Reverse charge VAT

In certain transactions, VAT is not paid by the supplier but by the buyer. This is called reverse charge. In an e-invoice, you must indicate that VAT is reverse-charged, using a specific VAT category code from the EN 16931/UNCL5305 code list. Which code you choose depends on the type of transaction.

The three codes at a glance

Code

Name

When to use

Intra-Community supply

When supplying goods to a VAT-liable buyer in another EU country

VAT Reverse Charge

For domestic reverse charge, e.g. subcontracting in construction

Export outside the EU

When exporting goods to a country outside the EU (0% rate)

Code K: intra-Community supply

Code K is used when supplying goods to a VAT-liable buyer in another EU country. The VAT is then reverse-charged to the buyer in the receiving country, who must pay the local VAT there via the reverse charge mechanism.

In the UBL invoice, you set the VAT category to K with a VAT percentage of 0%. Additionally, the VAT numbers of both the supplier and the buyer are mandatory, so that the tax authorities in both countries can verify the transaction.

Typical scenarios:

A Dutch company delivers machines to a Belgian company
A German supplier sells parts to a Dutch manufacturer

Note: Code K specifically applies to the supply of goods within the EU. Different rules apply to services; consult your accountant or tax advisor for the correct VAT scenario for cross-border services.

Code AE: domestic reverse charge

Code AE is used when VAT is domestically reverse-charged to the buyer. This occurs in specific sectors and situations where the legislator has determined that the buyer must pay the VAT instead of the supplier.

The most common example is the construction sector: when a subcontractor performs work for a main contractor, VAT is typically reverse-charged to the main contractor. This prevents VAT fraud in chains with multiple subcontractors.

In the UBL invoice, you set the VAT category to AE with a VAT percentage of 0%. The invoice must include a statement that VAT is reverse-charged (for example "VAT reverse charge" or the legal wording).

Typical scenarios:

Subcontracting in the construction sector
Supply of certain waste streams (metals, plastics)
Specific sector regulations where the legislator prescribes reverse charge

Code G: export outside the EU

Code G is used when exporting goods to a country outside the EU. The VAT rate is 0% because the transaction falls outside the scope of European VAT legislation.

In the UBL invoice, you set the VAT category to G with a VAT percentage of 0%.

What does this look like in UBL?

Below is a simplified example of an invoice with reverse charge VAT (code AE):

<cac:TaxTotal>
  <cbc:TaxAmount currencyID="EUR">0.00</cbc:TaxAmount>
  <cac:TaxSubtotal>
    <cbc:TaxableAmount currencyID="EUR">1000.00</cbc:TaxableAmount>
    <cbc:TaxAmount currencyID="EUR">0.00</cbc:TaxAmount>
    <cac:TaxCategory>
      <cbc:ID>AE</cbc:ID>
      <cbc:Percent>0</cbc:Percent>
      <cbc:TaxExemptionReason>VAT reverse charge</cbc:TaxExemptionReason>
      <cac:TaxScheme>
        <cbc:ID>VAT</cbc:ID>
      </cac:TaxScheme>
    </cac:TaxCategory>
  </cac:TaxSubtotal>
</cac:TaxTotal>

For codes K, AE and G, the TaxExemptionReason field is mandatory. Fill in a clear description, for example "Intra-Community supply" (for K) or "VAT reverse charge" (for AE).

Common mistakes

Wrong code for cross-border services. Code K is specifically for goods supplies, not services. Different VAT rules apply to cross-border services. Consult your accountant.

VAT number missing with code K. For intra-Community supplies, the VAT numbers of both parties must be in the invoice. Without a valid VAT number of the buyer, the invoice will be rejected during validation.

No TaxExemptionReason filled in. For all reverse charge codes (K, AE, G), an explanation is mandatory. Do not leave this field empty.

Other VAT category codes

Besides K, AE and G, EN 16931 has other commonly used VAT category codes:

Code

Meaning

Supplier VAT number required?

Standard VAT rate (9% or 21% in the Netherlands)

Yes

Zero rate (0% VAT, but not exempt)

Yes

Exempt from VAT — for a VAT-liable supplier invoicing a specific VAT-exempt transaction

Yes (BR-E-02: own VAT number or fiscal representative required)

Outside scope of VAT — for organisations with no VAT obligation and no VAT number (foundations, certain government bodies, some healthcare providers)

Code O — when to use?

Code O ("Services outside scope of tax", UNCL5305 code O) is intended for organisations that structurally have no VAT obligation and do not hold a VAT number. For manual invoicing via the platform: select VAT category 'O' in the invoice form, after which the requirement for the VAT number field is removed and the invoice can be sent without a supplier VAT number.

Do not use dummy VAT numbers (such as NL000000000B01) for this situation. Code O is the correct mechanism.

Distinction E vs. O: code 'E' is for VAT-liable suppliers invoicing a VAT-exempt transaction — the VAT number is required. Code 'O' is for suppliers with no VAT obligation whatsoever — the VAT number is not required. Source: expert confirmation Platform & Integrations, 2026-05-26.

Processing by eConnect

For PDF-to-UBL conversion, eConnect follows the standard EN 16931/NLCIUS rules for VAT categorisation. The platform estimates the correct code based on the data on the PDF invoice. Special schemes or the distinction between goods and services are only applied if this is explicitly stated on the invoice.

Tip: Unsure which VAT code applies? Check the invoice in the free eConnect Validator. The validator warns about inconsistent VAT categories.

Check your VAT codes