If a product sale or a sale of services takes place, it is normally the duty of the company, which also provides the value added tax pay the VAT. Sometimes, however, the relationship is reversed so that the recipient of the service is responsible for paying the VAT. Thus, under the reverse charge mechanism, the company making the supply may only charge the net price.
Reverse charge is often used when a service or product is purchased from a company abroad. Sometimes the procedure is even mandatory for transactions within Germany.
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