Reverse charge (§ 13b UStG)

What reverse charge means

Normally the supplier charges VAT, collects it and pays it to the tax office. Under the reverse-charge mechanism this flips: the business customer owes the VAT on the purchase and declares it in its own VAT return. In Germany the mechanism is implemented in § 13b UStG, based on the EU VAT Directive. Its main purposes are to simplify cross-border B2B trade — the supplier does not have to register for VAT in the customer's country — and to prevent VAT fraud in sensitive sectors.

When it applies

The most relevant case for agencies is the B2B general rule for services: under § 3a Abs. 2 UStG, a service supplied to a business customer is taxed where the customer is established. A German agency invoicing a business client in another EU member state therefore issues the invoice without German VAT; the client self-assesses VAT at its local rate. The same logic runs in reverse: when a foreign creator or service provider invoices a German agency, the agency itself owes German VAT under § 13b UStG — and may deduct it as input tax in the same return if fully entitled, so the net cash effect is usually zero.

Formal requirements

In agency practice

Cross-border constellations are everyday business for creator agencies: a German agency books a creator in Austria for the campaign of a French brand, and suddenly three VAT regimes are in play. Getting the invoice wording and the VAT treatment right per counterparty — instead of defaulting everything to 19 % German VAT — is one of the most common sources of accounting rework. Note that § 13b UStG also covers purely domestic special cases (construction services, emissions allowances and more) with their own conditions. The mechanics look simple but the edge cases are not: involve your tax advisor whenever a new cross-border constellation appears.