Reverse Charge VAT – applies to Republic of Ireland only.
If you are a Principal Contractor you may receive an Invoice from a subcontractor showing no VAT but stating that “VAT on this supply to be accounted for by the Principal Contractor”.
There is no VAT charged on this invoice but you must account for the VAT that would normally have been charged.
If you are entitled to a Credit Input, i.e. you would normally claim back VAT on such a sale, you should ensure the you tick ‘Credit Input for Reverse Charge Vat?’ in Setup/Options.
When entering this invoice you must select VAT Type ‘Reverse Charge’ and enter the VAT amount which would have been applicable to the transaction.
The VAT is not included in the Total but is included in your VAT Returns. It is automatically included in the T2 (Purchases) section of the Standard VAT Report and will also be included in the T2 (Sales) section if the option ‘Credit Input for Reverse Charge VAT’ is selected in Setup / Options / Reverse Charge VAT.
