Latvia VAT guide
Latvia VAT guide for businesses
Latvia introduced Value Added Tax (VAT) in 1995. The rules on Latvian VAT compliance are based on EU VAT directives, as the country is a member of the European Union.
The tax is administered by the State Revenue Service which is part of the Latvian Ministry of Finance.
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What is the VAT rate in Latvia?
21%
The standard VAT rate in Latvia is 21%.
Reduced VAT rates: 12% and 5%.
There is a reduced-rate of VAT of 12%, a second reduced-rate of 5% on certain types of fresh fruit, berries and vegetables. Furthermore, there is a 14% flat-rate compensation percentage for farmers.
The reduced rate of 5% is applicable until 31 December 2023.
Requirement to register for VAT
If the turnover of a business exceeds the threshold of €40,000 it must register for VAT by the 15th day of the month following that period. Voluntary VAT registration is also possible before reaching the threshold.
The thresholds in Latvia are the following:
- Distance selling: €10,000 (from July 2021).
- Intra-Community Acquisitions: €10,000.
- Electronically supplied services (MOSS): €10,000.
Deadlines and VAT filing frequency
VAT returns can be filed monthly or quarterly, depending on the number of taxable supplies made (threshold is €40,000). From 1 January 2021 all tax payments (including VAT) are to be paid to a new unified tax account of the Latvian tax authorities, for which the payment deadline is the 23rd day of the month (previously it was the 20th day of the following month). The returns are submitted via the Electronic Declaration System.
For the tax payments administered by the Latvian customs authorities (import duty, import VAT and excise duty), the existing budget accounts are to be used – payments to the unified tax account will have to be made as of 2023.
Local sales lists and local purchase lists are submitted in a form of appendix to the VAT return.
Intrastat declarations also have to be submitted depending on the threshold set for Intra-Community acquisitions and supplies. Intrastat returns are submitted on a monthly basis, by the 10th day of the month following the return period.
EU Sales List (ESL) is required if a taxable person performs Intra-Community supplies of goods and services. The ESL report is also submitted on a monthly basis by the 20th day following the end of the month as an appendix to the VAT return.
EU Purchase List (EPL) is required if a taxable person performs Intra-Community acquisitions of goods and services. The EPL must be submitted as an appendix to the VAT return.
In certain cases taxpayers are required to submit an annual VAT return by 1 May of the year following the tax year, for example, when a business needs to make input VAT adjustments.
Invoicing requirements for Latvia
The details on a VAT invoice are crucial for establishing VAT liability on the goods or services provided, and it also enables VAT registered customers to reclaim VAT charged. There are certain requirements regarding the content of an invoice, which includes:
- Invoice issue date.
- A date of the supply if different from the invoice date.
- Invoice number.
- VAT number of the supplier.
- Full address of the supplier and customer.
- Description of the goods or services provided.
- Details of quantities of goods.
- Net amount of the supply.
- VAT amount.
- Gross amount.
- VAT rate applied.
- Details to support zero VAT – export, reverse charge or intra-community supply.
- Reference to the VAT law or the directive if the 0% VAT if reverse charge or another special regime applies.
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Agents and fiscal representatives
Businesses in Latvia have the opportunity to appoint a fiscal representative to act on their behalf regarding their VAT compliance. Fiscal representatives must submit a power of attorney if they wish to represent the taxable person in their VAT obligations.
In case of businesses established outside the EU it is no longer compulsory to appoint a fiscal representative to register for VAT purposes – they can register in their own names.
IOSS
The Import One Stop Shop was introduced on 1 July 2021. The main goal of IOSS is that a taxable person can register in only one EU Member State to declare and pay all EU VAT due on the goods imported within the scope of IOSS.
It can be used for goods that are located outside the EU at the time of being sold, they are dispatched in consignments of an intrinsic value not exceeding €150, and they are not subject to excise duties. If the supplier is registered for IOSS, all import VAT due under IOSS through the EU can be reported in one return.
In order to register for the special scheme businesses have to use the Electronic Declaration System.
Intrastat
The aim of Intrastat declarations is to collect statistical data on the movement of goods between EU Member States. EU Member State businesses subject to VAT must submit a declaration on Intra-Community trade when their taxable transactions exceed a specified threshold amount.
The threshold in Latvia is set as following:
- Arrivals: €230,000
- Dispatches: €120,000
- Arrivals detailed: €4,000,000
- Dispatches detailed: €6,000,000
VAT rules on eCommerce in Latvia
Latvia has implemented VAT rules of e-commerce since 1 July 2021. The rules also include that import VAT will be due on all low-value goods imported into Latvia from non-EU countries (currently, the importation of goods for personal use with a value not exceeding €22 is exempt from VAT).
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