Latvian VAT returns

Any company registered with the Latvian tax authorities (see our Latvian VAT registration briefing) as a non-resident VAT trader must report taxable transactions through periodic filings, known as returns.

If intra-Community supplies have been made then monthly returns are required in Latvia. If sales have ranged between EUR14,228.72 and EUR50,000 in the previous twelve months and no intra-Community supplies have been made then a business may apply to submit quarterly returns. If sales are below EUR14,228.72 and no intra-Community supplies have been made then twice-yearly returns may be submitted.

All returns must be submitted electronically through the Electronic Declaration System.

Companies can offset the sales, or output VAT, declared in the Latvian return with the corresponding input or purchase VAT. There are some exceptions, including:

• Non-business expenses.
• 60% of the input VAT in relation to representation expenses (for example merchandise with corporate logo)
• 20% of the input VAT on business-related car purchase, maintenance, repair and fuel
• Car purchase, maintenance, repair and fuel if the car is worth over EUR50,000

Any Latvian monthly or quarterly VAT filing is due on the 20th of the month following the period end. The VAT is payable on the same date.

Taxpayers are required, in certain situations, 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.

Latvian VAT returns have been filed electronically since 2011, with electronic authentication, over the internet.

If the Latvian VAT return is filed late or contains incorrect information, foreign companies may be subject to penalties. Late filings and payments are subject to a charge of 10% of the VAT due, with interest charged at 0.05% per day. In addition fixed penalties of up to EUR 722 may be levied for late filing or payment. Penalties for incorrect information can be up to 50% of the tax due. There is a three year statute of limitations for Latvian VAT.

If there is a surplus of VAT inputs over outputs (more VAT incurred than charged), then a Latvian VAT credit arises. In theory, this is due back to the VAT registered business. For EU businesses a claim must be submitted electronically no later than 30 September of the year following that in which the VAT was incurred in Latvia. Refunds are made within ten days of notification of the Latvian authorities to issue a partial or complete refund. For non-EU businesses the form “Application for refund of Value Added Tax to a Taxable Person not Established in the European Union Territory" must be submitted no later than by 30 September of the calendar year following the refund period. The amount due is then paid within ten working days of the date of the Latvian authorities’ decision to grant a refund. VAT is only refunded to non-EU businesses where reciprocity agreements are in place e.g. Norway, Iceland, Monaco and Switzerland.