According to the Pay Transparency Directive 2023/970 (“Directive”), the concept of work of equal value covers four aspects: skill set, accountability, necessary effort and working conditions. As the Directive is to be implemented by June 2026, these aspects have become topical. This article deals with  the legislature’s guidance.

Companies that operate at a loss for an extended period of time remain in the sights of tax administrations, including the Latvian State Revenue Service, especially if these companies are part of a multinational group of companies and carry out controlled transactions.

This article looks at a number of court cases in European countries that show how complex and difficult it is for companies and tax administrations to scrutinise the transfer pricing of loss-making companies.

The closing part of last week's Article.

The topic of annual tax returns becomes a hot one in the public eye between late February and mid-March in Latvia. Whereas the State Revenue Service (SRS) works to strengthen its IT systems by implementing queues to ensure a smooth operation of its Electronic Declaration System on the first day of tax return submissions. Some taxpayers dive into the “lottery” as early as the end of February, while others either do not bother or are not in a rush to file their returns. Is it true that the outcome of filing an annual tax return depends on a person's luck or astrological sign?

On 17 October 2024, the Sustainability Disclosure Act (“ŠDA” or “Law”) came into force, which sets out the framework for sustainability reporting and adopts the provisions of the European Corporate Sustainability Reporting Directive (“CSRD”). The law aims to provide publicly available and comparable information on the impact of the activities of legal entities on sustainability aspects, including environmental protection, social rights, human rights and aspects of corporate governance, including anti-corruption and anti-bribery, as well as information on how these issues affect the development, performance and condition of legal entities. This information should be included in the sustainability report.

We have previously informed our readers about the impact of the Carbon Border Adjustment Mechanism (“CBAM”) on companies importing goods (one of the most recent articles for Mindlink subscribers is available here). In short, from October 2023, companies (and economic operators) based in the European Union are subject to reporting requirements on the embedded emissions of goods imported from third countries that fall within the scope of the CBAM. Conversely, under the CBAM framework, as of next year, only companies that have obtained the status of registered CBAM reporters will be allowed to continue importing these goods.

Recognising that compliance with the CBAM requirements may create additional administrative and financial burdens, the European Commission (EC) has prepared a draft amendment to Regulation 2023/956 establishing a carbon border adjustment mechanism providing for amendments to the existing regulatory framework and allowing for an exemption from the regulatory requirements for most importers.

In Latvia, medical costs are very high for many people, especially for patients with serious illnesses, and the state does not cover them in full. Employers can support their employees financially, but the existing regulation makes this financially disadvantageous. The bill, which is in its 3rd reading in Parliament (Saeima), proposes significant changes that could change this system and allow employers to cover medical costs without an additional tax burden. This article informs you about the expected changes and the consequences for employers and employees alike.

Conclusion of the article from the previous week.

The mere fact that the owner of a trade secret considers certain information to be a trade secret or recognises it internally as such is not sufficient. Section 6 of the Trade Secrets Protection Law requires the trade secret owner, when disclosing such information to a natural or legal person, to indicate which information is to be considered a trade secret and, at the same time, to inform about the need to ensure the protection of such information.

Conclusion of the article from the previous week.

All taxable persons are obliged to register for VAT purposes, unless they can be considered a small business, i.e., if the total value of taxable transactions carried out domestically and also certain non-taxable transactions does not exceed EUR 50,000 per calendar year (+EUR 5,000 per year).

Every six months, the Council of the European Union (EU) reviews and updates the list of countries and territories with low taxes or duty-free allowances. The last review took place on 18 February 2025. On 27 February 2025, the current list of low-tax or tax-free territories was published in the Latvijas Vestnesis, which is in force from 1 March 2025.

As of 1 January 2025, verification documents (invoices) will be created in a structured electronic invoice or e-invoice format for settlements with state and municipal institutions. Such an electronic invoice may contain trade secrets and certain procedures must be followed to ensure their protection. How can I protect trade secrets in electronic invoicing?

As you may known, Etsy is one of the largest international internet trading platforms offering handmade items of various categories. Sales of their products, products, artworks through various trading platforms are currently popular.

What should be taken into account by sellers who have chosen to make use of the opportunities offered by the platforms in the application of VAT in the course of their economic activities? 20.02.2025. The national Revenue Service published a briefing material: “Information material application of VAT to transactions on online platforms.” This Article casts some light on it.

In the cases specified in the Commercial Law, a minority shareholder has the right to file a lawsuit in court against the founders, the board or council members, or an auditor in order to protect the company and its interests.

For more than a year, PwC has been supporting its customers implement artificial intelligence (AI) solutions that streamline day-to-day work with Microsoft's Copilot technology. We do not code anything in particular, but we help you find a solution that works well by using the customisation options available. Such technologies enable companies to increase their efficiency and adapt to the dynamic market environment.

In everyday life, companies have to use an option such as borrowing money for various specific purposes. A significant increase in debt can present the company  with challenges that impact balance sheet performance and potential tax risks.

One solution to the problem of increasing debt can be to capitalise the loan – a process whereby the creditor invests its debt rights as a financial asset in the borrower's equity.

This article describes the nature of the loan transaction and its capitalisation with practical examples of possible situations dealing with both corporate income tax (CIT) and transfer pricing (TP) aspects.

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:

1. The free national delivery solution E-address;
2. PEPPOL service providers or operators (paid service);
3. Individual kind by agreement between the issuer and the recipient of the invoice regarding the transmission channel (email, direct software integration interfaces)

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”.