A foreign invoice arrived: Prepare the reverse-charge review

Decision map

Do not begin with “foreign vendor = reverse charge.” Goods, services, imports, intra-EU acquisitions and special domestic cases follow different mechanisms.

Worked example: cross-border service

A German business purchases a €1,000 business-to-business software service from a supplier established in another EU member state. If the place-of-supply and §13b conditions are met, the German recipient may need to account for German VAT. At a 19% illustrative rate, that is €190 of tax liability. If the input VAT deduction conditions are fully met, an equal deduction may be available. The cash paid to the supplier remains €1,000; the tax reporting happens separately. The actual result depends on the facts and deduction restrictions.

A foreign invoice arrived: build the case before choosing the rule

The owner should provide the original invoice, order or contract, what was actually supplied, supplier and customer legal entities, service and invoice dates, stated VAT wording, business purpose, and payment. DeinHans can retain those facts, detect that the document has a cross-border pattern, and route a focused question such as: “The invoice is from an Irish entity and states no VAT; confirm the service and customer entity for adviser review.”

DeinHans does not apply reverse charge solely from vendor country, invoice wording, or a prior invoice. An unconfirmed fact pattern remains in review.

Evidence and booking workflow

1. Save the contract, invoice and proof of the service period.
2. Validate the legal parties and relevant tax identifiers.
3. Classify the supply before selecting a VAT mechanism.
4. Document the statutory basis and reporting period.
5. Assess input VAT deduction separately.
6. Request a corrected invoice if mandatory information or treatment is inconsistent.
7. Route uncertain cases to a tax adviser before submission.

Warning signs

• The invoice charges foreign VAT and also states reverse charge.
• The supplier country, invoice entity and payment recipient do not align.
• The description is too vague to determine goods versus services.
• A private or mixed-use purchase is treated as fully business-related.
• A copied recurring treatment ignores a changed supplier or contract.

Important: Reverse charge includes multiple statutory cases with different conditions and timing. This article provides an evidence checklist, not a substitute for applying §13b UStG to the transaction.

Owner, software and adviser

The owner confirms what was bought and why, and supplies the current contract and invoice. DeinHans can detect that a cross-border review may be needed, preserve the evidence and prepare a proposal or question, but does not decide missing place-of-supply facts. The accountant or tax adviser determines liability, rate, deduction and reporting. Evidence, limitation and reviewer decision remain visible together.

Keep liability and deduction auditable

Where the adviser concludes that reverse charge applies, record the taxable base, currency conversion, tax rate, liability amount, potential deduction, reporting period and legal basis as separately reviewable fields. Equal liability and deduction in a simple example do not make the transaction irrelevant: restrictions, timing or reporting obligations can produce a different result.

Reconcile the population of approved reverse-charge cases to the relevant VAT return fields. Review cases held outside the return and state why. This is especially important when an invoice arrived late, a correction changed the base or the service period spans the cut-off.

Recurring supplier control

For a repeated software or service vendor, compare the current legal entity, customer entity, service description, VAT IDs, invoice wording and service period with the conditions behind the previous decision. A group can move invoicing to another country or sell a different service without changing the brand name.

If a corrected invoice is requested, keep the original and correspondence and prevent both versions from being treated as separate purchases. The new document should resolve the identified issue and link to the original decision history.