Latvia introduced Value Added Tax in 1995. The rules on Latvian VAT registrations, returns and compliance are based on European Union EU VAT Directives which Latvian has transposed into its VAT Act. The tax is administered by the State Revenue Service which is part of the Latvian Ministry of Finance.
Foreign companies, or ‘non-resident’ traders, providing goods or services in Latvia to local businesses or consumers may have to register their business for Latvian VAT. They will then have to follow the Latvian VAT compliance rules, including invoicing and VAT rates, as well as pay over any Latvian VAT due.
There are a number of trading situations which typically require a foreign trader to register with the Latvian tax authorities. These follow the broad EU VAT rules, and include:
- Importing goods into Latvia from another country, either from within the EU or from outside the EU
- Moving goods between Latvia and other EU member states (intra-community supplies), either as sales (dispatches) or purchases (arrivals)
- Buying and selling goods in Latvia
- Selling goods over the internet to Latvian consumers, subject to the Latvian distance selling VAT regisration threshold
- Goods held in consignment stock
- Holding live exhibitions, events or training in Latvia
- If a company is otherwise a non-VAT trader, but is receiving services in Latvia under the reverse charge rule
- The self supply of goods
Few companies need to VAT register if they are providing services to local Latvian companies, and instead can use the Reverse Charge process. This is based on the 2010 VAT Package changes.
Note that providers of electronic, broadcast or telecoms services to consumers in Latvia only have to VAT register in one EU country under the MOSS scheme to file a single return covering all 27 member states.
If you do need to VAT register, read our Latvian VAT registration briefing to understand the requirements, including the VAT registration thresholds. You can also read more about Latvian VAT returns.
