If this setting is configured, the customer will be handled with reversed liability for payment. This means that the customer's VAT code will be reset to VAT exempt (VAT code 4) You can make exceptions per order/invoice if the VAT differs.
If you select the Reversed liability for payment box, the customer order will be managed the same way as a purchase order to an EU supplier, in other words the VAT amount will automatically be set to zero (0) and a fictitious input and output VAT will be coded. You will find special standard accounts for reversed liability for payment in the Chart of Accounts / Standard Accounts procedure in the Global Settings.