Amount, taxed with the value added tax.
Company formation and accounting in Latvia
Last updated: 2017-01-07

Sale (supply) of goods and provision of services.

In transactions for the supply of goods and provision of services VAT taxable value (amount) is a reward for the sold goods or provided services.
The reward is the value of goods or services in monetary terms, excluding VAT and a seller of goods or a service provider receives or should receive this value as a payment from a recipient of goods or services or from another person.

Consumption for personal needs (private use).

If the VAT payer gratuitously gives (transmits) the assets for their personal use or the personal needs of its staff (employees), and for the acquisition of assets either partially or completely deducted the VAT, then VAT levied purchase price or production cost (if not possible to determine the purchase price).
For example, if a company has purchased goods and part of the goods are used for the personal needs of employees and such use is not necessary for ensuring economic activities of the company, then the company must pay (must specify in the declaration for payment) the VAT on the purchase price of these goods.

If a company provides services free of charge for personal needs of employees and the provision of services is not necessary for ensuring economic activities then VAT is levied on all the costs to provide such services.

Sale of goods within the territory of the European Union.

If the taxpayer delivers (sells) goods within the European Union (sends or transports goods from one EU country to another EU country), then the VAT is levied on remuneration for the delivered goods.
If a taxpayer from Latvia to another EU country moves part of its assets used for economic activities, for ensuring economic activities in another Member State of the EU, then VAT is levied on the purchase price of these or similar assets or the cost of assets (if there is no purchase price).

Purchase of goods in the territory of the European Union.

If a taxpayer buys goods in the European Union, then VAT levied on a reward for the purchased goods.
If a taxpayer from another EU country to Latvia moves part of its assets used for economic activities, then VAT is levied on the purchase price of these or similar assets or the cost of assets (if there is no purchase price).

Intermediary services.

If a taxpayer provides intermediary services, then VAT is levied on a reward of the intermediary.

Rent (lease).

In rent (lease) transactions VAT is levied on all lease payments specified in the lease agreement.

Installment buying.

In transactions of installment buying the VAT taxable amount is a reward for a purchase object (a reward, specified in the contract) on the day of conclusion of the contract. Also VAT is levied on additional payments (specified in the contract), except for interest on the loan.

Transactions with related persons.

In transactions with related persons VAT is levied on the market value of goods or services, if an amount of transaction is below the market value and the recipient of goods or services has no rights to deduct VAT in full or transaction amount is above the market value and a supplier of goods or services has no rights to deduct VAT in full.

Import of goods.

In transactions for the import of goods VAT is levied on customs value of goods and to following costs (added to the customs value):
  • The cost of services if the services are directly related with the import of goods and if the cost of services is not included in the customs value of goods.
  • Commission payments, as well as costs of transportation, packaging and insurance, which have arisen prior to the first destination in the domestic territory.
  • The cost of transportation of goods to a recipient in another EU country, if the place of transportation is known at the moment of import.
  • In legislation defined taxes, fees and other mandatory payments, which are charged for the import of goods, except VAT, tax on natural resources and tax on cars and motorcycles.

Transactions with a real estate.

  • In case of sale of unused real estate (except renovated real estate) and sale of land for construction (building) VAT is levied on a reward for the sold property.
  • In the case of a sale of renovated real estate VAT is levied on the difference between net sales and cost of real estate before the renovation.
  • If parties conclude a contract on the purchase of real estate (with the exception of housing, which is not used in the business) in installments, the contract is not fulfilled and the real estate remains in the possession of the seller, then VAT must apply as in lease transactions. But VAT is not charged on interest on the loan.
  • In sales of a real estate (that contains several objects or groups of premises), where part of the sold real estate is unused real estate, VAT is levied on part of the remuneration in proportion to the unused part of the real estate against all property sold.

If a bailiff or an administrator of the insolvency proceedings sells a property at the auction.

If a property owner is a VAT payer and a bailiff or an administrator of the insolvency proceedings sells the property, then:
  • If in an auction for sale is movable property or renovated property and the owner informed the bailiff about the VAT taxable value of the property, then the VAT is levied on the taxable value.
  • If an owner has not informed a bailiff about VAT taxable value of movable property, then VAT is levied on the auction price.
  • If a renovated property is for sale and the owner has not informed the bailiff about the VAT taxable value, then VAT is levied on the difference between the auction price and the purchase price (according to the Land Registry).
  • If for sale is unused real estate or land for construction (building), then VAT is levied on the auction price.
  • If the property is not an unused real estate, then VAT does not apply to the auction price (the price is not subject to VAT).

Decrease of price.

On the reduction of price (discount) decreases the amount subject to VAT.
VAT taxable amount is reduced by discount that is applied at the moment of sale of goods (services), and also by discount, applied after the sale (for example, the discount can be applied for early payment).

What is included in the amount of supplied goods?

Amount (sum) of supplied goods includes all additional payments (including, for mediation, insurance, packaging, transportation), customs tax, natural resources tax, excise tax, and other taxes and duties provided for in laws and regulations, with the exception of VAT.

What is included in the amount of rendered services?

Taxable price of services include all costs, as well as all taxes and other obligatory payments, which are related with the provision of services, with the exception of VAT.



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