Latvia domestic reverse charge on laptops

Latvia has announced plans to introduce the anti-VAT fraud domestic reverse charge mechanism on sales of laptops, computer chips, mobile phones from 1 April 2016.

The domestic reverse charge eliminates cash payments of VAT between sellers and buyers of goods in the same country. It may only be introduced by EU member states after seeking approval from the European Commission to deviate from the EU VAT Directive.

It is used in sectors where countries suspect there is VAT fraud. Typically such ‘missing trader fraud’ exploits the EU VAT’s practice of not levying VAT on sales of goods between EU states. Criminal gangs report these intra-community sales, but in fact sell the goods locally with a VAT charge. They then withhold the VAT.