VAT in Latvia guide

VAT rates

The term “taxable supplies” refers to supplies of goods and services that are subject to VAT.

In Latvia, the following rates of VAT apply:

• Standard rate: 21%
• Reduced rate: 12% and 5%
• Zero rate: (0%)

The standard rate of VAT applies to all supplies of goods or services unless a specific measure provides for the reduced rate, the zero rate or an exemption. When an exemption is granted, there may be an option to tax.

Latvian VAT for digital service providers

In case of digital services, telecom services or broadcasting services supplied in a business-to-business (B2B) context, the place of supply is the place where the recipient is customer are established in Latvia.

In case of digital services, telecom services or broadcasting services supplied in a business – to consumer (B2C) context Latvian VAT is always due in case of supply to customers established in Latvia, disregarding whether the supplier is established inside or outside the EU. See the section on the “One-Stop-Shop” (OSS) below for more information.

One-Stop Shop

On 1 July 2021 EU has introduced a so-called “One-Stop-Shop” (OSS) system which has replaced a previously applied “MiniOneStopShop” (MOSS) system. OSS has extended the scope of MOSS from digital goods and services to all goods and services sold B2C in the EU. OSS is an electronic portal that simplifies VAT compliance for online sellers, i.e., online businesses that sell goods and/or services in the EU are now only required to register for VAT in one EU country for all their B2C sales in the EU. If such sellers’ B2C sales in EU are above the applicable threshold, which is 10.000,00 EUR throughout the EU, businesses are liable to charge, collect and remit VAT in the Member State where their B2C buyers are located, instead of the Member State or country of their incorporation, i.e. online sellers have to apply the VAT rate of the Member State where the goods are dispatched or where the services are supplied. AS each EU Member State has an online portal where businesses can register for OSS and submit their VAT returns in one Member State for their B2C sales throughout the EU, it is estimated that VAT compliance costs will be significantly reduced. Registration in the OSS system is available for both – taxable persons established in the EU and outside the EU.

Late – registration penalties

No specific penalty applies to late registration. However, the following penalties may be assessed if VAT is not paid or if VAT returns are not filed as a result of late registration or non-registration:

• An administrative penalty in the amount of EUR210 to EUR350 may be imposed for non registration in the VAT taxable person’s register.
• A penalty may be imposed for undeclared VAT. In such circumstances, undeclared VAT must be paid, together with a penalty of up to 30% of the unpaid VAT and late payment fines of 0.05% per day.
• A penalty in the amount of 0.05% per day may be imposed for late VAT payments.