Value Added Tax (VAT) in Latvia

The VAT is paid into the State budget by every taxpayer who is registered (or who has to be registered according to Value Added Tax Law) in the State Revenue Service Value added tax register and who performs taxable transactions, which inland are applied with the tax.

Taxable transactions

1) With VAT imposable transactions are such inland transactions, performed within the framework of economic activities, as:

• delivery of goods for remuneration;
• providing services for remuneration;
• acquisition of goods within the European Union for remuneration;

2) Any import of goods is imposed with VAT.

Regarding exceptions please contact Gencs Valters Law firm.

3) A taxable transaction is the purchase of a new vehicle within the territory of European Union, performed by the non-registered taxable person or person who is not the taxpayer.

4) A taxable transaction is also occasionally performed in the delivery of new vehicles, in cases where the supplier, recipient or a third party on behalf of the supplier or recipient from inland dispatches or transports a new vehicle to the recipient to a destination outside the inland, but within the territory of EU.

Taxpayers

The taxpayer is a person who independently performs in any place any economic activity, with respect to the purpose or results of the activity.

Taxpayers are classified:

• Domestic tax payers – (registered taxpayers - who are registered in the State Revenue Service in the Value added tax register; non-registered taxpayers - who are not registered in the State Revenue Service Value added tax register);
• Taxpayers of other Member States (registered/ non-registered);
• A third country or third territory taxpayers (registered/ non-registered);

As registered taxpayer is considered also fiscal agent and the VAT group.

In respect of received construction services, a state or local authority or municipality is also considered to be a taxpayer.

In any case, a public person shall be considered as a taxpayer, if it provides electronic communication services, supplies of goods, including water, gas and electricity, provides freight transport services, provides tourism services etc.

For detailed information, please contact Gencs Valters Law firm.

VAT Group

A VAT group is a group of two or more taxpayers, founded in accordance with a VAT Group Foundation agreement, for performing mutual transactions inland, and is registered in the State Revenue Service Value added tax register.

Tax rates in Latvia

• The standard rate 21 %;
• The reduced tax rate of 12 %;
• Tax rate of  0 %.

The reduced tax rate applies to: medical supplies; milk and dairy products; regular inland transportation services of passengers and their baggage; delivery of textbooks and the original literature; accommodation services; delivery of wood fuel, heat etc.

Tax rate of 0 % applies to: export and import of goods; acquisitions of goods within the EU performed by the fiscal agent; to services related to export or import of goods or transit of goods; delivery and import of the ships,  aircrafts; delivery of goods if the natural person from the third country or third territory, who is not a taxpayer in EU territory, exports acquired goods from the territory of the EU; delivery of goods and services provided to diplomatic and consular missions, international organizations, institutions of the EU and NATO.

The 0 % tax rate shall not be applied if the registered taxpayer, who has performed the transaction, can not present the export documents, or documents certifying the application of 0 % tax rate.

VAT Register

The taxpayer, prior to the performance of taxable transactions or receiving services, shall register in the State Revenue Service Value added tax register. The Taxpayer for performance of the transactions has the right to register in the State Revenue Service Value added tax register for a certain period of time.

In the State Revenue Service Value added tax register shall be registered:

• natural persons; 
• legal persons; 
• partnerships; 
• natural persons authorized by the group of individuals, if the group performs economic activity on the basis of the Agreement; 
• VAT groups; 
• fiscal agents.
• taxpayers of the other Member State; 
• the representatives inland of the taxpayer of the other Member State. 

Taxpayers are registered in the VAT register according to the registration request submitted to the State Revenue Service. The State Revenue Service within 5 working days after receipt of the registration request shall decide on the taxpayer registration in the Value added tax register or decision to refuse registration.

Taxation periods

• 1 month – if the taxable transaction value in pre-taxation year or fiscal year exceeds 50000 EUR.
• 1 quarter;
• half of the calendar year  - if the taxable transaction value in the pre-taxation year does not exceed 14228,72 EUR and who does not perform delivery of goods within EU subject to tax rate of 0 %.

Tax declarations

The Cabinet of Ministers determines the order of filling and submitting the Tax declaration for the tax period.

The VAT declaration consists of declaration for the tax period and its attachments (overview of the pretax and tax amounts; overview of the delivery of goods and provided services in the territory of EU; overview or overview amendments of the input and the amount of tax in the tax return for the tax period; overview of the delivered goods value distribution on free ports and special economic zones; overview of the use of the real property; overview of the transactions performed by the fiscal agent).

Terms of submitting the declaration- 20 days after expiry of taxation period - if the Declaration is submitted in the State Revenue Service using electronic reporting system;

Within 20 days after the end of the taxation period the registered taxpayer has to pay the tax what is calculated for the taxation period in the State budget.

Special tax application regimes

• for farmers;
• for services provided by tour operators;
• for transactions with used goods, works of art, collectors' objects and antiques;
• for transactions with investment gold;
• for electronically provided services in the territory of EU for third country or third territory taxpayers;
• for delivery of timber and related services;
• for construction services;
• for delivery of scrap metal and related services;
• for transactions of delivery of used real property;
• for tax payments and pretax deduction order.

Taxation treaties

Taxation treaties ratified by over 50 countries are in force in the Republic of Latvia.