Local VAT reverse charge mechanism for electronic goods comes to Lithuania

From August 1, 2019 local VAT reverse charge mechanism will be applied to mobile phones, tablets, laptops and hard disks. These types of goods are often used for tax fraud. As a result, VAT will be taken over by the buyers if they are registered as VAT payers in Lithuania.

The new order will be temporary and will vary depending on the product type:

·       local VAT reverse charge mechanism will be applied to hard drives until February 28, 2022 (limited by the European Commission);

·       local VAT reverse charge mechanism will be applied to mobile phones, tablets and laptops until June 30, 2022.

Local VAT reverse charge mechanism will be not applied to:

·       budget institutions;

·       non-VAT payers;

·       in cases where the seller issues a cash register receipt to the buyer and issues a VAT invoice (i.e. when cash/ card payment is made at the point of sale).

However, if the company, VAT payer, purchases goods, pays by bank transfer and the seller issues a VAT invoice, the seller only calculates sales VAT, but VAT payment is taken over by the buyer i.e. the purchaser pays for the goods without VAT and declares both purchase VAT and sales VAT on its VAT return.

Currently, local VAT reverse charge mechanism in Lithuania is applied to VAT payers for:

·       construction works (construction of a new building, reconstruction works of a building, demolition works);

·       purchase of goods from a supplier which is subject to bankruptcy proceedings (in the procedure of bankruptcy or already bankrupt);

·       ferrous and non-ferrous metal waste / scrap;

·       wood (logs, boards, beams).

If you have any questions, please do not hesitate to contact the Leinonen team.