VAT compliance & reporting rules Latvia 2024
Below is summary of the major rules provided under Latvian VAT rules (VAT Law 2013 (Pievienotās vērtības nodokļa likums). Plus adoption of the EU VAT Directive. Check our country VAT guides for other jurisdictions.
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Latvia VAT country guide
| Highlights | Local term | Pievienotās vērtības nodoklis (PVN) |
| VAT Rates - standard | 21% | |
| Rates news | Reduced rates on COVID-19 hit sectors | |
| VAT Rates - reduced | 12%; 5%; 0% | |
| VAT number format | LV 12345678901 | |
| Registration threshold | €50,000. Nil for non-residents; €10,000 for pan-EU digital services and goods OSS return. Intra-community acquisitions €10,000. | |
| VAT Group | Permitted | |
| VAT recovery foreign businesses | Permitted, although reciprocity agreement required for non-EU businesses | |
| Fiscal Representative | Not required. | |
| Currency | Euro €, January 2014 | |
| Administration | Introduction | Latvia introduced VAT in May 1995. It joined the European Union in 2004. |
| VAT laws | VAT Law 2013 (Pievienotās vērtības nodokļa likums). Also EU VAT Directive which takes supremacy as part of EU membership | |
| Tax Authorities | State Revenue Service ('Valsts ieņēmumu dienests' or 'SRS'). The Riga office manages non-resident VAT registered businesses | |
| VAT Rates | Standard rate | 21% |
| Reduced rates | 12%: medicines; overnight accommodation; newspaper and journals; domestic passenger travel; children's supplies; domestic heating products. 5%: basic foodstuffs including fruit and veg until 31 Dec 2023 | |
| Zero-rated | Intra-community passenger travel by air and sea; Exports and intra-community supplies of goods; gold to central banks; services related to vessels and aircraft | |
| Exempt | Education; financial services; health, hospital, and social welfare; public postal; letting immovable property; betting and gambling; welfare services; international passenger transport; certain copyrights | |
| Scope of VAT | Scope of VAT | Provision of domestic taxable goods and services; EU imports; intra-community acquisitions; Distance selling of goods B2C (OSS or IOSS); receipt of services or goods via the reverse charge |
| Time of supply | Goods & Services (general rule) | Goods at time of delivery (or start of transport); services at time of provision. Prepayment trigger VAT tax point (not for intra-community supplies) |
| Reverse Charge | General rule | |
| Continuous Services | At time of invoice or payment. But at least every six months. | |
| Imports | At time of clearance into Latvia free circulation from customs or bonded warehouse. Postpone accounting licence available to avoid cash payment (see separate) | |
| Goods on approval and return | General rule applies | |
| Registration | VAT registration threshold | €50,000. Nil for non-residents; €10,000 for pan-EU digital services and goods OSS return. Intra-community acquisitions €10,000. |
| Voluntary VAT registration | Permitted | |
| VAT number format | LV 12345678901 | |
| VAT Group | Two or more connected (management or shareholding) taxpayers may form a VAT group with a single VAT identity. Transactions between group members are zero-rated. Members report under a consolidated VAT number, but still retain their own VAT numbers for non-group transactions. All members of the group and jointly liable for each others VAT. At least one member must provide taxable services exceeding €350k to the others. Holding companies without a taxable income may join a VAT group if adjustments are made to the deductible VAT. Non-residents with no local presence are excluded. | |
| Non-residents | Permitted without tax agent | |
| Fiscal Representative | No longer required for non-EU businesses. Although the tax office reserves the right to impose it on certain taxpayers. | |
| Digital Services | Latvia participates in the EU single One Stop Shop (OSS) VAT return for digital, telecoms and broadcast services. This was formerly the MOSS regime until 30 June 2021 | |
| Pre VAT registration costs | Permitted for expenditure on goods are services up to 15 month prior to VAT registration. Some specific costs excluded e.g. rent | |
| VAT Invoices | Issuance | Invoices should be issued within 15 days of supply or from receipt of payment. Intra-community supplies must be invoiced by the 15th of the following month. Continuous supplies should be invoiced at least every calendar year. Cashier's till receipt may be used for amounts not exceeding €30 |
| Content | Date; unique sequential invoice number; name and address of supplier and customer; Customer VAT number for intra-community supplies or reverse charge; date of supply or advance payment if different from invoice date; Description, quantity or units etc of supply of goods or services; price per unit; taxable amount; VAT charged; rate (broken out if supplies at different rates); total; explanation if zero-rated supply. | |
| E-invoices | 2026 B2B e-invoicing mandate | |
| Simplified invoices | Permitted when not exceeding €150. May be used as credit notes. | |
| Self-billing | Permitted by written agreement between both parties with requirements around the terms, obligations and requirements for invoices. The agreement may be included within sales contract. | |
| Retention of invoices | Five years. Paper invoices may be digitised under strict controls and obligations to SRS. Invoices must be kept in Latvia. | |
| FX rules | Invoices may be issued in foreign currencies, but the VAT payable should be shown in €. The exchange rate at the time of supply should be based on the ECB published rate. | |
| Invoice corrections | Credit or debit notes may be used, with a clear reference to the original invoice number and reason for adjustment. Simplified invoice format may be used. | |
