Reverse charge mechanism – Meaning & Definition | Freight Academy

GlossaryEN1 min readUpdated: Jun 12, 2026

Reverse charge mechanism

The reverse charge mechanism activates when a supply occurs: instead of the supplier remitting the VAT, the recipient must self-assess and pay it.

Last updated: 12 June 2026Published: 27 January 2026

Source: https://ec.europa.eu/taxation_customs/business/vat/different-vat-rates/reverse-charge-mechanism_en

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The reverse charge mechanism activates when a supply occurs: instead of the supplier remitting the VAT, the recipient must self-assess and pay it. Common in cross-border B2B transactions (e.g., international services, construction work abroad) and specific domestic transactions (e.g., scrap metal purchases), the shift in liability prevents fraud and streamlines tax control.

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