Reverse charge invoices in Ireland: what the document must say
Leaving the VAT off is the easy part. Three things have to be on the invoice, and the one people forget is a specific phrase.
Reverse charge means your customer accounts for the VAT instead of you. You invoice with no VAT on it; they declare it on their own return. In Ireland you will meet it in two quite different situations, and they are not the same thing on your VAT3.
The two cases you will actually meet
1. Services sold to a business in another EU member state
You supply a service to a VAT-registered business in, say, the Netherlands or Germany. Under the general place-of-supply rule for B2B services, the supply is taxed where the customer is, and the customer accounts for the VAT. You charge nothing.
2. Construction subcontracting to a principal contractor
This one is domestic, both parties Irish, and it catches people because it feels like it should be a normal invoice. Where construction services fall within Relevant Contracts Tax and you are the subcontractor invoicing a principal contractor, the reverse charge applies. You invoice without VAT. The principal contractor accounts for it.
Second-fix carpentry, dry lining, suspended ceilings, mechanical and electrical, groundworks, fit-out packages — if you are on a site working for the main contractor, this is your default, not an exception.
What the invoice must carry
An invoice with no VAT on it has to explain itself, or it is not a valid document for the customer to rely on. Three things:
- No VAT charged. The VAT line is nil and the total equals the net.
- Your customer's VAT number, on the face of the invoice. Where the customer is liable for the tax, Article 226(4) of the VAT Directive requires their VAT identification number to appear. Yours belongs there too.
- The notice. Article 226(11a) requires the invoice to state that the reverse charge applies.
The exact wording
Use the phrase the Directive names. A paraphrase is not it, and “VAT not applicable” or “zero rated” are actively wrong — zero-rating is a different treatment with a different meaning.
Put it under the totals rather than in small print at the foot of the page. It is there to explain why the VAT line reads zero, and the person who needs it is the bookkeeper reading the total.
Where it goes at the end of the period
As the supplier you charged no VAT, so there is no VAT on that supply to declare in T1. The mistake worth avoiding is treating reverse-charge turnover as a 0% rated sale and folding it in with your exports — same number on the page, different return.
| Situation | VAT you charge | How it is reported |
|---|---|---|
| Services to an EU business | None | As an intra-EU supply of services, separately from your domestic sales |
| Construction to a principal contractor | None | Domestic reverse charge — separate again from your EU supplies |
| Export outside the EU | None | Not reverse charge at all |
Reverse charge is decided per invoice, not per customer. A customer's registration can change, and one customer can be both — a main contractor you subcontract to on one site and sell materials to on another. The invoice you issued in March has to still say what it said in March, so the treatment belongs on the document, not on the customer record.
Four ways it goes wrong
- The notice is missing. The commonest one. The VAT is off, the numbers are right, and the phrase that makes it a valid reverse-charge invoice was never added.
- Paraphrasing. “No VAT — customer to account” reads fine and is not the wording the Directive names.
- The customer's VAT number is missing. Easy to skip when you have invoiced the same contractor forty times.
- It is booked as 0% in the accounts. Then the return shows a zero-rated sale where a reverse-charge supply should be, and the two are not interchangeable.
A worked example
A tiling subcontractor invoices a main contractor for second-fix tiling on blocks C and D, €8,400, plus €1,150 of materials supplied as part of the same construction service.
- Subtotal €9,550
- VAT: none
- Total €9,550
- Both VAT numbers on the document
- Under the total: Reverse charge. VAT to be accounted for by the recipient.
The main contractor accounts for the VAT on their own return. The subcontractor's cash position is the full €9,550, and none of it is the taxman's.
This is a plain-English summary, not tax advice. Revenue's own guidance on the reverse charge and on Relevant Contracts Tax is the authority, and your accountant knows your situation. Where a supply sits on the line — a mixed contract, a customer whose registration you are unsure of — ask before you issue it, because the correction is a credit note and a reissue.
Kayment puts all three on the invoice for you
Set the VAT treatment to reverse charge on the invoice and the VAT line goes to nil, both VAT numbers print on the face of the document, and the notice sits under the total in the wording above. At period end the turnover is reported on its own rather than inside your T1, with EU supplies kept separate from domestic ones.
See how it works