EU‑EU Cross-Border Invoices: Complete Guide for 2025

When conducting business between different EU member states, understanding the reverse charge mechanism and proper invoice requirements is crucial for VAT compliance. This guide covers everything you need to know about EU-EU cross-border invoicing.

The Reverse Charge Mechanism

For cross-border B2B transactions within the EU, the reverse charge mechanism applies when both parties are VAT-registered businesses located in different EU member states.

How It Works

• Supplier (Seller): Issues invoice without charging VAT
• Customer (Buyer): Accounts for VAT on their VAT return as both output tax (due) and input tax (deductible)
• Result: Usually cash-flow neutral for the buyer since both entries cancel out

When Reverse Charge Applies

The reverse charge mechanism applies to:

• Cross-border supply of goods between EU member states
• Cross-border supply of services between EU member states
• Both parties must be VAT-registered businesses
• Transaction must be business-to-business (B2B)

Mandatory Invoice Fields

According to EU VAT Directive 2006/112/EC Article 226, all invoices must include these fields:

Essential Information

1. Invoice date and sequential invoice number
2. Supplier’s VAT identification number
3. Customer’s VAT identification number
4. Full name and address of both supplier and customer
5. Quantity and nature of goods or services supplied
6. Unit price excluding VAT
7. Any discounts or rebates (if not included in unit price)
8. Taxable amount per VAT rate
9. VAT rate applied (or reverse charge reference)
10. VAT amount payable (zero for reverse charge)
11. Total amount
12. Date of supply (if different from invoice date)

Reverse Charge Specific Fields

• Customer’s VAT number (mandatory for reverse charge)
• Reverse charge reference: One of these options:
  • “Reverse charge”
  • “VAT reverse charge under Article 196 of Council Directive 2006/112/EC”
  • Reference to applicable national legislation

VIES Verification

Before applying reverse charge, verify both VAT numbers through the VIES (VAT Information Exchange System):

1. Check supplier’s own VAT number is valid
2. Verify customer’s VAT number in VIES database
3. Ensure customer is registered for intra-Community supplies
4. Keep VIES verification records for compliance

Invoice Example

INVOICE #2025-001
Date: January 15, 2025

From: TechCorp GmbH
      Hauptstraße 123
      10115 Berlin, Germany
      VAT ID: DE123456789

To:   SoftwareCorp SAS
      Rue de la Paix 45
      75002 Paris, France
      VAT ID: FR98765432101

Description: Software development services
Quantity: 100 hours
Unit Price: €150.00
Subtotal: €15,000.00

VAT: Reverse charge applies
Reference: Article 196 of Council Directive 2006/112/EC

Total Amount: €15,000.00

Country-Specific Considerations

2025 Updates

• Czech Republic: New rules for VAT deductions on overdue invoices (6+ months)
• Estonia: VAT rate increase from 22% to 24% (effective July 2025)
• Digital Age (ViDA): Enhanced e-invoicing requirements across EU

Common Variations

Different EU countries may have specific requirements for:

• Additional invoice references
• Local language translations
• Specific formatting requirements
• Electronic invoicing mandates

Best Practices

For Suppliers

1. Verify customer VAT status before issuing reverse charge invoice
2. Include clear reverse charge reference on all applicable invoices
3. Maintain detailed records of all intra-EU transactions
4. Monitor customer VAT number changes regularly
5. Use certified invoicing software for compliance

For Customers

1. Account for VAT promptly on VAT returns
2. Maintain invoice records for minimum 5 years
3. Verify supplier credentials before accepting reverse charge
4. Monitor regulatory changes in supplier’s country

Common Mistakes to Avoid

Invoice Errors

• Missing customer VAT number
• Incorrect reverse charge reference
• Including VAT amount when reverse charge applies
• Using invalid or outdated VAT numbers

Compliance Issues

• Failing to verify VIES before transaction
• Not maintaining proper documentation
• Delayed VAT accounting by customer
• Mixing reverse charge with standard VAT procedures

Electronic Invoicing

2025 Requirements

The EU’s ViDA (VAT in the Digital Age) initiative introduces:

• Mandatory e-invoicing for many B2B transactions
• Real-time reporting requirements in some countries
• Enhanced data requirements for digital invoices
• Removal of “buyer acceptance” requirement

Technical Standards

• Use certified e-invoicing platforms
• Ensure invoice authenticity and integrity
• Implement proper digital signatures
• Maintain electronic audit trails

Record Keeping

Documentation Requirements

• Keep all invoices for minimum 5 years
• Maintain VIES verification records
• Store proof of goods delivery or service performance
• Keep correspondence related to transactions

Electronic Storage

• Use tamper-proof storage systems
• Ensure data accessibility for tax authorities
• Implement proper backup procedures
• Maintain chronological filing systems

Penalties and Compliance

Risk Areas

• Incorrect VAT treatment can lead to significant penalties
• VIES verification failures may void reverse charge eligibility
• Missing documentation can result in VAT adjustments
• Late filing may incur interest charges

Mitigation Strategies

• Regular compliance audits
• Staff training on VAT procedures
• Automated verification systems
• Professional tax advice for complex transactions

Conclusion

EU-EU cross-border invoicing requires careful attention to reverse charge procedures, mandatory invoice fields, and evolving digital requirements. Success depends on:

• Proper VAT number verification through VIES
• Complete invoice documentation per Article 226
• Clear reverse charge references
• Robust record-keeping procedures
• Staying updated with 2025 regulatory changes

For complex transactions or high-volume cross-border business, consider investing in specialized VAT compliance software and professional tax advice to ensure ongoing compliance with EU regulations.