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.

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.