Manual procurement documentation is time-consuming and prone to human error. Employees often use previous procurement documentation to create new documentation, which, if not thoroughly reviewed, can harbour risks. According to Gartner, 65% of procurement leaders are actively investing in artificial intelligence (AI) to improve productivity rates and reduce the risk of human error. AI is a useful tool for tasks such as analysing historical procurement data, preparing documentation and evaluating candidates. 

Tax residents in the Republic of Latvia (RoL) have the right to recover overpaid personal income tax (PIT), submit a payroll tax booklet to the employer and add a relative as a dependent for tax purposes to receive tax relief. Does a person who is a non-resident for tax purposes, employed by a Latvian company and earning income subject to PIT also have such a right? This article summarises the criteria under which non-residents can recover overpaid PIT for unused tax reliefs and eligible expenses.

In practice, the application of VAT to hire-purchase transactions (lease/finance lease) still leads to confusion, as a recent ruling by the Senate suggests (the ruling of 6 December 2024 in case A420225819, SKA-38/2024).  

In recent years, intersectionality has become a hot topic in various fields, from political science to the provision of social services. The concept is also increasingly mentioned in public procurement processes to emphasise the need for comprehensive solutions that foster a more inclusive and equitable society. Intersectionality is a new and innovative look at how different identities such as gender, age, nationality, ethnicity, physical and cognitive ability affect people’s experiences and opportunities. This approach helps us to understand that socio-economic challenges affect different population groups differently and how they impact people's personal and working lives, including the management of organisations.

Intra-group financing transactions are a way for corporate groups to promote efficient capital allocation, stimulate development and provide more flexibility and control over financial resources than external financing. However, as with all other intra-group business transactions, transfer pricing risks should not be forgotten in financing transactions.

This article discusses an important but sometimes overlooked comparability factor to consider in cross-border financing transactions with related parties: the sovereign risk premium.

This judgement of the European Court of Justice (ECJ) dealt with an important issue relating to the free movement of capital within the European Union. The case concerned a Polish law that restricts the tax exemption for internally managed collective investment undertakings (CIUs) from other EU countries to those managed by external entities. The said tax exemption was denied for CIUs that are managed internally. This restriction was contested as incompatible with EU law, in particular with the free movement of capital.

Given the current challenges facing Europe—ranging from increasing geopolitical tensions and slowing economic growth to intensified global technology competition—the European Commission (EC) has concluded that the European Union (EU) requires a comprehensive business plan that integrates climate action, circularity, and competitiveness.

On 26 February 2025, the EC presented the Clean Industrial Deal (CID), a strategic plan designed to accelerate decarbonisation, re-industrialisation, and innovation while enhancing the competitiveness of EU industries. The CID aims to strike a balance between the EU's global competitiveness and its ambitious environmental goals outlined in the Green Deal.

In today’s rapidly evolving digital landscape, many companies are adopting e-invoicing to enhance their accounting processes and boost efficiency. However, for e-invoicing to be effective, accounting policies must be updated to clearly define the new procedures and requirements. This article explores the key considerations when updating accounting policies to integrate e-invoicing effectively.

This article concludes the discussion from last week’s article.

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.