Selling to EU Businesses 2026 — Reverse Charge & Invoicing

This guide covers selling to VAT-registered businesses in the EU. If you are selling to individual consumers, see the consumer guide instead. If you sell to both, you need both guides — the rules are completely different.

How B2B EU Sales Work — The Reverse Charge

When you sell to a VAT-registered business in the EU, you do not charge VAT. Instead, the buyer accounts for VAT themselves in their own country. This is the reverse charge mechanism.

It exists so that a German business buying from a non-EU supplier does not have to navigate foreign VAT reclaim processes. They self-assess local VAT on their own return.

IOSS does not apply to B2B sales. The €150 threshold, monthly IOSS returns, destination-country VAT at checkout — none of that is relevant here. B2B is an entirely separate process.

Step by Step — Processing a B2B EU Sale

1. Get the buyer’s EU VAT number

Before you zero-rate the sale, your EU business customer must provide their VAT identification number. Every EU VAT number starts with a two-letter country code:

DE123456789 (Germany)
FR12345678901 (France)
NL123456789B01 (Netherlands)
IE1234567FA (Ireland)
ESX1234567X (Spain)

2. Validate the number on VIES

This is not optional — it is a legal requirement.

Go to the EU VIES system and enter the customer’s VAT number. VIES will confirm whether the number is valid and return the business name and address on record.

If valid: proceed with reverse charge. Issue a zero-VAT invoice.

If invalid: do not zero-rate the sale. Treat the buyer as a consumer and charge VAT normally. It does not matter what the buyer tells you — if VIES does not validate the number, you are liable for the VAT.

If VIES is down: try again later. VIES downtime is not an accepted excuse for skipping validation if you are audited.

Keep a record of every validation — screenshot or log the VIES response with a timestamp, stored alongside the invoice. Re-validate periodically for ongoing customer relationships; registrations can be cancelled.

3. Issue a reverse charge invoice

Your invoice must include:

Your business name, address, and domestic tax or VAT registration number
The buyer’s business name, address, and EU VAT number
A unique invoice number and date
A description of the goods or services, quantity, and unit price
The net amount only — no VAT line, no VAT total
A clear statement: “Reverse charge — customer to account for VAT”
The legal reference: “Article 44 and 196 of Directive 2006/112/EC” (for services) or “Article 138 of Directive 2006/112/EC” (for goods)

Do not show a VAT amount of 0%. The invoice should have no VAT line at all. The reverse charge statement replaces it.

4. Report the sale on your domestic return

Even though you did not charge VAT, you should report the zero-rated sale on your home country’s tax return in line with local requirements. The sale is a zero-rated export — it typically appears in your total sales figure but generates no tax payable. Check your home country’s rules for how to categorise zero-rated international supplies.

Goods vs Services

Physical goods

For goods shipped to an EU business, you zero-rate the sale under reverse charge. The buyer accounts for import VAT in their country when the goods arrive. Keep proof of export — shipping documentation confirming the goods left your country.

Unlike B2C IOSS shipments, there is no IOSS number involved. The buyer’s import broker or customs agent handles the VAT on their side.

Services

For most B2B services (consulting, design, software development, marketing), the place of supply is where the customer is established. A supplier outside the EU providing consulting to a German company does not charge VAT — the German company self-accounts under reverse charge.

Invoice requirements are the same as for goods, but cite Article 44 and 196 instead of Article 138.

Exceptions apply for services tied to a physical location (property services, events, passenger transport), but these are uncommon for online sellers.

When Reverse Charge Does NOT Apply

Reverse charge is not automatic for every B2B sale. It does not apply when:

The buyer is not VAT-registered. A small EU business below their country’s registration threshold will not have a VAT number. Treat them as a consumer.
The buyer cannot provide a valid VAT number. No valid VIES result = no reverse charge.
You have a fixed establishment in the buyer’s EU country. If you have a warehouse, office, or permanent presence in the same country as the buyer, domestic VAT rules apply instead of reverse charge. This is uncommon for online sellers but relevant if you use EU fulfilment centres.
Certain specific service categories — land-related services, passenger transport, restaurant services, and short-term vehicle hire — have special place-of-supply rules that override the general B2B reverse charge.

B2B Sales Over €150

The €150 IOSS threshold has no relevance to B2B sales. Whether the order is €50 or €50,000, the process is the same: validate the VAT number, issue a reverse charge invoice, do not charge VAT.

The buyer handles import clearance and accounts for VAT on their end.

Mixed Sales — Selling to Both Consumers and Businesses

If your customer base includes both EU consumers and EU businesses, you need to capture the buyer type at checkout:

Add an optional VAT number field at checkout
If a number is provided, validate it on VIES before completing the order
If valid → process as B2B reverse charge (no VAT charged)
If not provided or invalid → process as B2C (charge destination-country VAT via IOSS)

Shopify and WooCommerce both have plugins that handle this flow — they add a VAT number field, validate on VIES automatically, and adjust the tax treatment accordingly.

Never assume a buyer is a business without a valid VIES-validated number. “I’m a business” without verification = consumer sale.

Common Mistakes

Not validating on VIES. If the number turns out to be invalid and you did not charge VAT, you owe the VAT. Not the buyer.
Using a single generic “reverse charge” label. The correct legal reference differs for goods (Art. 138) and services (Art. 44/196). Using the wrong reference can cause the buyer problems with their own tax authority.
Accepting a buyer’s word that they are a business. No VIES validation = no reverse charge. Treat as consumer.
Validating once and never again. Registrations get cancelled. Re-validate for ongoing relationships.
Confusing reverse charge with “no VAT obligations.” You still report the sale, issue a compliant invoice, and keep records. You just do not collect VAT.

Selling from a Specific Country?

The reverse charge rules above apply to any non-EU seller. Some countries have additional nuances:

United Kingdom — Post-Brexit, sellers in Great Britain do not appear on VIES (GB-prefix numbers are not listed). Northern Ireland businesses with XI-prefix numbers do appear on VIES and follow different intra-EU supply rules. There are also specific domestic reporting boxes for EU supplies on the UK VAT return. See the UK guide to selling to EU businesses.
United States — guide coming soon
Australia — guide coming soon