Every now and then corporate groups decide to undertake a strategic restructuring of their assets, including a transfer of assets to one or more group companies for financing another activity. Using a contribution in kind to increase a company’s share capital raises a number of important legal and tax issues. In this article we will explore whether a contribution in kind attracts VAT, as well as assessing the need to adjust the input VAT deducted on the contribution and the right to deduct the input VAT on services acquired for the contribution, such as expert valuation services and legal advice.

Effective from 24 September 2022, urgent amendments to the Immigration Act significantly limit the scope for Russian and Belarusian nationals to obtain a Latvian temporary residence permit (TRP), including on employment or business grounds. What awaits nationals of these countries holding a TRP and working for or running a Latvian company? In this article we will sort out the amendments affecting the labour market and explain whether those persons have reason to worry and what happens if a TRP is about to expire.

The rules for implementing the aid programme “Financial instruments for encouraging digital transformation of businesses” under the EU Recovery and Resilience Facility came into force on 5 July 2022. The programme is designed to encourage the digital transformation, development and revenue growth in businesses by supporting investment in digital information tools aimed at productivity gains. The aid is targeted at Latvian-registered businesses regardless of size. This article takes a closer look at the aid programme.

When it comes to performing accounting or any other duties where data processing takes a long time or where you regularly need to perform some repetitive or similar activities and processes, it’s great to keep easy-to-use tools handy. As we are putting together courses at PwC’s Digital Academy, we would like to tell you about a tool that will make your daily tasks much easier to do. Power Query is a data preparation and transformation tool available in Microsoft Power BI and, starting from the 2016 version, in Microsoft Excel and other programs. This tool allows users to obtain data from a variety of external data sources and from files stored on computer. It allows you to group and transform data and perform other activities. This article offers a few practical examples to raise awareness of how this functionality can be used and what benefits it offers.

Section 18.2(1) of the Anti Money Laundering and Counter Terrorism and Proliferation Financing Act requires a company to notify the Enterprise Registry of its ultimate beneficial owner (UBO) and how UBO control is exercised.

Amendments to the Proof of Identity Act that came into force on 1 September 2022 will also affect entities that are subject to the Anti Money Laundering and Counter Terrorism and Proliferation Financing Act (“AML/CTPFA subjects”). If you want to keep your client relationships then you should evaluate how the amendments will affect them, and you should adopt solutions that will allow you to legally continue those relationships.

Germany has adopted the Supply Chain Due Diligence Act (the “Act”) with effect from 1 January 2023. This article explores how the new requirements will affect Latvia.

Latvian taxable persons may recover VAT paid on goods and services acquired in other EU member states. This is done under Council Directive 2008/9/EC, i.e. VAT is refunded to taxable persons that are not doing business in the member state of refund but are doing business in another member state. Latvian taxable persons may apply for a VAT refund from other member states for 2021 by 30 September 2022.

Investment funds have recently become more active in Latvia. Foreign non-resident investment funds often invest in the share capital of Latvian companies. The Corporate Income Tax (CIT) Act is silent on the CIT or personal income tax treatment of a non-resident investment fund paying income to its non-resident members from the sale of shares in a Latvian-registered company. Following the “Advise First!” principle of the State Revenue Service (SRS), PwC has prepared an application on behalf of a client seeking an advance tax ruling on how to proceed in this case.

With advanced technology and improved international cooperation, people are becoming less and less tied down to a particular residence. Many relocate from Latvia to live abroad indefinitely. Since this is a new experience for most people, this article summarises key tax aspects a Latvian tax resident should consider in the case of relocation.

With the financial year nearing its end, section 15.2 of the Taxes and Duties Act requires many companies to prepare, or to prepare and file with the State Revenue Service (SRS), their transfer pricing (TP) documentation. Since determining related-party status often confuses taxpayers and authorities, this article reminds you who is considered a related party for TP purposes and what transactions require the taxpayer to prepare TP documentation.

As company balance sheets become increasingly saturated with liabilities and future cash flows less certain, the scope for obtaining bank finance on balanced terms is limited. Yet companies need fresh capital to continue investing and to make their business more resilient to energy shocks and lack of raw materials, and to cope with rising costs, which often cannot be offset by an increased price of the end product.

Ever-changing legislation puts additional pressure on businesses and individuals. To make sure you haven’t missed any important changes and to spot potential risks early, the best solution is to keep up with the changes and know your way around the relevant resources.

In statutory cases, the taxpayer is liable to prepare transfer pricing (TP) documentation and file it with the State Revenue Service (SRS). An examination of TP documentation helps the SRS monitor the correctness of corporate income tax (CIT) payments because the difference between a controlled transaction’s value and market price must be included in the taxable base under the CIT Act. If the taxpayer defaults on the obligation to prepare and file TP documentation, then in addition to the opportunity to start an audit and assess the correctness of the CIT calculation, the SRS may start a data assesment in the field of tax revenue risks and charge a hefty fine on the company if an offence is found. This article explores what offences relating to TP documentation permit the taxpayer to be fined outside an audit and how the SRS should evaluate and justify the size of fine.

