Intra-EU Reverse Charge: VIES, M16 and M40
How to invoice businesses in other EU countries without VAT: VIES validation, the right code for goods and for services, the mandatory wording, and the recapitulative statement.
A German company buys €2,000 of product from you. They ask for an invoice with their VAT number. Do you charge VAT?
No, provided you can prove they really are a taxable person registered in another member state. It is called reverse charge: the VAT does not disappear, it changes hands. The buyer accounts for it and deducts it in their own country.
The key word is prove. Not "the customer typed a number into the checkout".
The sequence, and the step nobody may skip
Intra-EU reverse charge: five steps, and the second is the one nobody may skip.Step 1: the number comes with its country
An intra-EU VAT number carries the country prefix: ES for Spain, FR for France, DE for Germany. B12345678 on its own is not enough; ESB12345678 is the number.
Many checkouts collect the number without the prefix, because the field was designed for Portuguese customers. If you are going to sell to EU businesses, the field has to accept and store the prefix.
Step 2: VIES, and only VIES
VIES is the European VAT number validation system. It is the only place to confirm that a number exists, is active, and belongs to a taxable person registered for intra-EU operations.
Three possible answers, three different consequences:
| VIES answer | What it means | What to do | |---|---|---| | Valid | The number exists and is registered for intra-EU operations | Issue at 0%, with reverse charge | | Invalid | The number does not exist, or is not registered in VIES | Treat as a consumer: charge VAT (OSS or Portuguese rate) | | Service unavailable | That country's system did not answer | Do not decide. Wait and retry |
The third case is the treacherous one. "Did not answer" is neither "invalid" nor "valid", and treating it as either issues a document that may be wrong. The correct move is to hold the document and repeat the validation: national VIES services go down frequently and come back on their own.
VIES is not for Portuguese customers. A Portuguese company buying from another Portuguese company is a domestic operation: ordinary Portuguese VAT. And many Portuguese numbers do not even appear in VIES, because only those registered for intra-EU operations are listed.
Step 3: the code, M16 for goods and M40 for services
This is where most configurations go wrong.
| You sell | Legal basis | Code | Typical wording |
|---|---|---|---|
| Goods to an EU business | Article 14 of the RITI | M16 | VAT, reverse charge |
| Services to a business abroad | Article 6(6)(a) of the CIVA, read the other way round | M40 | VAT, reverse charge |
Both come out at 0% and both carry the reverse-charge wording, but the legal basis differs and the SAF-T file tells them apart. If you sell physical product, it is M16. If you sell access, consultancy, licences or training, it is M40.
A mixed catalogue has to distinguish line by line. There is no single code that covers both.
Step 4: the wording has to be on the document
The invoice has to carry the phrase "IVA — autoliquidação" (or, when issued in English, "VAT — reverse charge"), and the buyer's prefixed VAT number has to be visible on the document.
A 0% invoice with no buyer VAT number and no wording cannot be defended in an inspection, however legitimate the sale was. The document has to tell the story on its own.
Step 5: the recapitulative statement
This is the part people discover late: intra-EU supplies have to be reported in a recapitulative statement, on top of the periodic return.
- It is filed on the Portal das Finanças, with each customer's VAT number and the total per customer in the period.
- The frequency, monthly or quarterly, follows your VAT regime and the volume of operations.
- The deadline is the 20th of the month following the period.
What you report here has to match what your customer reports on the other side. That cross-check is exactly what produces letters from the tax authority when a number is wrong.
Common mistakes
- Accepting the number without validating it. This is the one that costs money: if the number was not valid, the VAT was due, and you are the one paying it, with interest.
- Validating once and never again. A number valid in January can be cancelled by September. For recurring customers, validation is per sale.
- M16 on services. Wrong legal basis in the SAF-T file. It still comes out at 0%, which is what lets the error go unnoticed for years.
- Reverse charge to a consumer. A French individual performs no reverse charge, whatever they typed into the VAT field. That sale is OSS.
- Forgetting the recapitulative statement. The invoice was right and the declaration was never filed.
How Rioko helps
In Rioko, reverse charge is not a box you tick per customer: it is the result of a check. The buyer's VAT number is validated in VIES at the time of the sale, and the regime only changes when VIES confirms.
When VIES does not answer, the sale is held instead of being issued on a guess, and it is retried on its own. That is the difference between an invoice half an hour late and an invoice wrong forever.
The code follows from the nature of what you sell, and the legal wording travels with the document. If you have not configured what your connection declares, start with Exemption codes M01–M99.
Frequently asked questions
Is it enough for the customer to say they are a business?
No. You need a VAT number with the country prefix and a valid answer from VIES. Without that, the sale is treated as a sale to a consumer and carries VAT.
VIES did not answer. Do I issue anyway?
No. Service unavailable is neither valid nor invalid. The right move is to hold the document and retry the validation: national VIES services go down often and come back on their own.
Is VIES any use for Portuguese VAT numbers?
Not for this purpose. A Portuguese business selling to another Portuguese business is a domestic operation with ordinary VAT. Besides, many Portuguese numbers do not appear in VIES at all.
What wording has to be on the invoice?
VAT, reverse charge, and the buyer's prefixed VAT number has to be visible on the document. A 0% invoice without both cannot be defended.
Beyond the invoice, is there anything to declare?
Yes: the recapitulative statement, with each customer's VAT number and the total per customer in the period, by the 20th of the following month.
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