Flash News offers the latest information on current tax, accounting, legal and other business issues.
Some time ago, we started to present the upcoming amendments to Directive 2023/2225 of the European Parliament and of the Council on credit agreements for consumers (hereinafter “the “Directive”) and the types of services it regulates. The purpose of the Directive is to promote responsible and prudent borrowing. Informative, open and fair advertising is an essential element in achieving this aim, but it is particularly important to ensure that consumers are fully informed before they enter into and sign an agreement.
Crypto-asset trading is a popular source of income that not only attracts new investors but also brings economic benefits to the countries in which crypto-asset providers operate. In order to make Latvia an attractive location for international crypto-asset providers, the Ministry of Economy (“the Ministry”) has recently submitted a draft law that provides for the abolition of personal income tax (PIT) on non-residents' income from the sale of crypto-assets for several years. In this article about the draft law and its impact on the Latvian crypto-asset sector.
When planning to acquire shares or interests in a company, you can determine not only the legal, financial and tax risks but also the competition law obligations that may arise when carrying out the planned transaction.
According to the law, married persons assume legal obligations and exercise their rights. For example, in the case of personal income tax (PIT), the money received from the spouse is not taxed. At present, people tend not to marry but to live in a joint household, even with children. Since such a relationship is by nature a marriage-like cohabitation, the question arises as to whether this PIT exemption could be extended to people living together unmarried. The Senate of the Republic of Latvia (Senate) has answered this question in one of the latest judgements (No. A420156821) discussed in this article.
Outsourced accounting has long been a strategic choice for companies looking to optimise their processes, cut costs and get professional financial support. As we enter 2025 and look to the future, the accounting industry is undergoing major changes driven by technological advances, changing customer demands and global trends. Let's take a look at the key directions that are shaping the future of outsourced accounting.
In previous MindLink articles, we looked at what the Carbon Border Adjustment Mechanism (CBAM) is, which companies it applies to and how it is implemented in Latvia. In this article, we would like to draw readers' attention to important measures that companies should take in 2025 to continue importing CBAM goods to Latvia. We also explain why it is important to include high-quality data in CBAM reports.
On taking a closer look at the findings of PwC’s corporate cyber resilience survey 2024 (Global Digital Trust Insights Survey) I realise that business leaders are greatly concerned about the potential costs of cyberattacks. These include a potential ransom payment in the event of a ransomware attack, system recovery, and potential compensations to customers for the company’s inability to supply its goods or services while it’s dealing with the consequences. Small companies may find such costs unaffordable.
From 13 December 2024, all economic operators subject to the new regulatory framework must start to apply Regulation 2023/988 of the European Parliament and of the Council on general product safety (hereinafter referred to as “the Regulation”). The regulation imposes a number of obligations not only on manufacturers but also on importers, distributors and providers of online marketplace . It is therefore worth familiarising yourself with the regulation to avoid being unexpectedly penalised for non-compliance.
The obligation to register for VAT purposes depends not only on the registration threshold set in Latvia for domestic transactions (EUR 50,000), but also on the type of services supplied to a VAT payer of another EU Member State, if the place of supply of these services is determined under Section 19, Paragraph One of the VAT Law (the recipient of the service is responsible for the payment of VAT), or on the type of services received, the place of which is determined under the above-mentioned Section. According to the VAT Law, VAT registration is also required if the purchase of goods by a company in the territory of the EU reaches or exceeds EUR 10,000 in the current calendar year (currently, this threshold can be used not only by inland taxpayers but also by taxpayers from another EU Member State). The registration requirement has so far prevented SMEs from “enjoying” their status. Some changes have already come into force from 1 January 2025, others will become effective on 1 July 2025. This article looks at these changes.
At the end of 2024, PricewaterhouseCoopers (PwC) conducted a survey among Baltic CFOs to understand the key priorities, trends and challenges in the area of finance function management. CFOs from Latvian, Lithuanian and Estonian companies representing different types of organisations – private companies, listed companies, state and municipal capital companies - took part in the survey.
