In order to simplify trade in the single market, the EU created the concept of reverse charge VAT. The reverse charge transfers from the seller to the buyer of a good or service, the responsibility for reporting a VAT transaction. This reduces the requirement that sellers register for VAT in their country of supply. When a transaction is subject to reverse charge, the recipient of the goods or services reports in their VAT return both their purchase (VAT input) and the sale of the supplier (VAT output). These two statements offset each other from the point of view of cash payment, but the authorities are made aware of such treatment.

Most sales between EU member states will be subject to a reverse charge and there are also many instances where a domestic reverse charge rule exists within specific EU member states