Free tool
Reverse-charge VAT checker
Answer four questions about a cross-border supply and see whether to charge VAT, reverse-charge it, or zero-rate it, with the wording for the invoice.
Reverse charge applies
Cross-border B2B services to a VAT-registered business in another EU country. The customer accounts for the VAT under the reverse-charge mechanism, so you do not charge Cyprus VAT.
This tool covers the most common scenarios and is for general guidance only, not tax advice. Confirm the treatment for your specific supply, and verify EU VAT numbers on VIES.
How the decision works
Place of supply decides who charges VAT
The reverse charge exists because cross-border VAT follows the place of supply, not where you are based. For most B2B services and intra-EU goods, the place of supply is the customer's country, so the customer accounts for the VAT instead of you. You issue the invoice without Cyprus VAT and add a short note pointing to the reverse charge. Get the place of supply wrong and you either charge VAT you should not, or miss VAT you owe.
The wording to put on the invoice
When the reverse charge applies, the invoice has to say so. For B2B services to another EU country, reference Article 196 of the VAT Directive. For an intra-EU supply of goods, the customer's VAT number goes on the invoice and the supply is zero-rated. For goods leaving the EU, mark them as a zero-rated export and keep proof the goods left. The checker shows the exact line for each case.
Reverse charge and intra-EU zero-rating depend on the customer being a VAT-registered business in another EU country. Verify the number on the EU VIES system and keep the result. If the number is invalid, the supply is treated as B2C and you charge Cyprus VAT. Zero-rating a supply that should have carried VAT leaves you owing the VAT, plus penalties.
Common mistakes
Three trip up most people. Treating a consumer as a business and skipping the VAT. Assuming every EU sale reverse-charges, when B2C distance sales may fall under the One Stop Shop instead. And forgetting that services to a non-EU business are usually outside the scope of EU VAT, not zero-rated, which changes what you report.
Related free tools
Pileform flags reverse-charge entries automatically
It reads each invoice, applies the right VAT treatment across 55 jurisdictions, and posts to Xero or QuickBooks.