On 5 June 2025, the Parliament of the Republic of Latvia (Saeima) adopted amendments to the Accounting Law, which provide for the mandatory use of structured electronic invoices between companies, with the exception of budgetary institutions, to be postponed until 1 January 2028. The Saeima’s decision to postpone the date reflects the country’s adaptation to the challenges of digital transformation and gives companies, especially small and medium-sized enterprises, additional time to fully prepare for system adaptation and process modernisation.

The European Commission (EC) has amended the rules on state aid to improve public access to legal proceedings on environmental issues. These changes allow environmental non-governmental organisations (NGOs) to challenge EC decisions approving state aid where there is a suspicion of breaches of EU environmental law. This is a significant change because, for the first time, environmental NGOs can formally request the European Commission to review such decisions, particularly where there are concerns about compliance with EU environmental rules.

Historically, transfer pricing in the Latvian market was usually considered from a compliance perspective. The focus has been on preparing adequate transfer pricing documentation to demonstrate that the transfer prices applied are at arm’s length (market price) and making adjustments where necessary. However, there is an increasing trend for companies to develop transfer pricing policies as strategic tools that contribute not only to compliance but also to risk management and business planning.

A recent Baltic human capital and work environment survey reveals that Latvian organisations have a limited and fragmented approach to diversity and inclusion (D&I) matters. Employers acknowledge that attracting, retaining, and effectively managing human resources, as well as fostering innovation and a positive work environment, are critically important for ensuring long-term growth. However, only 19% of surveyed employers have developed a strategy to address human capital issues. An overwhelming 94% of employees across the Baltics consider an inclusive work environment a crucial factor when choosing an employer, but just 16% of employers in Latvia are actively working to foster inclusion and manage diversity in the workplace. 

Internet portal serves as a company’s business card, making it essential to ensure uninterrupted access to information and seamless communication. To guarantee maximum availability and optimal performance, AI-driven website monitoring is employed. This enables businesses to track the performance of their websites and online services, identify issues early, and proactively resolve them before they impact users.

Variable pay is an essential tool that companies use to motivate employees, achieve business goals, and foster a results-oriented culture. It is becoming increasingly popular in Latvia and the Baltics, where companies are seeking flexible ways to respond to market changes while also retaining top talent. 

An employee’s absence from work can be grounds for termination of the employment contract. But what happens if the employer has not specified a particular place of work? Could this affect the termination? The case law (20 May 2025) provides answers that help clarify the nuances of the dismissal process in such a case.

In preparation for the mandatory introduction of electronic invoices from 2026 or 2027, there is growing interest in Latvia both in the role of e-invoice operators and in the corresponding legal framework in the Republic of Latvia (RoL). Although the legal framework is still inconsistent, companies need to be able to assess service providers’ offerings and technical compliance today to prepare for the changes in time. This article deals with issues related to e-invoice operators in the RoL and selecting a suitable cooperation partner.

The payment of stamp duty is an unavoidable part of the process, if not a mandatory prerequisite for the initiation of proceedings. The amount of the duties is regulated by the Civil Procedure Law (hereinafter – “CPL”) and depends on the amount of the claim. Often, the amount of stamp duty has deterred potential claimants from filing a lawsuit. In addition, legal entities were previously not allowed to apply to the court for a reduction or deferral of the payment of stamp duty, which meant, for example, that a company in financial difficulties could not adequately defend its rights in court.

The amendments, which came into force on 1 April 2025, were aimed at implementing several rulings of the Constitutional Court. They mainly concern the calculation and determination of stamp duties and grant private legal entities the right to apply for exemption from court costs and bail and deferral of court cost payments. This article focuses more on the changes related to the determination and payment of stamp duties. These changes have significantly changed and clarified both the amount of the fees and the calculation procedure. Almost nothing remains of the previous provisions on the amount of fees and the calculation procedure, which were contained in section 34 of the previous CPL.

SAFE (Security Action for Europe) is a European Union financial instrument established to provide financial assistance to Member States, enabling them to undertake urgent and substantial public investments in support of the European defence industry. It forms part of the EU’s broader response to the markedly deteriorated security environment in Europe and is designed to reinforce the European Defence Technological and Industrial Base (EDTIB). SAFE aims to promote joint procurement, boost defence production capacity, and reduce strategic dependencies on external suppliers. It will make available up to EUR 150 billion in low-cost, long-term loans, aligned with Member States’ national defence investment plans.

The instrument entered into force on 29 May 2025, and includes a provision for value added tax (VAT) exemptions on contracts concluded under its framework. Read more in this article.

