Flash News offers the latest information on current tax, accounting, legal and other business issues.
On 20 January 2022 the Court of Justice of the European Union (CJEU) ruled on C-90/20 (Apcoa Parking Danmark A/S) regarding the VAT treatment of a fee the operator of car parks located on private land charges any motorist who breaks the parking terms and conditions. This article explores the CJEU’s findings and their practical implications.
Companies sometimes buy and sell property, plant and equipment, transfer liabilities, restructure their assets, and conduct other transactions necessary to improve their business. It is important to assess whether this gives rise to a transfer of business as a going concern (TOGC), which has specific implications for both the transferor and the acquirer.
We are experiencing the consequences of climate change more and more – through extreme weather conditions and changes in nature. To mitigate climate change and tackle problems associated with environmental degradation, the EU has set ambitious goals to achieve a 55% reduction in greenhouse gas emissions by 2030 and to become climate neutral by 2050. The European Green Deal is a strategy designed to help Europe achieve the goal of climate neutrality.
The Accounting Act and the Cabinet of Ministers’ Rule No. 877 came into force on 1 January 2022. Because no transition period is allowed for the new requirements, this article again highlights key changes affecting the CEO’s duties and responsibility for adopting control system rules that must be described in the company’s accounting policy.
A company’s shareholders in a general meeting may decide to pay a dividend once the annual accounts showing a profit have been approved. If the company’s articles of association provide for this, the Commerce Act permits an interim dividend to be declared and paid halfway through the financial year. This article explores the legislation and corporate income tax (CIT) treatment of dividends a Latvian branch pays to its foreign head office.
If a company finds it is governed by the Anti Money Laundering and Counter Terrorism and Proliferation Financing (AML/CTPF) Act, it has two priority steps to take: register as an entity subject to the Act after stating a type of activities governed by the Act, and appoint an officer responsible for ensuring compliance with the Act’s requirements under section 10. This appointment must be reported to the relevant supervisory authority such as the State Revenue Service or the Financial and Capital Markets Commission.
On 7 January 2022 the Constitutional Court ruled on case No. 2021‑06‑01, in which the Ombudsman claimed provisions of the Personal Income Tax (PIT) Act for determining traders’ taxable income are inconsistent with section 105 of the Constitution. This article explores why those provisions were challenged and what the ruling found.
Our experience suggests that individuals tend to disagree with tax authorities about how provisions of international law should be applied. There is often disagreement over which country’s tax law is applicable and to what extent. A dispute usually arises in the case of a cross-border transaction, i.e. if income is earned abroad. This article explores a few steps that will help you analyse the applicable law and find out whether your foreign-source income is subject to Latvian personal income tax (PIT).
In our previous article on financing available to businesses we informed our MindLink subscribers about additionally available grants, loans and guarantees financed out of public and EU funds. A new EU funding period has just started, with sub-programmes being developed in detail for setting EU financing priorities. The aggregate EU investment for 2021–2027 involves EUR 10.44 billion to be absorbed by Latvia’s economy. A preliminary list of priorities and qualifying measures has been drawn up, and projects could be launched from mid-2022. Financing from the EU funds for project implementation is available to every Latvian citizen who has a clear idea of how to contribute to society’s well-being, economic growth and sustainable development. Projects may be submitted by entrepreneurs, municipalities and governmental organisations. This article explores the priorities, available funding and programmes of the Latvian Recovery Fund, as well as financing available from the EU Structural Funds for 2021–2027.
In late 2021 the government debated and approved the Justice Ministry’s proposals for amending the Commerce Act. Although the amendments have yet to be endorsed by Parliament, they might come into force on 1 July 2023. The most important proposals relate to disclosure requirements for a public limited company’s shareholders.
On 8 October 2021 the Supreme Court announced a ruling on case SKA-301/2021 regarding expenses a person incurs in repaying a mortgage on an inherited real estate (RE), which may be treated as an investment in a functionally similar RE.
Latvia is committed to reducing its CO2 emissions. One of the objectives is to cut emissions from road vehicles. This can be done by minimising the overall use of transport and by encouraging the use of vehicles with low or zero CO2 emissions. This article explores what incentives are available for buying and using electric vehicles (EVs) in Latvia and other member states.
