Reverse Charge System

VAT is usually paid by the enterprise delivering the goods or providing the service. It has to pay the VAT to the tax office. However, under the "reverse charge system" it is not the enterprise providing the service but the enterprise receiving the service that is liable to pay the VAT. In this case, the recipient enterprise is responsible for paying the VAT to the tax office.

General information

The reverse charge system may be used, for example, when a foreign enterprise that does not operate within Austria or has no business premises there provides a service or supplies works to an Austrian enterprise and where the service or works are taxable in Austria under the place of performance rules. The reverse charge system cannot be applied to permission to use federal highways subject to payment of a fee, to the services in connection with events or to the renting of land.

Tax liability may also be transferred in the case of certain domestic deliveries or services. Some examples are transfer of greenhouse gas emission certificates, delivery of mobile phone devices and construction works. Tax liability can be transferred in the case of construction works where the recipient themselves was contracted to perform the works or usually performs construction works themselves.

Reverse charge invoice

When the reverse charge system is applied, the recipient enterprise will be issued an invoice by the enterprise providing the service stating only the net amount (no tax statement) and is responsible for paying the VAT due. This can then be deducted should they be entitled to input VAT deduction. The invoice must be issued by the 15th of the calendar month following the month in which the service was provided.

When issuing an invoice under the reverse charge system, the following should be borne in mind:

• The invoice must provide information on transfer of tax liability to the recipient of the service.
• The VAT Identification (UID) Number of the company providing the service and the VAT Identification Number of the recipient should be indicated.
• The regulations on separate tax statements do not apply.

Legal bases

• Place of performance rules: section 3a paragraph 6 of the Umsatzsteuergesetz (UStG)
• Exception concerning services in connection with events: section 3a paragraph 11a of the UStG
• Invoicing rules for the Reverse Charge System: section 11 paragraph 1a of the UStG
• Transfer of tax liability for domestic deliveries or services:
  • section 19 of the UStG
  • Schrott-Umsatzsteuerverordnung
  • Umsatzsteuerbetrugsbekämpfungsverordnung