Reverse charge on EU B2B sales

When you sell to a VAT-registered business in another EU country, you often do not charge VAT on the invoice. Instead, your buyer reports the VAT in their own country. This is called reverse charge, and Kintsugi determines it for you automatically during tax calculation.

Quick Summary

• Reverse charge shifts VAT reporting from you, the seller, to your business buyer

• Kintsugi applies reverse charge when the buyer has a valid VAT ID for the ship-to country and you are not established in that country

• Sales within one country, or sales where you are established in the destination country, keep local VAT (forward charge)

• If a transaction has no ship-from address, Kintsugi uses your active physical presence on the transaction date to determine where the supply originated

When reverse charge applies

Kintsugi treats an EU B2B transaction as reverse charge when both of these are true:

1. The buyer has a valid VAT ID for the ship-to member state

2. You are not established in that member state for this supply

For example, your company ships from Germany to a business customer in France, and that customer has a valid French VAT ID. Kintsugi zeroes the VAT on your side of the calculation, and your customer accounts for the French VAT.

When local VAT still applies

Not every B2B transaction with a VAT ID qualifies. If the supply starts and ends in the same country, or if you have an establishment in the destination country that makes the supply, the transaction stays forward charge and local VAT applies.

For example, your company sells from a French location to a French business customer with a valid French VAT ID. This is a domestic supply, so Kintsugi applies French VAT as normal.

How Kintsugi decides

For each eligible EU B2B transaction, Kintsugi compares four inputs:

• The buyer's VAT registration

• The ship-to country

• The supply origin, taken from the ship-from or bill-from address when the transaction includes one

• Your physical presence records

When a transaction has no ship-from or bill-from address, Kintsugi falls back to your active physical presence on the transaction date. This fallback is date sensitive: the start and end dates on your physical presence records determine which establishment counts for older transactions.

What Kintsugi does automatically vs. what you do

Kintsugi handles:

• Deciding reverse charge or forward charge on eligible EU B2B calculations across EU member states

• Zeroing your side of the VAT when reverse charge applies

• Falling back to your physical presence when a transaction has no supply origin address

You handle:

• Collecting and maintaining valid buyer VAT IDs, including VIES verification and your compliance evidence

• Providing accurate ship-to, ship-from, and bill-from addresses on transactions

• Keeping your physical presence records current, including start and end dates

• Invoice wording and any legal or reporting obligations that come with reverse charge

What this article does not cover

• Kintsugi does not validate VAT numbers in this calculation. You remain responsible for verifying buyer VAT IDs, for example through VIES

• Domestic reverse-charge rules for specific sectors, and country-specific thresholds, are outside this calculation

• B2C transactions follow different rules. See How EU VAT Is Determined for the full picture, including B2C and place of supply

This article is general information about how Kintsugi works, not tax advice for your specific situation.

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