Reverse charge: the invoice arrives without VAT
It is not an exemption and it is not an oversight by the supplier. It is a transfer of the obligation: the tax is declared by whoever receives the invoice, in two boxes at once.
The mechanism by which the customer of a transaction, and not the person carrying it out, is the one liable to declare the VAT.
It is in article 84.One.2 of the VAT Act. The cases seen most in practice:
- Transactions carried out by businesses not established in the territory where the tax applies.
- Construction work, with or without materials supplied, under contracts made directly between developer and contractor for the development of land or the construction or renovation of buildings. And, down the chain, subcontractors' work.
- Scrap and waste metal, unworked gold, silver, platinum and palladium.
- Mobile phones, games consoles, laptops and tablets, on the conditions in point (g).
- Supplies of property where the exemption is waived, or in enforcement of a security.
The invoice carries no VAT and does carry the compulsory wording «inversión del sujeto pasivo», required by article 6.1.m) of the invoicing regulations.
An example with numbers
A bricklaying subcontractor invoices €12,000 without VAT to the contractor on a renovation. The contractor, on their form 303:
- Declares €2,520 as output VAT under the reverse charge.
- And the same €2,520 as deductible input VAT.
Effect on cash: none. Effect on the form: two boxes that have to be filled in. Left blank, the 303 is wrong even if the amount payable comes out the same.
The mistake that comes up most
Not declaring it “because it comes out at zero”. The output and deductible boxes have to reflect the transaction, and the supplier is going to declare it on their side. The data cross-check does the rest.
Where this carries on in Cairos: The reverse charge in construction.
Terms that go with this one
Almost no tax concept makes sense on its own. These three are the ones that most often turn up beside it.
VAT charged (cuota repercutida)
The VAT you add to the taxable base of your invoice and charge the client, to pay over to Hacienda afterwards.
VATInput VAT
The VAT you pay your suppliers on purchases and expenses, deductible only if the goods or the service are used in your activity and you have the full invoice.
RegulationsIntra-Community VAT number
The tax identification number with the ES prefix, assigned once you are registered on the Register of Intra-Community Operators and visible in VIES.
This, handled without thinking about it
Cairos keeps the invoices, the record books and Hacienda's forms from the same data, so the theory on this page turns into boxes that are already filled in.
No card and no minimum term.