On 21 May 2025, the Ministry of Smart Administration and Regional Development (VARAM) published an information report entitled “On the progress of the introduction of structured electronic invoicing”. The report proposes to postpone the mandatory introduction of electronic invoicing in business-to-business (B2B) transactions from 1 January 2026 to 1 January 2027, while allowing voluntary use from March 2026. These changes are justified by several critical factors, including technical readiness, a lack of digital skills and insufficient preparation time.

The European Union is about to embark on one of the most significant modernisations of the value-added tax (VAT) system since the introduction of the VAT Directive. The driving force behind these changes is the “VAT in the Digital Age” (ViDA) legislative package, which will have a profound impact on the business environment across the EU. In response to this crucial legislative phase, the EU VAT Committee convened an extraordinary 126^th meeting on 21 March 2025 to provide clarification and guidance to Member States on the practical implementation of the planned reforms, particularly regarding e-invoicing and digital reporting.

It is important for finance professionals — accountants, finance directors and company directors — to understand the conclusions of this meeting and their implications for the regulatory framework. This article provides a detailed analysis of the key legal aspects, the policy directions and the necessary actions that businesses need to take to ensure compliance and maintain their competitiveness.

Good things are worth waiting for. This could be said about the new amendments to Latvian transfer pricing regulations, which this time are especially favourable for taxpayers (hereinafter – “TP”). Changes have come into force that allow local transfer pricing documentation to be prepared in English. This article covers the new changes, the details of their application and possible challenges. 

State support for companies is often associated with direct subsidies, grants, or tax reliefs. However, a state or municipal investment in a company's share capital, which may take the form of acquiring shares or stocks, in-kind contributions (such as the transfer of real estate or equipment), or recapitalisation, also constitutes a form of state aid. It is important to remember that any public investment in a company’s share capital, if it meets the criteria set out in Article 107 of the Treaty on the Functioning of the European Union (TFEU), is considered state aid and is subject to EU regulation. This is a grave error that Member States occasionally make, as they fail to recognise that any such investment must be assessed against these criteria, which may otherwise result in the granting of unlawful state aid. 

The European Union has launched its most comprehensive VAT reform to date with the initiative “VAT in the Digital Age” (“ViDA”), marking a turning point in both tax administration and business operations across the EU. ViDA has three main goals: 1) to reduce VAT fraud, 2) to improve the efficiency of tax administration, and 3) to adapt the existing VAT system to the digital economy. One of the cornerstones of this initiative is the introduction of structured e-invoices and digital transaction reporting for cross-border transactions.

Although ViDA will officially come into force gradually, starting in 2028, businesses engaged in cross-border B2B transactions must already prepare for significant changes. The impact of the Directive will be felt far beyond VAT reporting — it will affect financial processes, IT infrastructure, data management, and the overall corporate compliance strategy. This article explores how ViDA will change the rules of the game, the main obligations and risks for businesses, and why it is essential not to wait until the last minute to start preparations.

Starting from 1 January 2026, the Directive on Administrative Cooperation in the field of crypto-assets  (DAC8), adopted in 2023, will come into force. It will require service providers and platform operators to report to the State Revenue Service (SRS) on sellers of certain types of crypto-assets. As a result, the legal framework of the Republic of Latvia (RoL) is currently being updated to ensure compliance with the requirements of the Directive. A draft law has recently been prepared clarifying the application of exemptions in relation to the scope of information to be reported.

In today’s world, innovation has become a critical component of competitiveness and economic growth. Companies and individuals around the world are looking for new solutions in the hope that the market will recognise and demand them. Innovation usually means the introduction of new ideas, methods or products that promote growth and competitiveness by improving processes, services or technologies. However, when pursuing progress, it is important to assess whether innovations will truly improve society as a whole and whether the benefits they offer are accessible to everyone. Specifically, will innovations be inclusive? In this article, we will explore the link between social innovation and social justice, or how innovation can help reduce social exclusion, provide accessible solutions for all and promote long-term positive change in society.

The question of when the sale of property shifts from being considered a private sale to being regarded as an economic activity has always been a pertinent issue. On the website of the State Revenue Service (“SRS”), there is an informative material titled “Economic Operators”, which outlines the conditions under which the SRS identifies a registrable economic activity (https://www.vid.gov.lv/lv/saimnieciskas-darbibas-veiceji). The Court of Justice of the European Union (CJEU) has also repeatedly considered disputes regarding what is regarded as economic activity. Among others, the CJEU examined a Latvian case concerning whether the supply of timber from private forest to eliminate storm damage constitutes economic activity (Judgment of 19 July 2012, Rēdlihs v. State Revenue Service (C 263/11). The criteria for the existence of economic activity were also addressed in a recent CJEU judgment in a Polish case (3 April 2025, E. T., C-213/24). Full details are available in the article.

