Reverse charge
VAT mechanism shifting the liable party from supplier to customer, coded on the e-invoice.
Definition
Under the reverse charge, the supplier invoices without VAT and the customer reports it as both output and input VAT. On an EN 16931 or EDIFACT invoice, the line carries the VAT category code “AE” (VAT Reverse Charge) and a legal note citing the applicable article.
Origin
Provided for by Articles 194 to 199 of Council Directive 2006/112/EC (the VAT Directive). The “AE” code comes from the UNTDID 5305 code list (Duty/tax/fee category code), used by EN 16931 and EDIFACT.
Example in context
EN 16931 line: BT-151 (VAT category code) = AE ; BT-120 (VAT exemption reason text) = “Reverse charge – Art. 196 Directive 2006/112/EC”.