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Key takeaways
- Latvia VAT rates: The standard VAT rate is 21%, with reduced rates of 12% and 5%, plus a 0% rate for intra-EU and international transport services.
- Registration threshold: Resident businesses must register once turnover exceeds €50,000, while non-resident businesses must register from their first taxable activity
- Filing & penalties: VAT returns are filed monthly, quarterly, or bi-annually, and late filings or payments can result in fines up to €700 and interest charges up to 18.25%.
Latvia has its own specific VAT (Value Added Tax) regulations that are essential for businesses operating in the country to understand. This comprehensive guide delves into the Latvian VAT system, covering VAT rates, registration requirements, and more.
What is the Latvia VAT rate?
In Latvia, VAT, or Pievienotās vērtības nodoklis (PVN) as it’s known there, is a significant aspect of the fiscal framework. The standard Latvia VAT rate is 21%, with reduced rates of 12% and 5% and a zero VAT rate for specific goods and services.
Registering for VAT in Latvia
Businesses, both local and foreign, engaging in taxable activities in Latvia must register for VAT. The registration threshold for local businesses is €50,000. Unlike resident businesses, non-resident businesses are subject to Latvian VAT registration regardless of their turnover.
For EU-wide cross-border e-commerce, the distance-selling threshold is €10,000. Exceeding this in annual sales to Latvian customers will require you to register your business for Latvia VAT. Registration is also mandatory for businesses storing goods in Latvia or using fulfillment services like Amazon's FBA (Fulfilled-by-Amazon).
To register for VAT and receive a Latvian VAT number, businesses should apply directly to the Latvian State Revenue Service. The registration process typically takes around three weeks to complete.
Fiscal representation in Latvia
Unlike many other EU member states, Latvia does not require non-EU businesses to appoint a fiscal representative when registering for VAT.
Latvia VAT return filing and penalties
Those businesses engaged in intra-community selling must submit a Latvia VAT return monthly. Quarterly returns are required for businesses with non-intra-community sales of between €14,228.72 and €50,000 per annum. If annual non-intra-community sales are below €14,228.72, VAT returns must be filed bi-annually.
Returns should be electronically submitted through the Latvian State Revenue Service’s portal by the 23rd of the month following the reporting period.
Fines of up to €700 may be levied for the late submission of a Latvia VAT return. Failure to pay VAT on time will incur a fine of between 10% and 100% of the VAT owed as well as interest at 18.25%.
Latvian Intrastat declarations
Intrastat declarations are necessary for businesses trading within the EU that have sales surpassing annual thresholds of €330,000 for arrivals and €200,000 for dispatches. These declarations are due by the 10th of the subsequent month and fines may be imposed for late submission.
Reverse charge mechanism in Latvia
The reverse charge mechanism in Latvia applies to certain transactions, such as services from non-residents and intra-community acquisitions as well as a limited number of domestic supplies. It shifts the VAT reporting and payment responsibilities from the supplier to the recipient.
Frequently asked questions
What is the VAT rate in Latvia?
Latvia’s standard VAT rate is 21%, with reduced rates of 12% (for baby food, accommodation, books, and medicines) and 5% (for locally grown fruits and vegetables). A 0% rate applies to intra-EU and international transport.
When do I need to register for VAT in Latvia?
Resident businesses must register once annual turnover exceeds €50,000. Non-resident businesses must register immediately upon starting taxable activities. The EU-wide distance selling threshold is €10,000.
How do I register for VAT in Latvia?
Businesses can apply through the Latvian State Revenue Service (VID). Once approved, you’ll receive a Latvian VAT number within around three weeks.
Do foreign businesses need a fiscal representative in Latvia?
No. Non-EU businesses are not required to appoint a fiscal representative for VAT registration in Latvia.
How often must VAT returns be filed in Latvia?
- Monthly – for businesses involved in intra-EU trade
- Quarterly – for annual turnover between €14,228.72–€50,000
- Bi-annually – for turnover below €14,228.72
Returns must be filed electronically by the 23rd of the following month.
Are Intrastat declarations required in Latvia?
Yes. Intrastat declarations must be filed monthly if annual EU trade exceeds €330,000 (arrivals) or €200,000 (dispatches). Submissions are due by the 10th of the following month.
