Invoicing VAT exemption codes

Tax Authority amended the VAT Exemption / Reverse Charge codes to mention on invoices, for communicating the elements of the billing documents, which come into force at the beginning of 2023.

1. The most commonly used code for M08 VAT Reverse Charge is replaced by the following 6 new codes:

M30 VAT Reverse Charge – Used in Waste transactions

M31 VAT Reverse Charge – Used for refurbishment, repair, maintenance, conservation and demolition of real estate, on a contract or subcontract basis.

M32 VAT Reverse Charge – For greenhouse gas emission rights transactions.

M33 Vat Reverse Charge – For cork, wood, pine cones and pine nuts with bark transactions

M40 VAT Reverse Charge – For services provided to a purchaser located in an EU country, who is also subject to tax in the state of residence and indicates the respective VAT number for transaction registration (see M99 below).

M41 VAT Reverse Charge – When the customer is headquartered in an EU country and is expressly designated in the invoice, issued by the national seller, as the tax debtor in that Member State, related to the transfer of goods carried out.

M42 VAT Reverse Charge – Use related to the waiver of VAT exemption, on leasing and transfer of real state property.

M43 VAT Reverse Charge – Used in the special regime applicable to an investment in gold.

2. Additionally, 3 new VAT non-charge codes were introduced:

M19 other exemptions – Temporary VAT exemptions granted by a specific law.

M21 does not entitle to VAT deduction – Used by resellers on behalf of Fuel distributors.

M25 Consignment Goods – As mentioned, used on consignment goods.

3. It should also be mentioned here that the use of code M99 – Not subject or not taxed doesn’t have a residual nature. On the contrary, it has a very specific use and is linked, under specific conditions, to transactions with the State, transfer of commercial or industrial business, transfers made by agricultural cooperatives to their members, promotional samples and the use of company goods and services by its employees.

It should be noted that this code is also used in the provision of services linked to a property located abroad, where the property location rule is imposed.