# Reverse charge mechanism

*Last updated: 2026-06-26*

> At the moment a supply is made, the reverse charge mechanism shifts VAT liability from the supplier to the recipient: instead of the seller collecting and remitting tax, the buyer self-assesses and reports it directly to the tax authority.

At the moment a supply is made, the reverse charge mechanism shifts VAT liability from the supplier to the recipient: instead of the seller collecting and remitting tax, the buyer self-assesses and reports it directly to the tax authority. Widely applied in cross-border B2B transactions within the EU – covering services, goods, and construction work – it also extends to specific domestic sectors prone to carousel fraud, such as scrap metal trading. Where the recipient holds full input tax recovery rights, the mechanism is cash-flow neutral. For freight forwarders and international traders, correct application is a compliance priority; errors in determining who bears the liability routinely trigger VAT audits and back-assessments.

**Source:** [https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A32006L0112](https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A32006L0112)

## Quick Facts

| Property | Value |
|---|---|
| Term | Reverse charge mechanism |
| Language | EN |
| Word count | 111 |
| Last updated | 2026-06-26 |
| Source | https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A32006L0112 |

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*Logistics Glossary — Freight Academy: [https://www.freight-academy.com/en/glossary/reverse-charge-mechanism-2](https://www.freight-academy.com/en/glossary/reverse-charge-mechanism-2)*

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