for the corresponding company in foreknown. If this flag is activated, the flag of the same name is set for all offers, orders and invoices created for this company.
Offers, orders and invoices that have the ‘Reverse Charge Procedure’ activated can only be finalised if all tax rates are set to 0%. The check also takes into account stored payment plan entries for fixed price positions. A corresponding error message is displayed in the ‘Finalise’ dialog.
In the event that not all of a company's offers, orders and invoices are subject to the ‘Reverse Charge Procedure’ the flag can be removed from individual offers, orders and invoices. The flag can be found in the ‘Edit’ dialog under the ‘Settings’ tab.
Templates
The new ‘Apply reverse charge procedure’ flag is provided for templates of type ‘offer’, ‘order’ and ‘invoice’ with the path ‘offer.reverseCharge’, ‘order.reverseCharge’ and ‘invoice.reverseCharge’ respectively and can therefore be used in the templates, e.g. to display additional text below the positions.
The standard templates supplied for the ‘Offer’, ‘Order’ and ‘Invoice’ types already contain a query of the flag and display the following text if it is positive:
"According to the reverse charge procedure, the VAT liability is transferred to the recipient of the service."
If you have created your own templates and want to use the ‘Reverse Charge Procedure’, you should take the query and the desired text from the standard templates and adapt them if necessary. To do this, you can download the ‘Basic Template’ of the corresponding template type and search for the term ‘.reverseCharge’.
E-Invoice
The ‘Reverse Charge Procedure’ is also taken into account when creating an e-invoice. The correct indicator ‘AE’ is stored in the tax rate on the e-invoice if the ‘Reverse Charge Procedure’ is activated on the invoice.