Effective from 11 January 2024, the Ministry of Finance has amended the Cabinet of Ministers’ Rule No. 1507 of 17 December 2013, ‘The procedure for refunding VAT to a taxable person registered in a third country or territory’, and Rule No. 1514 of 17 December 2013, ‘The procedure for filing a registered taxable person’s VAT refund claim in another EU member state and the procedure for refunding VAT to a taxable person registered in another EU member state’.
The amendments apply in particular to EU and non-EU registered taxable persons that are not established in Latvia but acquire services related to real estate (RE) and claim a VAT refund because the services are acquired to make supplies that attract Latvian reverse-charge VAT.
On 21 December 2023 the Court of Justice of the European Union (CJEU) passed ruling C-288/22 on whether a public limited company’s board members are taxable persons for VAT purposes. This ruling is important because it explains what criteria must be met if a person is to be treated as carrying out an economic activity that forms the basis for paying VAT and what factors should be considered to determine whether someone is an independent taxable person.
In its ruling C26128713, SKC-201/2019 of 28 June 2019, the Supreme Court took a different view on the VAT Act’s condition that the taxable amount should include only taxes payable in relation to a supply of services. The dispute involved a forced lease of land that stipulated a rent plus a compensation of real estate tax (RET). The Supreme Court was assessing whether VAT should be charged on the compensation. First of all, the assessment focused on what items attract RET and who is liable to pay it.
Where lease services are supplied for a consideration, any person (including a public entity or a derived public entity) will be treated as a taxable person for VAT purposes unless the consideration received is a token sum. So the lease service will be a supply governed by the VAT Act. This article explores whether real estate tax (RET) collected from the tenant in addition to the rent qualifies as part of the rent and whether VAT should be charged on it.
Accountants working for Latvian service providers tend to feel confused when they find out that their foreign business partner has a VAT registration number not only in his country of establishment but also in Latvia. What does a foreign trader get a Latvian VAT number for? And how does that affect service providers in Latvia? Read on to find out more.
The Finance Ministry has come up with a number of proposals for amending the VAT Act from 2024. The goals are to improve the VAT rules by exempting VAT on services that are closely linked to sports, to minimise the administrative burden, to encourage improvements to the business environment, and to revise the conditions for how registered taxable persons can adjust input tax paid on bad debts. The proposals must be approved in their second reading by Parliament before they can take effect. This article explores what we see as key changes to the VAT Act.
We have informed our MindLink subscribers that in late 2022 the European Commission (EC) published proposals for amending the VAT directive (2006/112/EC) and Council Implementing Regulation (EU) No. 282/2011 to upgrade the EU VAT system and increase its resistance to fraud. Known as ‘VAT in the Digital Age’ (ViDA), the EU VAT reform aims to modernise and simplify the VAT rules for platform economy members by introducing mandatory real-time digital reporting and e-invoicing for all intra-Community B2B transactions. This article explores the latest developments and the potential reforms, focusing on e-invoicing practices.
The Ministry of Finance has suggested how tax legislation should be amended from 2024. This article explores proposals for amending the Corporate Income Tax (CIT) Act and the VAT Act relating to luxury executive vehicles (LEVs).
In September 2023, the EU VAT Committee published guidelines on how to assess the VAT treatment of fuel card transactions, which had been dealt with earlier by the Court of Justice of the European Union (CJEU) in its ruling C-235/18 Vega International. The CJEU ruled that the Austrian company’s transaction of issuing fuel cards to other companies for fuel purchases, which was invoiced as a supply of fuel, qualifies as a service of granting credit that is exempt from VAT.
It’s usual for sellers (and service providers) to make offers such as “buy a product, get another one for free” or “each buyer gets a gift”. For VAT purposes, sellers are not usually concerned about the concept of a gift as long as it’s up to EUR 15, but they do become more careful if gifts exceed this threshold. The restriction on low-value gifts in the Latvian VAT Act is per individual and per year, placing a certain burden on the taxable person to identify the recipient and keep such a record. However, the Act’s definition of a low-value gift contains a disclaimer that this does not apply to goods or services made available free of charge if their costs qualify as advertising or “representation” expenses. The State Revenue Service does not tend to evaluate the seller’s advertising slogans literally but will assess a supply according to its economic substance. This article explores the latest ruling from the Court of Justice of the European Union (CJEU) on how to assess gifts for VAT purposes.
In June 2023, Parliament passed two extensive amendments to the Taxes and Duties Act effective from 1 January 2024. This was followed by a publication on the website of the State Revenue Service (SRS) detailing the new system’s objectives and explaining the meaning of taxpayer grades.
Fixed assets, and sometimes inventories too, have to be written off if they no longer meet your company’s needs or are obsolete, or if there is no demand for them. The issue of input tax deduction always comes up in such situations, and has been recently heard by the Court of Justice of the European Union (CJEU). This article explores Ruling C‑127/22 (Balgarska telekomunikatsionna kompania) of 4 May 2023.
On 19 April 2023 the EU Official Journal published the European Commission’s decision (EU) No. 2023/829 of 17 April on an exemption from import customs duty and import VAT on goods intended for free distribution or transfer to persons fleeing the military aggression waged in Ukraine and to persons in Ukraine who need help.
On 20 April 2023 the Court of Justice of the European Union (CJEU) ruled on case C‑282/22 concerning the VAT treatment of services supplied by EV charging stations that offer charging equipment and software in addition to the charging service. This article explores the CJEU’s interpretation.
