Estonia has drawn up new taxation plans that will considerably change the financial landscape for businesses and people from 2025. This article looks at the proposed defence tax and motor vehicle tax, as well as other significant tax increases affecting various sectors.
In early July 2024, the European Commission (EC) published its annual report on tax policies across the EU. Value added tax (VAT) is one of the most important taxes in the EU accounting for about 7.5% of GDP and 18.6% of total EU tax revenue in 2022. This article explores the EC’s VAT findings.
In this article, we will explore how the courts ruled on a tax audit where the State Revenue Service (SRS) claimed the company under audit had wrongly deducted input VAT and misapplied a ratio. Although the SRS did not approve the company’s adjustments to its VAT returns and did not refund the VAT it had overpaid, the courts found the penalty and interest charged by the SRS to be justified. This case highlights important lessons for companies to avoid similar problems in the future.
On 8 May 2024, the EU Council published updated proposals for amending the VAT directive (known as VAT in the Digital Age – ViDA). The amendments are to be passed at an ECOFIN meeting on 21 June 2024. It’s likely that the original deadlines will be postponed and the member states will have to pass some of the amendments into their national laws by 1 July 2027, some by 1 July 2028 and some by 1 July 2030. This article explores key changes and the timeline.
Whether a taxable person transfers a business or makes a contribution in kind in exchange for shares, this is typically treated as a transaction outside the scope of VAT. However, the Latvian VAT Act does not resolve this issue conclusively, and this assumption comes from a logical assessment of the rules that require adjustment to input VAT deduction. The latest case law of the Court of Justice of the European Union (CJEU) has weakened the impression that a contribution to share capital is always a supply outside the scope of VAT. This article explores a recent CJEU ruling.
In this article we explore Ruling C-606/22 from the Court of Justice of the European Union (CJEU) on the entitlement to a refund of value added tax (VAT) where the taxable person has applied a higher rate of VAT than what the law prescribes. This ruling is important because it explains how the VAT directive’s principles should be applied in practice where a cash-register receipt has been issued to the customer, which is practically impossible to amend in order to show the correct rate of VAT and to refund the overpaid tax to the customer.
The Value Added Tax (VAT) Act prescribes a special scheme for charging VAT on supplies of second-hand goods. These include a variety of tangible items, such as cars, machinery, office equipment, furniture and other goods that are fit for future use in the same form with no modification or after repairs and that are not works of art, collectors’ items or antiques. A taxable person selling second-hand goods will normally charge VAT on the full price. However, certain supplies of second-hand goods can be exempt from VAT or taxable under a special scheme on the difference between the acquisition cost and the selling price (a margin scheme for second-hand goods as per section 138 of the VAT Act). This article explores what conditions have to be met before section 138 can be applied and when an exemption is available.
Companies are sometimes unsure whether a transaction affecting them qualifies as the transfer of a business as a going concern (TOGC). This is a crucial question in identifying a number of potential risks, including VAT liabilities. If a TOGC has occurred, the transaction is not subject to VAT if the acquirer is registered for VAT and continues a business that does not involve asset stripping or liquidating the company.
Effective from 11 January 2024, the Ministry of Finance has amended the Cabinet of Ministers’ Rule No. 1507 of 17 December 2013, ‘The procedure for refunding VAT to a taxable person registered in a third country or territory’, and Rule No. 1514 of 17 December 2013, ‘The procedure for filing a registered taxable person’s VAT refund claim in another EU member state and the procedure for refunding VAT to a taxable person registered in another EU member state’.
The amendments apply in particular to EU and non-EU registered taxable persons that are not established in Latvia but acquire services related to real estate (RE) and claim a VAT refund because the services are acquired to make supplies that attract Latvian reverse-charge VAT.
On 21 December 2023 the Court of Justice of the European Union (CJEU) passed ruling C-288/22 on whether a public limited company’s board members are taxable persons for VAT purposes. This ruling is important because it explains what criteria must be met if a person is to be treated as carrying out an economic activity that forms the basis for paying VAT and what factors should be considered to determine whether someone is an independent taxable person.
In its ruling C26128713, SKC-201/2019 of 28 June 2019, the Supreme Court took a different view on the VAT Act’s condition that the taxable amount should include only taxes payable in relation to a supply of services. The dispute involved a forced lease of land that stipulated a rent plus a compensation of real estate tax (RET). The Supreme Court was assessing whether VAT should be charged on the compensation. First of all, the assessment focused on what items attract RET and who is liable to pay it.
Where lease services are supplied for a consideration, any person (including a public entity or a derived public entity) will be treated as a taxable person for VAT purposes unless the consideration received is a token sum. So the lease service will be a supply governed by the VAT Act. This article explores whether real estate tax (RET) collected from the tenant in addition to the rent qualifies as part of the rent and whether VAT should be charged on it.
Accountants working for Latvian service providers tend to feel confused when they find out that their foreign business partner has a VAT registration number not only in his country of establishment but also in Latvia. What does a foreign trader get a Latvian VAT number for? And how does that affect service providers in Latvia? Read on to find out more.