The tax authority has once again raised the issue of authentication procedures in the State Revenue Service’s (“SRS”) Electronic Declaration System (“EDS”), in line with national information system security policies and digital transformation guidelines.
This article discusses the proposed amendments to the Cabinet Regulation No. 7 “Regulations on the State Revenue Service’s Electronic Declaration System” of 9 January 2024 (“Cabinet Regulation No. 7”). 

NIS2 (Network and Information Security Directive) is a European Union (EU) directive aimed at strengthening cybersecurity across the EU, particularly concerning critical infrastructure and essential services. In Latvia, this directive has been transposed into national legislation by the adoption of the National Cybersecurity Law (NCL). Right now, companies should have clarity about their status (whether NCL subject or not) and should have registered by 1 April 2025, at the National Cybersecurity Centre (NCC). Organisations are due to appoint a cybersecurity manager and submit their first self-assessment report by 1 October 2025 and begin reporting cybersecurity incidents from 1 July this year. 

Resident tax status obliges an individual to pay personal income tax (PIT) on their global income in a particular country and generally allows tax relief for residents. Similarly, the correct determination of tax resident status is important to avoid double taxation by applying the relevant laws and regulations. This article describes the experience of PwC specialists concerning the intricacies of determining and registering the tax residency status of Ukrainian nationals in the Republic of Latvia (RoL).

One of the main conditions for the successful functioning and development of the groups of companies (group) is sufficient funding. However, there is no common model for best financing the economic activities of the group. In some cases, the lending and borrowing functions in the financing of the group companies may be performed by the same undertaking (treasury firm or holder), which attracts third party financing and allocates financial resources to the other members of a multinational group. In such circumstances, the cash company carries out a centralised treasury activity within the group. When assessing transfer pricing issues, it is essential to define the transaction boundaries accurately and to assess in detail the functions and activities implemented by the cash company. This text message discusses the process and purpose of the treasury function and provides guidance on pricing the service provided by the treasury holder. 

In commercial transactions, there may be cases when a buyer, upon discovering defects in the purchased goods, wishes to cancel the contract or claim damages. However, not every defect identified by the buyer is necessarily considered a legitimate defect. Furthermore, it must be noted that the buyer (the business) is required to take certain actions in order to retain the right to compensation for damages or contract cancellation when defects in the goods are properly identified. This article casts more light on this. 

In Latvia, there is frequent talk of progress in gender equality, yet the reality is harsher. Latvia ranks last in the European Union for gender pay equality, and the gap between men’s and women’s wages is unfortunately growing. While the EU’s average gender pay gap in 2023 was 12%, in Latvia this figure reached 19%, worsening the country’s position (17.1% in 2022) and placing it last among all 27 Member States. In other words, for every euro earned by a man in Latvia, a woman earns only 81 cents.

Digital transformation in both the public and private sectors is rapidly advancing, with one of its central elements being the digitisation of document circulation. On 17 April 2025, the Ministry of Finance (“MoF”) submitted proposed amendments to the Value Added Tax (“VAT”) Law for public consultation, aiming to align it with the requirements set out in the Accounting Law regarding the issuance of structured electronic invoices, or e-invoices. These changes represent a significant step toward a fully digital and efficient accounting and tax administration system in Latvia. 

The global trend towards digital solutions is becoming increasingly apparent in the financial and tax sectors. The introduction of e-invoicing, which was initially seen as a formal compliance requirement, is now becoming an important strategic step towards more efficient, transparent and sustainable business management. Like many other countries, Latvia has begun the gradual introduction of e-invoicing to strengthen fiscal discipline, reduce the shadow economy and modernise data exchange processes. These measures require companies to review their existing systems and introduce technological solutions that ensure compliance while adding real value to business processes. 

In practice, there are cases where businesses located in different countries, having agreed to apply the laws of the Republic of Latvia (“RoL”) to a contract, are unaware or forget that not only the provisions of the Civil Law or the Commercial Law may apply, but also the United Nations Convention on Contracts for the International Sale of Goods (“Convention”), unless the contracting parties have excluded its application. 

In this article, we look at the circumstances under which the Convention is applicable and how it can impact claims for damages.  

What is Big Data? We usually talk about Big Data when traditional data processing methods can no longer cope with the volume, velocity, variety and reliability of the data. While there is no specific amount of data that can be labelled as Big Data, it is usually a data set that exceeds the capabilities of traditional databases and data processing tools. What should you do if you need to analyse such a huge data set and don't have immediate access to a fully-fledged Big Data platform? In this article, we will look at how you can use available tools to gain insight into this Big Data when no specialised solution is yet available.  

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.