ViDA, or the European Union's VAT for the Digital Age reform package, is changing from July 1, 2028 Article 194 of the VAT Directive is mandatory: where goods or services are sold by a company that is not established or registered for VAT purposes in the Member State where VAT is due, and the buyer is already a VAT taxable person in that country, the obligation to charge and pay VAT automatically passes to the buyer. This is not a new general cross-border reverse charge for all intra-EU purchases. The rule concerns narrowly cases where a foreign seller operates on the local market without a local VAT number.
What four conditions determine obligation?
Before you decide that an invoice should be reverse-charged, go through in Directive (EU) 2025/516 four conditions are set out: the seller is not established in the buyer's country; the seller does not have an individual VAT number there; the buyer is already registered for VAT in that country; and the transaction is not subject to the margin scheme for second-hand goods. If all four are met, the invoice will be VAT-free and the buyer will declare it themselves.
What happens if the seller already has a local number or location?
If the foreign supplier is already registered for VAT in the country of the buyer or has a permanent establishment there that participates in the transaction, the mandatory rule of 2028 does not apply. In that case, the current procedure of each Member State will determine the liability. In Estonia, the principle already applies that Estonian entrepreneur calculates VAT on goods and services purchased from a foreign seller not registered in Estonia, if the seller's Estonian place of business is not actually involved in the transaction. Latvia VID describes its reverse charge procedure for narrowly listed groups of goods, such as metal scrap and construction services, and Lithuania VMI explains, that a buyer of goods located in Lithuania declares the sale of goods on VAT form FR0600, if the seller is not established or registered in Lithuania. The 2028 amendment does not eliminate these domestic categories.
What must the invoice and declaration reflect?
From July 1, 2028 The buyer's VAT number must be indicated on the invoice., on which the buyer calculates VAT, and the seller must issue the invoice no later than the 15th of the month following the turnover. Check that you have given the seller the correct local VAT number, as the seller will enter the transaction in their consolidated report and an incorrect number means that the reverse charge entry will not match the tax authorities' cross-check.
Will this remain a realistic cost?
In most cases, no. If the purchased goods or services are intended for taxable business activities, you deduct the same amount as input VAT in the same period. For example, in Lithuania, On the FR0600 form VAT is calculated within 25 days of the end of the period, but if you have the right to deduct, you will get the same amount back. If the purchase is related to a tax-exempt activity, part of the VAT remains as a real expense, just like with a regular purchase invoice.
Is this related to the 2030 e-invoice rule?
The 2028 reverse charge concerns the VAT liability of a specific transaction. There is also a separate deadline: Member States must implement the measures in Article 5 from 1 July 2030, and the digital reporting obligation then extends to every person registered for VAT, but only for the categories of transactions listed in Article 262 – including the exceptions for VAT-exempt goods and services. These are two different deadlines in the ViDA package, which are often confused due to the same name.
FAQ
When will the ViDA reverse charge obligation for the buyer come into effect?
From July 1, 2028. If the foreign seller is not established in the buyer's country or registered as a VAT payer there, the obligation to calculate and pay VAT automatically passes to the buyer.
What four conditions must be met for reverse charge to apply?
The seller is not established in the buyer's country; the seller does not have an individual VAT number there; the buyer is already registered for VAT in that country; and the transaction is not subject to the margin scheme for second-hand goods.
Will reverse charge become a real cost for the buyer in 2028?
In most cases, no. If the purchased goods or services are intended for a taxable business activity, you deduct the same amount as input VAT in the same period. If the purchase is related to a tax-exempt activity, part of the VAT remains as an actual expense.
Is the 2028 reverse charge related to the 2030 e-invoice rule?
No, these are two different deadlines in the ViDA package. The 2028 change concerns the VAT liability of a specific transaction, while in 2030 the digital reporting obligation will extend to every VAT payer.