| Compliance | Right to deduct | Excluded: 50% of car purchase and running costs; 100% if vehicle in excess for €50,000. Business and staff entertainment. Most business gifts. Non-business hotel accommodation |
| Call-off stock | Following the EU's 2020 Quick Fix harmonisation reforms, stock may be transferred from an EU state to an customer location/warehouse in Latvia without triggering a VAT registration and supply for a non-Latvian supplier. Title has not passed until the customer takes the goods for production and sale. At which time a zero-rated transaction may be effected. This must happen within 12 months of the original movement | |
| Reverse Charge - B2B | In addition to the reverse charge on B2B cross-border supplies of most services, the RC is applied on non-residents supplying VAT registered residents with most goods and services. Also, non-resident suppliers of natural gas and electricity; Domestic reverse charge - construction; scrap, certain crops, timber and wood products, domestic electrical appliances, metal products, mobile phones, computers, microprocessors and CPUs | |
| Cash discounts | Separate credit notes are not required if a customer subsequently takes-up a cash discount fully detailed on a sales invoice. | |
| Bad debt relief | For debts not exceeding €430 permitted for unrelated parties were state notification to customer, plus other basic conditions. If above €430 then court action required with phased write-back depending of the stage of bankruptcy proceedings. Bad debts are recovered through VAT returns in March each year, or in next month if customer declared bankrupt | |
| Import VAT deferment | Postponed VAT accounting for deferring import VAT to the VAT return is permitted. An application for a licence is required, and will be granted if good compliance history. Exemption is allowed in the case of an import and immediate (30 days) intra-community supply. | |
| VAT warehouse | No VAT warehouse regime in Latvia. Goods may be held in customs duty and import VAT suspension in bonded warehouses prior to import. | |
| Supply & install | If a non-resident trader provides and goods supply and instal services to a VAT registered resident customer, the reverse charge should be used. Otherwise it is the supplier's responsibility to VAT register. | |
| Use and enjoyment services | Latvia applies the local use & enjoyment VAT obligations for: telecoms, broadcast and electronic (TBE); lease of movable property and motor vehicles; goods transportation services | |
| Capital goods adjustment period | Movable property: five years. Immovable property: ten years | |
| Non-residents VAT recovery | EU businesses may apply for Latvian VAT reclaims through the electronic portal of the tax authorities of their company of residency (8th Directive). Quarterly claims above €400 permitted, with final claim above €50 by 30 Sept of following year. For non-EU businesses, Latvia does require a reciprocal agreement with the country of residence of the claimant - which includes Norway, Switzerland, Iceland, Monaco, and the UK (subject to Brexit confirmation). Non-EU businesses must submit a paper-reclaim with supporting invoices via the Latvian authorities directly (13th Directive). Non-EU businesses do not have to appoint an Latvian resident Fiscal Representative for the reclaim process. | |
| VAT on Digital Services | Latvia follows the EU VAT on digital services regime, introduced in 2015. This includes participation in the One-Stop-Shop (OSS) single EU VAT return (formerly MOSS until 30 June 2021) | |
| Live events | ||
| Distance selling threshold for goods | Nil. Following the EU ecommerce VAT package reforms from 1 July 2021, local Latvian VAT must be charged on all sales by non-Latvian EU e-commerce sellers shipping from within the EU. Imported distance sales not exceeding €150 liable to Latvian sales VAT with IOSS return option | |
| Cash accounting scheme | Permitted for resident businesses not exceeding €100,000 sales per annum. | |
| VAT registered cash tills | N/a | |
| Statute of limitations | Three years | |
| Other | N/a | |
| VAT Returns | Frequency | Quarterly. If a trader makes intra-EU supplies exceeding €50,000 per annum then monthly returns. Bi-annual VAT returns if sales do not exceed €14,228.72 per annum. |
| Filing method | Electronic via the state Electronic Declaration System | |
| Deadlines (inc payments) | 23rd of the month following the reporting quarter. | |
| VAT credits | Automatic refund of excess input VAT when most of transactions zero-rated or exempt. Otherwise, must be over €5,000 for automatic refund, subject to possible audit. | |
| Corrections | Corrective return through the Electronic Declaration System, marked with 'clarification' | |
| Non-residents | Permitted. Same rules as residents. No VAT registration threshold. | |
| Other filings | Monthly European Sales Listing for goods and services supplies 20th of month following, and there is no reporting threshold. Intrastat monthly by the 10th of the following month for supply of goods above threshold: dispatches: €200k; arrivals: €350k. Domestic sales and purchases recapitulative statement required with each VAT return for transactions above €1,430. Annual VAT return required for financial services, material adjustments to VAT liabilities. | |
| SAF-T | N/a | |
| Penalties & interest | Missed return fine of up to €700.Missed VAT payments may incur penalties ranging from 10% to 100% of the unpaid VAT. In addition, interest at 18.25% will be levied. Improperly or undeclared VAT subject to fines of between 10% and 50%, plus late interest. | |
| B2C Distance Selling returns | Latvia participates in the One-Stop-Shop OSS pan-EU VAT return for distance selling, introduced in July 2021. |
