The Covid-19 pandemic has changed everyone’s life. With live entertainment still restricted, companies are holding online events that offer a prize to the winner of a competition. This article explores the tax treatment of prizes using a practical example.
On 4 September 2020 the Administrative Division of the Supreme Court ruled on case No. A420190717 SKA-383/2020 concerned with the personal income tax (“PIT”) treatment of a property contribution. The ruling reinforces the understanding of how PIT is deferred for an individual that has contributed capital assets (e.g. real estate or trademarks) to a company’s share capital in exchange for shares.
In last week’s edition of Flash News we outlined the VAT treatment of companies offering free meals to their workers during working hours as well as transport between home and work to ensure business continuity especially during the Covid-19 crisis. This article explores the personal and corporate income tax implications of this practice.
To mitigate the adverse effects of the Covid-19 pandemic, amendments to the Covid-19 Act were adopted by Parliament on 18 March and came into force on 20 March 2021. This article explores changes in how individuals file their annual income tax return and how taxes are calculated.
Employee stock option plans are gaining traction as a tool for motivating employees in Latvia. Employees elsewhere in the world have for years been able to become company shareholders, which has boosted their contribution to their company and its growth. The grant of employee shares or stock options is essentially a type of employee compensation linked to the company’s development (profitability).
The United Kingdom (“UK”) left the EU at midnight on 31 January 2020. The Brexit agreement provided that EU nationals staying in the UK until the end of the transition period would keep the social rights that go with EU citizen status, i.e. the opportunity to apply for various benefits, pensions and other social entitlements in the UK, similar to living in other member states. The Trade and Cooperation Agreement signed on 30 December 2020 is applied provisionally from 1 January 2021 pending ratification at EU level. The Agreement includes a separate protocol on social security coordination. This article explores some key changes in social security to be considered by employers after Brexit and in the light of the new agreement.
This article summarises the provisions of tax laws and other legislation affecting the calculation of personal income tax (“PIT”), national social insurance (“NSI”) contributions and solidarity tax (“ST”) on wages and salaries in 2021.
The Labour Act has been amended with effect from 5 January 2021 to adopt requirements of relevant EU directives. The new rules affect foreign employers posting employees to work in Latvia and Latvian employers posting staff to work abroad, as well as temporary employment agencies. The amendments strengthen the definition of a “posting” and the rules companies must follow when posting their workers. This article also explores key changes to daily allowances on business trips.
Last year the State Revenue Service (“SRS”) for the first time analysed data supplied by the Latvian banks to find income unreported by Latvian residents. Many taxpayers had a letter from the SRS asking them to explain why their bank income details do not match their tax filings. This article explores how the SRS runs taxpayer checks and what response is advisable.
The State Revenue Service (“SRS”) has come up with a new procedure for taking out a Latvian tax residency certificate to ease the administrative burden on organisations and individuals. The new procedure means a considerable time saving and is covered by amendments to the Cabinet of Ministers’ Rule No. 178, Procedures for Claiming Tax Relief under Double Tax Treaties, effective from 4 November 2020.
Christmas is a pleasant time of exchanging presents. This season too, companies would like to give presents to their staff and business partners. This article explores their tax treatment. In the emergency circumstances, we will not be discussing “staff sustainability” events such as Christmas parties for employees and their children. We will come back to this topic next year once the epidemiological situation has hopefully improved.
Globalisation is seeing a constant increase in cross-border business, something that encourages entrepreneurs to look for a suitable corporate structure within and outside their base country. Choosing a particular structure is often based not only on business interests in a certain market but also on favourable administrative and tax rules.
