Latvian VAT rates and VAT compliance
Latvian VAT rates
Suppliers of goods or services VAT registered in Latvia must charge the appropriate VAT rate, and collect the tax for onward payment to the Latvian tax authorities through a VAT filling (see Latvian VAT returns briefing). Whilst Latvia follows the EU rules on VAT compliance, it is still free to set its own standard (upper) VAT rate. The only proviso is that it is above 15%.
The current rates are:
|Rate||Type||Which goods or services|
|21%||Standard||All other taxable goods and services|
|12%||Reduced||Food products for infants; pharmaceutical products; medical products for disabled persons; domestic passenger transport; books (excluding e-books); newspaper and periodicals; hotel accommodation; district heating|
|5%||Reduced||A range of locally produced vegetables and fruit|
|0%||Zero||Intra-community and international transport|
Latvian VAT compliance
Once registered for Latvian VAT, you will have to start following the local rules in a number of aspects. This includes:
- Issuing invoices with the disclosure details outlined in the Latvian VAT Act.
- Electronic invoices with proper signature, authenticity and agreement by the recipient.
- Maintenance of accounts of record, which must be held for at least 10 years.
- Correct invoicing of customers for goods or services in accordance with the Latvian time of supply VAT rules.
- Processing of credit notes and other corrections.
- Use of approved foreign currency rates.
What is the tax point for Latvian VAT?
For most goods where no VAT invoice is issued, for example retail sales, the tax point is when the supply of goods is made. Where a VAT invoice is issued (as in most B2B transactions) the tax point is deemed to be the invoice date regardless of when the supply of goods takes place. For services, the tax point occurs when the service is supplied or carried out. If the service takes place continuously over a long period of time then a VAT invoice must be issued every six months.The tax point or” time of supply” rules in Latvia determine when the VAT is due. It is then payable to the tax authorities by the twentieth day following the VAT return period.
In the case of payment taking place in advance of an invoice or supply of goods or services, the tax point will occur at the time of payment. Likewise, in the case of an invoice being issued in advance of a supply of goods or services the tax point will occur on the date of the invoice.
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