Greek reverse charge on IT equipment
Domestic reverse charge in Greece has been extended to supplies of IT equipment.
Changes to the reverse charge in Greece
Last 1 August 2017 the Greek government amended the current VAT law to introduce changes to the reverse charge scheme on supplies of laptops, mobile phones, tablets, game consoles and personal computers.
Greece is the latest country in Europe to introduce this widely extended reverse charge on these products. The Directive allows Members States to apply reverse charge on certain products that are often used for carrousel fraud purposes. This type of reverse charge, however, must be approved beforehand by the European Commission.
The new reverse charge in Greece applies as from 1 August 2017. Further information is expected to be published by the Greek authorities, particularly about the scope of this reverse charge and specific items that are subject to the new rules.
What is reverse charge?
Reverse charge is an exception from the general rule on VAT. Under normal rules of VAT, the supplier charges and collects VAT from the customer which is paid to the tax authorities as output VAT. The customer who incurred this VAT will deduct it as part of its VAT return. However, when reverse charge applies, the supplier will not charge VAT and the customer will declare VAT on this purchase as due and as deductible in the VAT return. We often referred to it as self-accounting mechanism for the customer. Usually, this system has a nil financial effect for both supplier and customer, although this would not be the case if the client does not have full right to deduct VAT.
In our article, Reverse charge scenarios you can find more information about the meaning of reverse charge and the different scenarios in which this mechanism can apply according to the EU VAT Directive.