Company formation and accounting in Latvia
Last updated: 2017-01-07
General rule is following: if you start to make transactions, taxable with value added tax (VAT), you must register as VAT payer.

There is an exception from general rule. You have rights not to register as VAT taxable person and have rights not to pay VAT, if total amount of VAT taxable transactions during previous 12 months do not exceed 50 000 euro (starting from Year, 2018, - 40 000 euro).
The above mentioned amount does not include the value of sold (delivered) intangible and fixed assets, if such a sale (supply) occurs once in 12 months.

Taxpayer also has rights not to register as VAT taxable person, if after one transaction amount of VAT taxable transactions increases 50 000 euro (starting from Year, 2018, - 40 000 euro) and during next 12 months the taxpayer does not plan to make other VAT taxable transactions. However, in such case the taxpayer must pay VAT from amount that increases the mentioned amount.

Latvian legislation provides for cases (conditions), when the taxpayer must register as VAT taxable person, if the amount of VAT taxable transactions does not exceed the mentioned limit during the previous 12 months.

A person registered in Latvia must register as VAT taxable person in following cases:

  • A merchant (person engaged in economic activities) renders services to a person from another country of European Union (EU) if the person (recipient of services) engages in business activities (or has a VAT number).
  • A merchant (person engaged in economic activities) receives services from a person, registered in another EU country if the person (provider of services) engages in business activities (or has a VAT number).
  • A merchant (person engaged in economic activities) receives certain services from a person, that is registered outside Latvia and provider of services does not do economic activities in Latvia.
  • A merchant (person engaged in economic activities) buys goods within territory of European Union (except, Latvia) and total amount of purchases (without VAT) during calendar year reaches or exceeds 10 000 euro.
    However there is an exception, and a merchant has no obligation to register, if after one purchase (10 000 euro or more) during the next calendar year the merchant plans no purchases, total amount of which will reach or exceed 10 000 euros.

A person registered in the European Union, but not in Latvia must register as VAT payer in the following cases:

  • If a person (merchant) from other EU country supplies to Latvian VAT non-taxable person goods, which in Latvia are taxed with the excise tax. As VAT payer must register the person (merchant) from another EU country (point 2, part 2 of article 60 and article 10 of the VAT law).
  • If a person of another EU state delivers goods to Latvia to a person, that is not registered as VAT payer in Latvia, and total amount of supplies (excluding VAT) during the current or during the previous calendar year is 35 000 euros or more. As VAT payer must register the person (merchant) from another EU country.
  • If a person of another EU state delivers goods to VAT non-taxable person and the goods in Latvia are mounted or installed. As VAT payer must register the person (merchant) from another EU country.
  • If a VAT payer of another EU country has a permanent establishment in Latvia, and this permanent establishment is involved in the supply of goods or services of the VAT payer of another EU country, then the permanent establishment in Latvia must register as VAT payer in Latvia.

Exceptions when the person registered in the European Union, but not in Latvia, has the right not to register as VAT payer (article 61 of the VAT law):
  • The person supplies goods or provides services for which VAT must pay a recipient of goods or services.
  • A person in a customs warehouse or in a free zone delivers only goods, that are not goods of the EU or supplies goods, in relation to which export procedure has been commenced.
  • A person engaging in supplying of goods and from one of customs warehouse or free zone to another customs warehouse or free zone moves goods that are not goods of the EU or supplies goods, in relation to which the export procedure has been commenced.
  • The person supplies stocks of industrial goods or wholesale goods to registered VAT payer and according to the contract between the supplier and the recipient the ownership of goods is transferred only at the moment the next sale or usage.
  • The person, VAT payer of another the EU country, in Latvia purchases goods and delivers the goods, participating in the so-called trilateral transaction.
    To have the right not to register, it is necessary to fulfill the following conditions. A person does not conduct business activities in Latvia. The goods are delivered to Latvia from another country of the EU and the country is not a country of registration of the person. Person calculates and "pays" VAT for the purchase of goods.
  • A person does not conduct business activities in Latvia and delivers goods from Latvia outside the European Union. But the person must register as VAT payer in Latvia, if the goods are intended for equipping ships for recreational travel, personal aircraft or any other vehicles for personal use.
  • In relevant transactions the person is represented by a fiscal representative.

A person registered outside the EU must register as VAT payer in the following case:

If a person registered outside the EU has a permanent establishment in Latvia, and this permanent establishment is involved in the supply of goods or services of the person, then the permanent establishment in Latvia must register as VAT payer in Latvia.

Exceptions when a person registered outside the EU, has rights not to register as VAT payer in Latvia:
  • A person supplies goods or provides services for which VAT must pay a recipient of goods or services.
  • A person in a customs warehouse or in a free zone supplies goods that are not goods of the EU or supplies goods in relation to which the export procedure has been commenced.
  • A person engaging in supplying of goods and from one of customs warehouse or free zone to another customs warehouse or free zone moves goods that are not goods of the EU or supplies goods, in relation to which the export procedure has been commenced.
  • In relevant transactions the person is represented by a fiscal representative.
  • A person does not conduct business activities in Latvia and delivers goods from Latvia outside the European Union. But the person must register as VAT payer in Latvia, if the goods are intended for equipping ships for recreational travel, personal aircraft or any other vehicles for personal use.



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