---
title: EU VAT and reverse charge
description: Validate customer VAT IDs against VIES and invoice cross-border EU business customers at 0%.
domain: tax
status: shipped
visibility: public
last_verified: 2026-08-01
order: 30
---
Selling from one EU country to a business in another EU country usually means you do not charge VAT. The customer accounts for it themselves under the reverse charge mechanism, and your invoice has to say so. yRecurring handles both parts: it validates VAT IDs, and it applies the reverse charge on qualifying invoices.

## VAT ID validation

When you set a tax ID on a customer that looks like an EU VAT number, yRecurring checks it against VIES, the European Commission's VAT registry. The outcome shows next to the tax ID on the customer page:

- **Valid** means the registry confirmed the number. This is what qualifies the customer for reverse charge.
- **Invalid** means the registry does not recognize it. The customer is taxed like a consumer.
- **Validating** or **registry unavailable** mean the check is still pending or VIES was unreachable. It retries automatically, and an unvalidated ID is treated as not valid yet.

A VAT number can carry its country prefix ("DE123456789") or be a bare number with the customer's billing country supplying the prefix. Northern Ireland numbers with the "XI" prefix are checkable too. The VAT ID's country has to match the customer's billing country when that country is in the EU: a German VAT number on a French customer records as invalid, because reverse charge depends on the customer's own member state.

Changing the tax ID, or the customer's billing country, triggers a fresh check. The moment the ID changes, the old verdict is dropped and the status shows as validating until the new check lands, so a replaced ID can never ride on the old one's approval.

## Turning on reverse charge

Reverse charge is off by default. Turn it on in Settings, on the Tax rates page. Your business country comes from your business profile, and it has to be set before the toggle enables: without a home country there is no way to tell a cross-border invoice from a domestic one.

Once on, an invoice qualifies for reverse charge when all of these hold:

- the customer's billing country is an EU member state,
- it is a different country than your own,
- the customer's VAT ID has been validated.

A qualifying invoice is issued at 0% tax, records the reverse charge as the reason, and prints the required note on the document: "VAT reverse charged". Domestic customers and customers without a validated VAT ID are taxed normally from your [tax rates](/guide/taxes/tax-rates).

## What it looks like

The invoice shows no tax line and carries the reverse charge note, along with your VAT number and the customer's, which invoices print by default. Reports still record these invoices, so you can list your reverse-charged sales for your VAT return.

## Edge cases

- **The check is per tax ID.** If a customer's ID is replaced while a check is in flight, the old result is discarded rather than stamped onto the new ID.
- **Reverse charge is decided at generation.** Validating an ID afterward does not change an already-issued invoice; the next invoice qualifies.
- **Exempt customers stay exempt.** The tax exemption flag takes precedence and no reverse charge note is added.