What is the reverse charge mechanism?

The principle of the Reverse Charge Mechanism is that it shifts the liability to account for the VAT on a supply from the supplier to the buyer of a good or service. The main purpose is to avoid the need for the supplier to VAT register and account for VAT in a Member State in which he is not established. If the supplier incurs any local VAT on costs related to the service or goods supplied under the Reverse Charge, they may recover them through an EU VAT reclaim.
Reverse charges apply to all shipments of goods or services issued on a B2B (business to business) basis within the EU.
The EU created the concept of Reverse Charging VAT in the 1993 EU VAT tax system reform, in order to simplify trade within the Single Market and, in addition, to prevent VAT fraud.


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