VAT changes in relation to construction companies in Latvia
Reverse VAT charge is introduced in Latvia by the law effective January 1, 2012.
According to VAT reverse charge, construction company issues invoice for the services without VAT and the recipient of the services pays to the construction company invoice free of VAT. However, VAT on the invoice is paid by wire transfer to the state by the recipient of the services. The above presumes that both involved companies are VAT registered in Latvia. VAT rate in Latvia is 22%.
The new rule is applicable to the construction agreements concluded after January 1, 2012. Some exceptions are applicable to state and municipality contracts. Contracts concluded till December 31, 2011, will be subject to the new rules as of January 1, 2013.
Construction services for the above matters is meant all services staring with the preparation of the construction site up to completion/destruction of the construction.
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