Summary of various VAT aspects of supplies of goods in Latvia.

Withdrawal of business goods in Latvia

The supply of goods consisting of the application by a taxable person of goods forming part of his business assets for his private use or for that of his staff (self-supply) is treated as a supply of goods.

Free-of-charge supplies to third parties

Supply of goods – a transaction, which is manifested as the transfer of the property rights of a thing to another person, so that he or she may act with the thing (property). The sale of immovable property or its parts, as well as transactions, which are performed in accordance with concluded hire-purchase (leasing) contracts, shall also be considered as the supply of goods.

The application by a taxable person of goods forming part of his

business assets for his private use or for that of his staff, or their disposal free of charge or, more generally, their application for purposes other than those of his business, shall be treated as a supply of goods for consideration, where the VAT on those goods or the component parts thereof was wholly or partly deductible.

However, the application of goods for business use as samples or as gifts of small value shall not be treated as a supply of goods for consideration. Low-value bussines gifts are something that companies give to their clients for free as a promotion or just to show their gratitude for their clients. Ussualy it is something low on cost, so it would be possible to avoid VAT paying.

Transfer from taxable to non-taxable activity

The application of goods by a taxable person for the purposes of a non-taxable area or exempt of activity, where the VAT on such goods became wholly or partly deductible upon their acquisition is treated as a supply of goods.

Goods remaining at cessation of taxable activity

The distribution of such types of assets upon liquidation or total or partial dissolution of such company or holding is a supply of goods if the VAT on such goods became wholly or partly deductible upon their acquisition. These transactions are simultaneously subject to VAT and transfer tax.