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What is the "Reverse Charge mechanism"?

Customers may see the following note on their Twilio Inc (hereinafter, “Twilio”) invoice:

This invoice is subject to the reverse charge mechanism, if applicable.

This guide covers what the reverse charge mechanism is, and how it applies to your Twilio project.

What is the reverse charge mechanism?

A non-resident entity like Twilio US is not required to impose Value-Added Taxes (VAT) or Goods and Services Tax (GST) on Business-to-Business (B2B) consumers that are VAT or GST registered. That said, the B2B consumer is still responsible for reporting VAT or GST. This is done through the reverse charge mechanism.

The reverse charge mechanism shifts the responsibility of accounting for VAT or GST on these purchases to the B2B consumer. In other words, these customers must report the applicable VAT/GST on their own VAT/GST return.

Reverse Charge for Twilio Inc customers in Europe

If you are contracted with Twilio Inc (default), and are in the European Union, United Kingdom, or Norway, you can refer to this explanation for the reverse charge mechanism:

Reverse charge on EU VAT (Avalara VATlive)

For other details on VAT in Europe, see Does Twilio Charge VAT.

Reverse Charge for Twilio Ireland customers in Europe

If you are a customer contracted with Twilio Ireland, and consume Twilio services outside Ireland, the same EU VAT explanation for the reverse charge mechanism applies: Reverse charge on EU VAT (Avalara VATlive).

Notice: If your service address is in Ireland, you will not be subject to reverse charge mechanism, as both B2B and B2C customers are taxable.

Reverse Charge for Twilio Inc customers in Australia

If you consume Twilio services in Australia, the same EU VAT explanation for the reverse charge mechanism also applies to Australian Goods and Services Taxes (GST): Reverse charge on EU VAT (Avalara VATlive).

Reverse Charge for Twilio Inc customers in Singapore

If you consume Twilio services in Singapore, the same EU VAT explanation for the reverse charge mechanism also applies to Singaporean Goods and Services Taxes (GST): Reverse charge on EU VAT (Avalara VATlive).

Reverse Charge for Twilio Inc customers in India

If you consume Twilio services in India, the supplier of services is liable to collect and pay GST.  A non-resident supplier like Twilio is required to collect GST from non-registered B2C customers.  Twilio is not required to collect GST from B2B customers.  However, B2B customers may be liable under the reverse charge mechanism. Reverse charge mechanism means the liability to pay tax is on the recipient of the supply of services instead of the supplier of services. 

Other questions on Taxes?

For all other questions on how Twilio is required to tax its services, please see the Taxes section of our Support Help Center.

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