In March 2021 the European Commission passed a proposal for a new directive  aimed at putting mechanisms in place that will help employers provide equal pay for men and women. According to the draft directive, the pay disparity is still about 14%. Inequality becomes evident when we convert this percentage into days: compared to men, women actually have to work 51 days a year without pay. The main aim of the new rules is to minimise gender inequality in pay. While gender equality is a topic that has been discussed in public at length, statistics do not give us a reason to believe a balance has been achieved on the issue of pay. To achieve this, the European Commission has come up with new solutions that will mean new statutory obligations for employers.

The Excise Act was amended on 13 October 2022 with effect from 13 February 2023. The amendments are primarily made to transpose Council Directive (EU) 2020/262 of 19 December 2019 laying down the general arrangements for excise duty (recast) (the “new directive”), which will replace Council Directive 2008/118/EC of 16 December 2008 concerning the general arrangements for excise duty and repealing Directive 92/12/EEC (the “old directive”). More amendments stem from the CJEU’s ruling of 13 January 2022 concerning Mono SIA vs the State Revenue Service (SRS). The court disallows a situation where the ability of diplomatic and consular offices to claim an excise exemption is subject to the condition that payment for goods be made by bank transfer. This article summarises some of the key amendments to the Excise Act.

To measure the taxable income of businesses and individuals correctly, we need to assess whether self-employed expenses are associated with the conduct of business. In applying personal income tax (PIT), self-employed persons should follow the rules of the PIT Act and the Corporate Income Tax (CIT) Act, which in certain cases may cause disagreement with the State Revenue Service (SRS). This article explores some of the self-employed expenses the SRS may challenge if they are deducted as business expenses.

Amendments to the Personal Income Tax (PIT) Act were announced on 31 October 2022. The outgoing government has managed to introduce a number of important legislative changes. This article explores changes to the special rules of section 11.13, governing how income from an investment account is determined.

In one of our previous articles we looked at a Latvian-registered branch paying profits to a Lithuanian company and examined the corporate income tax (CIT) implications.  This article explores the CIT implications of income (profit) that a Latvian company receives from its foreign branch.

Deducting input VAT, particularly on capital goods, is based on their intended use for taxable supplies. Intentions sometimes fail to materialise, raising the question of whether the taxable person becomes liable to repay the VAT deducted earlier. This question was handled by the Court of Justice of the European Union (CJEU) in Ruling C-293/21 of 6 October 2022. This time the CJEU examined the need for adjustment if the taxable person did not use the acquired goods and services for making taxable supplies because the shareholder decided to liquidate the company. This article explores the CJEU’s findings and their practical implications.

We informed our MindLink.lv subscribers some time ago that the State Revenue Service (SRS) is increasingly exercising its statutory power to demand that a company’s overdue taxes be recovered from its board member if the tax debt cannot be recovered from the company. This article explores how we successfully resolved a court case to release a construction company’s former CEO (a client of ours) from the company’s tax debt of close to EUR 150,000.

To alleviate the consequences of the Covid-19 pandemic, the government has introduced various tax reliefs, including for excess interest charges. This article explores the corporate income tax (CIT) treatment of excess interest charges and what else can be done this year to avoid CIT implications in 2023.

Under the transitional provisions of the Corporate Income Tax (CIT) Act, companies may use their pre-2018 tax losses to offset the CIT charge on dividends, yet this relief has to be taken by the end of 2022. This article explores the finer points you need to know.

Now that the concept of remote work has become an everyday occurrence, many companies are considering ways to adapt their online staff motivation and team-building events to the new conditions. This article explores the State Revenue Service’s opinion on staff sustainability events held within one department of an organisation and on catering expenses being included in staff sustainability event expenses (“SSEE”) if an event is held remotely.

Amendments to the Taxes and Duties Act that require taxpayers to prepare and file a specified form of transfer pricing (TP) documentation with the State Revenue Service (SRS) took effect back in 2018, yet we had not seen any active enforcement steps from the SRS until the end of this summer, when several Latvian companies received an informational report on the submission of TP documentation via the SRS’s e-filing system (“EDS”). These reports imply that the SRS is checking the companies’ obligation to file TP documentation for 2020 and urging them to do so by the deadline stated in the report or to explain why they should not file TP documentation. This article reminds you of the TP documentation preparation and filing requirements and of the SRS’s activities in enforcing them, and we also suggest steps your company might take after receiving such a report.

A hire purchase is different from a lease in terms of various economic risks and VAT treatment. Although the customer is allowed to pay the purchase price by instalments, the supplier is liable to calculate and pay VAT on the entire amount of the transaction. This VAT treatment is not new, yet we have had to deal with situations where a taxable person has missed this important difference or finds it difficult to determine what kind of transaction is in fact taking place. This article explores key differences between the two transactions for VAT purposes.

Several EU member states are taking the taxation of employee share ownership plans in startup companies a step further. Their national rules make share plans far more attractive to startup employees and provide a more founder-friendly environment. While the rules aim to ensure startups give their employees a stake in the company, there are many solutions countries can use to achieve this goal.

Latvia continues to sign protocols amending its treaties by mutual agreement. On 29 September 2022 a protocol was signed to amend Latvia’s double tax treaty with Germany. To take effect, it must be ratified by the parliaments of the two countries.

To pick up where we left off about “contributions in kind” and VAT last week, this article explores a less common form of business – limited and general partnerships that make a “contribution in work” under a partnership agreement.