As is already known, companies that carry out transactions with public authorities (B2G) are now obliged to issue a structured electronic invoice. From 1 January 2026, this requirement will also be mandatory for business-to-business (B2B) transactions. To ensure mandatory electronic invoicing locally, a solution for decentralised electronic invoicing via three electronic transmission channels is envisaged:
Tax transparency is becoming increasingly important in the context of corporate sustainability. Investors, consumers and other stakeholders are paying increasing attention to how companies manage their tax liabilities and reflected in sustainability reports. We previously informed our readers about PwC’s 2023 study “Tax Transparency and Sustainability Reporting in 2023” in this field. This year, PwC published a new study covering the sustainability review practices of over 850 companies in 21 countries. This article summarises the key findings of PwC’s 2024 global study “Global Tax Transparency and Tax Sustainability Reporting Study”.
AI agents are a hot topic in the world of technology now. They represent a new breed of existing AI solutions that aim to automate processes and improve efficiency by providing each employee with a personal assistant. Over the past year, AI tools such as chatbots have become an integral part of everyday life. In a survey conducted by PwC in August 2024, 73% of respondents stated that they already use chatbots such as Microsoft's Copilot and ChatGPT daily or plan to use them. At the moment, however, the focus is increasingly on AI agents that combine a range of the skills of chatbots with broader automation and personalisation capabilities.
The digital transformation has not only created opportunities for companies around the world but also new possibilities. One of the most topical developments is the introduction of electronic invoicing, which offers significant benefits, such as cost reduction, process automation and improved accuracy. However, e-invoicing can also be full of challenges; and organisations need to decide whether to develop an in-house solution or use outsourced services. In this article, we will look at the nature, benefits and challenges of both approaches to help organisations make a considered decision.
The Organisation for Economic Co-operation and Development (OECD) is known to be a unique forum and a globally recognised centre of expertise that enables member states, including Latvia, to effectively address matters of interest to it regarding the adequacy of transfer prices.
This article looks at the guidance developed by the OECD on Amount B for associated enterprises performing the function of a distributor of goods within a group of companies.
State aid and competitive neutrality are the two important principles for public entities that must be respected to ensure the fairness and efficiency of their activities in the market. These principles are essential to prevent market distortions and promote fair competition between public and private companies. While these concepts have recently gained more attention, their interactions have not yet been sufficiently explored. This article discusses how they influence and complement each other.
On 1 January 2025, significant changes to the personal income tax (PIT) legislation came into force. Continuing our tradition, we have prepared an overview of the application of PIT, mandatory national social insurance contributions (MNSIC), and solidarity tax (ST) on salaries and wages in 2025.
In the Baltic countries, the format of the transfer pricing (TP) documentation and the scope of the information to be provided therein are largely uniform and in line with the revised TP documentation standard of the Organisation for Economic Co-operation and Development (OECD). However, the thresholds set by Latvia and its neighbouring countries, above which the corporate taxpayer (CTP) is obliged to prepare and submit TP documentation to the tax administration annually or upon request, differ significantly. In addition, different deadlines have been set for the preparation of TP documentation and the liability for non-compliance with the mandatory requirements. The approach to determining the arm’s length price (market value) is also different in each of the Baltic countries.
Directive (EU) 2023/2225 requires businesses to provide fair treatment and transparency in their loan ads and credit agreements, promoting the protection of consumer rights and the efficiency of the single market.
E-invoicing is becoming an important tool for businesses around the world, boosting efficiency, reducing the likelihood of errors, and securing tax compliance. Yet companies that have chosen to outsource their accounting function are not sure about who is to take responsibility for implementing and managing e-invoices. This article examines key roles, responsibilities and principles of collaboration that will help companies implement an e-invoicing system successfully.
Businesses, especially those with cross-border operations, are not finding it easy to apply value added tax (VAT).
In the context of domestic as well as cross-border transactions, we have discussed more than once how a customer’s free transfer of equipment to a service provider affects the amount of a subsequent supply of services. In practice, there are situations where a service provider lacks some specific equipment he needs for providing services to a customer, and the customer transfers the necessary equipment to the service provider free of charge. Also, there was uncertainty as to whether such a transactional structure affects the customer’s right to deduct input VAT on the equipment.
