Tax, VAT and reverse charge
The five tax treatments, how Steerd picks one, and the VAT ID mistake that costs you 19 percent.
This is the page to read carefully. The tax treatment decides which rates your lines may use, what sentence appears on the PDF, and whether you charge VAT at all.
The five treatments
| Treatment | What the invoice says |
|---|---|
| Domestic | German VAT applies. Lines at 19% or 7%. |
| Small business | No VAT, under the small-business scheme (Paragraph 19 UStG). |
| Reverse charge | Your client accounts for the VAT. Lines at 0%. |
| Third country | Not subject to German VAT, because the client is outside the EU. |
| Exempt | Exempt from VAT, with a reason you supply. |
How Steerd chooses
The treatment is derived from three facts: your country and small-business status from your invoicing profile, and the client's country and VAT ID.
You can override the derived treatment, and you should treat that as a tax decision rather than a formatting one. The derivation is the safe default.
The mistake that actually costs money
A VAT ID from the wrong country. If a client is recorded as being in France but carries a German VAT ID, the naive reading is reverse charge, and reverse charge means you charge no VAT. But a German-established customer means German VAT was due, and nobody is going to collect that 19% from your client on your behalf later. You will pay it.
Steerd checks that a VAT ID matches the country it is recorded against, warns you while you type, and offers to correct the country. At issue it stops being advice and becomes a block.
The format check is a shape check, not a lookup: Steerd verifies the ID looks like a valid ID for that country, and does not currently ask the EU whether it is real and active. Verifying an unfamiliar client's VAT ID against VIES yourself is still worth the minute it takes.
What each treatment demands
Some treatments need more than a checkbox, and the checklist will ask:
- Reverse charge needs both VAT IDs, yours and the client's.
- Exempt needs an exemption reason, which is printed on the invoice as the statutory sentence explaining why no VAT is charged.
Lines have to agree with the treatment
Steerd refuses to issue an invoice whose lines contradict its treatment: 19% lines under reverse charge, for instance. The checklist calls this "Lines match the tax treatment". The fix is almost always to correct the treatment rather than the lines.