0% VAT, Exempt, or reverse charge are different VAT treatments. See why cross-border EU B2B goods are an Article 138 exemption, and how to label it right.
You sell goods to a VAT-registered business in another EU country, you do not charge VAT, and now you need an invoice that says so correctly. Then you look at three options that sound interchangeable: 0% VAT, Exempt, and reverse charge. They are not interchangeable. They describe different VAT treatments, and your accountant (and a tax inspector) will notice if you pick the wrong one. Our EU Tax Exemption app for Shopify prints the correct wording on the invoice for you.
When you ship goods to a VAT-registered buyer in another EU member state, that is an intra-Community supply. Under EU rules it is exempt under Article 138 of Directive 2006/112/EC. An exemption and a zero rate are not the same thing in VAT law, even though both result in no VAT being charged.
Printing “0%” on the VAT line quietly relabels an exemption as a zero rate. It is a small wording difference that can create real friction during a review, because the supporting evidence and the legal reasoning behind the two are different. The cleaner, more defensible choice is to label the VAT line Exempt and print the legal basis next to it.
Reverse charge wording belongs to services and to certain domestic situations where the buyer accounts for the VAT instead of the seller. It is not the correct mention for a cross-border supply of goods. Using “reverse charge” on a goods invoice mixes up two different mechanisms. So the rule of thumb is simple: cross-border B2B goods to a VAT-registered EU buyer is an Article 138 exemption, not a 0% rate and not reverse charge.
This is exactly what the invoice feature handles for you. For a cross-border B2B sale of goods to a VAT-registered business in another EU country, it applies the correct treatment automatically: it labels the VAT line Exempt (in Dutch, Vrijgesteld) instead of “0%”, and it prints the matching legal mention on the document. Reverse-charge wording is kept for the cases where it actually applies, so a goods invoice never gets mislabelled.
Beyond the wording, the invoice captures the buyer’s VAT number and your seller details as a fixed snapshot, uses sequential, gap-free numbering (a requirement for EU invoices), and stores the PDF so you can download it later. It can email the invoice to your customer automatically when the order is paid, or on demand, sent under your own business name with replies coming back to you. Invoices are available in English, Dutch, German and French.
Getting the label right is part of a bigger picture. It also helps to keep an audit trail for your exemptions, to understand why tax-exempt customers still get charged VAT when something is set up wrong, and if you sell beyond the EU, to make use of non-EU VAT number support. This article is not tax advice, so confirm the specifics for your situation with your accountant.
If your tax-exempt orders are going out with “0%” or “reverse charge” where they should say “Exempt”, you are one setup away from invoices that hold up. Try the invoice feature and let every cross-border B2B order produce a correctly labelled, numbered PDF.