In its recent judgment C-475/23 Voestalpine Giesserei Linz GmbH, the Court of Justice of the European Union (CJEU) has ruled on the right to deduct input VAT in such a transactional structure.
In this article we present the CJEU’s perspective on this issue.
Central and local government agencies have been required to create accessible Web content since 2016. This is prescribed by Directive (EU) 2016/2102 of the European Parliament and of the Council of 26 October 2016 on the accessibility of websites and mobile applications of public sector bodies passed in 2016. However, studies suggest that it’s still very difficult for people with disabilities to access information in the way they need. For example, in August 2024, having surveyed 15 websites run by central and local government agencies, the Ombudsman found that none of them is fully accessible to people with disabilities. In this article we will explain what accessibility is and why it’s important for businesses, as well as exploring the essence of accessibility to digital resources and services, the rationale, legislation, practices and recommendations for providing accessibility successfully.
As part of adopting the yearly national budget, Parliament passed several key tax amendments in their final reading on 4 December 2024, which are in force but will apply from 1 January 2025. In this article, we look at the most important changes affecting people and businesses, with changes to personal income tax (PIT) and other taxes.
On 31 October 2024 Parliament passed the State Revenue Service (SRS) Act and the Tax and Customs Police Act (the ‘Police Act’) in their final reading to separate the Internal Security Board and the Tax and Customs Police Board from the SRS. These legislative changes will carry out the Ministry of Finance’s (MOF) intention of reorganising the SRS to carve out investigatory and operational functions. The new legal framework will result in the SRS being only tasked with the provision of advice, support and services in the field of tax and customs.
In the digital age, with technology becoming the basis for business process transformation, the synergies between e-invoicing and AI offer great potential for improving efficiency, accuracy and compliance. Yet the rapid evolution of AI technology increases the need for a clear set of rules to secure ethical practices and data protection. In this article we look at how the integration of e-invoicing and AI technology changes business operations, what the main challenges are, and what aspects organisations need to consider when adapting to the evolving regulatory environment.
Claiming tax relief under a double tax treaty between two countries is an integral part of day-to-day practice for many Latvian taxpayers. A key condition for taking relief is a foreign residency certificate approved by the State Revenue Service (SRS). While in general cases a residency certificate is approved for five years, there are situations where the SRS challenges another country’s residency certificate for compliance with national criteria. For example, the Latvian Supreme Court has recently ruled on an SRS decision to approve a US residency certificate for only three months because the SRS believed the conditions for a five-year period had not been met. In this article we explore the Supreme Court’s findings and answer the main question of whether the SRS decision was justified.
In an earlier MindLink article we wrote about proposals for amending the value added tax (VAT) framework. The proposals mandate e-invoicing in cross-border transactions and require changes to how EU sales lists are completed. The proposals also place responsibility for collecting VAT on platforms through which transactions are made in the accommodation and transport sector, and the one-stop shop (OSS) scheme is to be expanded.
A recent ruling from the Court of Justice of the European Union (CJEU) addresses the VAT treatment of electricity supplied to users of electric vehicles (EVs) through a third-party network. The original proceedings involved a German company contesting the Swedish tax authority’s decision on electricity supplied in Sweden. The CJEU ruling emphasises clarity in VAT treatment and reinforces adherence to the VAT framework. In this article, we summarise the key arguments and facts the CJEU considered in its ruling.
Having a network of double tax treaties (DTTs) helps countries work together when it comes to taxes, as DTTs aim to prevent the double taxation of income earned by individuals or companies doing business in two or more countries. As for the latest developments in international taxation, in this article we will take a closer look at the technical aspects of the most-favoured-nation (MFN) clause, which is found in just a few DTTs and from October 2024 has been implemented in the DTT between France and Latvia. We will also look at the significance of the MFN regime for French companies wishing to expand their operations in Latvia.