The world is facing significant and increasingly urgent challenges that are affecting individuals, organisations, governments and society alike. These trends are coming fast and impacting decision-making today. The challenges facing business leaders are significant and complex, with a substantial rise in the expectations people place on decision-makers as leaders.
Entering into contracts for services is an inevitable part of business, but this cannot be undertaken without fully assessing inherent risks. Over the years the courts have developed sufficient case law allowing us to make conclusions about how they approach situations that involve assessing the nature of a legal relationship to determine whether the contract is one for services or one of employment. This article explores some of the case law that prescribes the conduct of parties entering into either type of contract.
The Court of Justice of the European Union (CJEU) has examined a question that often faces Latvian taxable persons. May an excessive price of advertising services and the fact that they are not clearly necessary for the company’s business give the tax authority grounds for denying a deduction of input tax on the advertising expenses? This article explores the court findings and their practical implications.
We have already informed our MindLink subscribers that every company needs to update its accounting policy because the new Accounting Act effective from 1 January 2022 is replacing the old Accounting Act of 1993. This article explores what material changes the accounting policy needs to describe and what purposes it serves.
A litigation and dispute resolution lawyer’s clients often prefer to avoid arguing with the authorities in the hope of building a relationship or performing an obligation, even one that has no basis in law. From a strategy perspective it is sometimes useful to concede a small point in order to secure a bigger gain, such as time or progress. And unreasonably complaining right and left is not considered good style. However, you should not be afraid to speak up where this is necessary and to engage in a meaningful discussion with the authorities when it makes sense. The government is not a small child who will take offence and seek revenge at the first opportunity. Below is a story of successful communication with two fairly bureaucratic government agencies: the State Revenue Service and the Citizenship and Migration Office.
On 8 November 2021 Liepaja District Administrative Court heard a petition (case A42-02059-21) to overturn a State Revenue Service (SRS) decision assessing X (the petitioner) to extra personal income tax (PIT), a late fee and a penalty for undeclared income from person Y, who actually lives with X as they take care of each other and their child without entering into a marriage.
The Corporate Income Tax (CIT) Act has been amended only slightly during 2021, as we wrote in our Flash News edition of 20 April 2021. This article explores the latest changes to the CIT Act as well as amendments being proposed for the near future, including the long-awaited rules for bad debt provisions under IFRS 9 Financial Instruments.
Drafted by the Budgetary and Fiscal Committee, endorsed by the Cabinet of Ministers and passed by Parliament, amendments to the VAT Act are waiting to be announced by the President of Latvia. The amendments are mainly related to changes in other pieces of legislation or meant to take over several VAT directives amending Directive 2006/112/EC on the common system of value added tax. This article explores what we see as key amendments.
Since the adoption of a minimum rate for mandatory national social insurance (NSI) contributions, certain industries have seen an increase in the number of functions being outsourced. Companies are also consolidating their jobs to replace any part-time workers that were not socially insured for at least the minimum monthly wage. This article looks at extra work in detail.
Latvia saw a productive autumn in terms of changes to corporate governance rules. On 11 November 2021, Parliament passed amendments to the Public Person’s Shares and Companies Governance Act, effective from 8 December 2021, requiring large central and local government companies to apply corporate governance principles and prepare various statements in this area.
The European Green Deal and net zero carbon emissions are hot topics in Europe and globally, with implications for Latvia’s environmental protection policy, particularly affecting companies that produce or import iron and steel, cement, fertilisers, aluminium, and electricity.
We have already informed our MindLink subscribers about the new Accounting Act effective from 1 January 2022, which will result in relevant regulations being changed or a new one issued. This article explores the Cabinet of Ministers’ new Rule 590, which explain how a company’s assets and liabilities should be valued in its books and presented in its financial statements if the company or its business unit is dissolved. Rule 590 has been issued under section 21(3) of the new Accounting Act and replaces Rule 583.
To mitigate the economic impact of Covid-19, the government is supporting the private sector with various measures that financially help businesses cover some of their short-term losses. Yet it is very important for the businesses to see opportunities for future growth, which often comes down to the availability of financing for development, improvements and conquering new markets.
When goods are supplied to a person in another member state, one might wonder how VAT should be properly applied if the customer has not presented his VAT registration number, yet he is known to be a trader. Is this an intra-Community distance sale or an intra-Community supply of goods? Since the VAT treatment varies, it is important to understand the features of each transaction.