Counter causes damage. On the turn that it is used, your Pokémon
strikes last, doing twice the damage it receives during that turn, if any.
However, only Normal and Fighting attacks (including both physical and
calculated damage) may be Countered. If the damage is caused by any other
type of attack (including recurrent PSN/BRN damage), or if your Pokémon
does not receive any damage, Counter will automatically miss the
opponent.
Note that unlike the similar attack Bide,
Counter does not automatically hit the opponent (ie, even assuming that a
Normal or Fighting attack is present to be Countered), and is subject to
the effects of Evade and Accuracy modifiers.
The opponent's use of defensive attacks such as Light Screen, Harden, and the defensive aspect of Amnesia, and/or offensive attacks such as Leer or the Special-lowering side effect of Psychic have absolutely no effect on
the damage caused by this attack.
If both Pokémon use Counter on the same turn, the faster of the two
will strike first, and neither attack will hit.