VAT reverse charge as a construction subcontractor: how it works
Written by Ilias Aarrass7 min read · Published on · Last reviewed on 
In short
For subcontracted physical work you put "VAT reverse-charged" and your client's VAT number on the invoice, and report the turnover in box 1e of your VAT return.
- You do not reverse-charge when working directly for a consumer or for a business that does not build itself.
- If you do more than half of the work in your own workshop, you do not reverse-charge either.
- You still deduct the VAT on your own purchases, which is why you often end up with a refund.
- Design work, such as an architect's, falls outside the reverse-charge scheme.
If you often work as a construction freelancer for other contractors, you deal with the VAT reverse-charge scheme. Many starting entrepreneurs find this difficult: you don't charge VAT, but you do have to declare something. This article covers when you must reverse-charge and when you must not, what belongs on your invoice, which box it goes in on your return, and what happens if you get it wrong.
When does the reverse-charge scheme apply?
The reverse charge applies if, as a subcontractor, you perform work of a physical nature for a main contractor or another entrepreneur in construction. Think of bricklaying, carpentry, installation or groundwork that's part of a larger construction project. The main contractor is then responsible for declaring the VAT.
So two things decide whether you reverse-charge: the nature of the work and your position in the chain. If you are the final link towards the client, you do not reverse-charge. If you sit above or below in a chain of contractors, you usually do. Note two exceptions: if you do more than half of the work in your own workshop you do not reverse-charge, and design work such as an architect's falls outside the scheme altogether.
| Situation | VAT on your invoice |
|---|---|
| You work as a subcontractor for a main contractor | Reverse-charged |
| You work directly for a private individual | 9% or 21%, depending on the work |
| You work directly for a business that is not itself a builder | Normal 21% |
| You supply materials only, without installation | Normal 21% |
| You hire out staff for physical work | Reverse-charged |
| You work for an owner-builder running the project | Reverse-charged |
What do you put on your invoice?
On your invoice you state no VAT amount, but the words 'VAT reverse-charged'. The rest is a normal invoice; see creating your first invoice for the basics. These five points matter especially with the reverse charge.
- The words 'VAT reverse-charged', literally on the invoice.
- Your client's VAT identification number, not only your own.
- The amount excluding VAT, with a zero line or no VAT line at all.
- A description showing that it concerns physical work, not just 'services rendered'.
- The project or address where the work was done. In an audit that immediately shows why you reverse-charged.
How do you declare it?
In your VAT return you enter the turnover you reverse-charged in box 1e: supplies and services taxed at 0% or not taxed at your end. You pay no VAT on this turnover yourself, but you do report the amount.
The VAT on your own purchases and costs is reclaimed as input VAT as usual. That is exactly why many subcontractors get money back each quarter: there is no output VAT to set against your deduction.
Worked example: a quarter with reverse-charged turnover only
- Subcontracting turnover, VAT reverse-charged
- € 18,000 in box 1e
- VAT payable on that
- € 0
- VAT on tools, materials and fuel
- € 940 input VAT
Result: You get € 940 back for that quarter. Do not forget to report the turnover: paying zero is not the same as declaring nothing
Reverse-charged or 9 per cent: the distinction that often goes wrong
The reverse charge and the reduced rate are regularly confused, while they are unrelated. The reverse charge is about who declares the VAT; the reduced rate is about how much VAT the work carries.
Directly for a private individual
Then you never reverse-charge. If you work on a home older than two years, painting, plastering and wallpapering carry 9 per cent; most other work 21 per cent. More in painter, plasterer and handyman for private clients and which VAT rate applies.
Through a main contractor on that same home
Then you do reverse-charge, and the rate is not your concern: you invoice without VAT. The main contractor decides towards the private client whether it becomes 9 or 21 per cent. The same work, a different invoice, purely because your position in the chain differs.
Frequently asked questions
When must I reverse-charge VAT in construction?
When, as a subcontractor, you perform physical work for a main contractor, owner-builder or another construction entrepreneur. If you work directly for a private individual or a business that does not build itself, you charge normal VAT.
What must literally appear on my invoice?
The words 'VAT reverse-charged' and your client's VAT identification number. No VAT amount and no rate. Also state the project or address, so an audit immediately sees why you reverse-charged.
Which VAT return box is reverse-charged turnover?
Box 1e, supplies and services taxed at 0% or not taxed at your end. Your reverse-charged turnover belongs there: you enter the amount excluding VAT and pay nothing yourself. Your input VAT goes in box 5b as usual.
Do I always get VAT back with only reverse-charged turnover?
Usually yes. You pay no VAT on turnover but do deduct the VAT on tools, materials and fuel. The balance is then negative and you get it refunded.
Does the reverse charge apply if I only supply materials?
No. Supplying materials only, without installation or processing, is a normal supply at 21 per cent. As soon as you also fit or process it, it becomes physical work and the reverse charge can apply again.
What if my client has no valid VAT number?
Then you may not reverse-charge. Check the number before invoicing; you can do so via the European VAT number check. Reverse-charging to an invalid number leaves the VAT at your expense.
Sources
- Reverse charge for subcontracting and staff supplyBelastingdienst · belastingdienst.nl
- How the reverse charge and box 1e workBelastingdienst · belastingdienst.nl
Sources checked on
This article provides general information based on the rules known for 2026 and does not replace personal tax advice. For your specific situation, we're happy to take a look with you.