To adopt aid measures early and ensure business continuity, the government is proposing new rules on wage subsidy aid to help taxpayers stay in business in a Covid-19 crisis. This article explores the content of the proposals so taxpayers know what industries are eligible for this aid and how they can apply.

In our previous article, we looked at ESG cost categories and said it’s not always right to bear expenses according to the principle of ownership and split them evenly between all companies forming a group. This article continues to examine the reasons.

When it comes to personal data processing, political parties are no exception, being subject to the same requirements of the General Data Protection Regulation (GDPR) that apply to any other data controller. It’s noteworthy the National Data Office has recently issued new guidelines on personal data processing in the run-up to the general election. Could this mean the regulator will be scrutinising the political parties for GDPR compliance? This article explores what measures a political party should take to ensure its data processing complies with GDPR.

The global entertainment & media (E&M) industry’s revenue strongly outpaced overall global economic growth last year. Following a pandemic-related 2.3% decline in 2020, E&M revenue rose a strong 10.4% in 2021, from US$2.12trn to 2.34trn. With the industry becoming more digital, more mobile and more youth-oriented, virtual reality (VR), gaming and digital advertising are the main growth drivers. These are findings from PwC’s Global Entertainment & Media Outlook 2022–2026, the 23^rd annual analysis and forecast of E&M spending by consumers and advertisers across 52 countries and territories.

On 22 December 2021 the Supreme Court’s Administrative Division ruled on case A420209519, SKA-744/2021 dealing with the personal income tax (PIT) treatment of a non-resident individual’s sale of real estate (RE) in Latvia. The ruling reinforces the understanding of the PIT treatment for a non-resident selling RE to Latvian tax-resident individuals who are not traders.

Cross-border business is currently undergoing a huge transformation. Along with taking care of the environment, multinational groups are radically changing their strategy, setting sustainable development goals, and undertaking to considerably reduce their carbon footprint and to develop a socially responsible business according to the best governance practice. The inclusion of environmental, social and governance (ESG) criteria in a business development strategy gives cross-border companies a competitive advantage. In an unprecedented transition to the Green Deal, multinational groups are investing significant amounts and seeing their cost base rise. This article explores which of the companies in a group should cover costs incurred in planning, adopting and implementing their ESG strategy and related measures, looked at from a transfer pricing perspective.

Litigation tends to be costly. In addition to upfront duties payable when a claim is filed, claimants wishing to protect their rights and interests in court have to pay legal costs such as lawyer fees for representation at court hearings.

Russia’s military aggression has significantly affected some of the businesses importing metal products from Russia and Belarus, as well as industries such as metalworking, defence, construction, mechanical engineering, and information & communication technologies. To promote market stability, the Ministry of Economics intends to implement aid measures as an immediate solution in the form of financial instruments to ensure traders’ future business.

Although the single tax account has been up and running since 1 January 2021, taxpayers keep wondering about how payments are recognised in the systems run by the State Revenue Service (SRS) and how taxpayer liabilities are covered. There are issues in how payments are applied to cover mandatory national social insurance (NSI) contributions and other tax liabilities. Since NSI is a cornerstone of the social security system, the National Social Insurance Agency (NSIA) and the SRS have started addressing those NSI issues. This article explores what problems the two bodies are facing and how they plan to solve them.

On 2 August the Ministry of Finance published a proposal for amending the Personal Income Tax (PIT) Act to change the rate applicable to foreign nationals working remotely in Latvia. If approved, the proposal will come into force on 1 January 2023. There is no knowing how the proposal will move on, as it still needs approval from the Ministry of Justice, but we can examine its potential impact.

On 19 July 2022 the Regional Administrative Court ruled on a case in which a taxpayer sought compensation for a loss and non-pecuniary damages resulting from an unlawful audit decision issued by the State Revenue Service (SRS) and overturned by the court. This article explores what losses (expenses) the court considers reimbursable and what the court evaluates in determining whether particular expense items can be reimbursed.

Launched by the State Revenue Service (SRS) in 2018, the taxpayer rating system started out with five dimensions of analysis to determine a taxpayer’s individual assessment in the tax authority’s eyes. After hearing suggestions from the business community in February 2020, the rating system (dubbed “tax speedometer”) was expanded to include another two analysis dimensions with five new business assessment indicators. This article explores the system’s objectives, taxpayer groups, key analysis dimensions and assessments, as well as the taxpayer’s benefits from being rated.

Our Flash News edition of 12 July 2022 informed MindLink subscribers about a new aid programme based on rules recently adopted by the Cabinet of Ministers. In that article we looked at eligible entities, qualifying activities and excluded industries. This article explores the aid instrument and the programme’s status.

The first article of our NFT series presented an overview of NFTs and analysed the Spanish tax authority’s finding that NFT is a service supplied electronically between its creator and the customer. This article explores how to determine what national VAT should be charged on NFT supplies and where the place of supply of electronic services is.

The Supreme Court’s Administrative Division has reversed the Regional Administrative Court’s ruling, which had overturned a decision from the State Revenue Service (SRS) on an additional personal income tax (PIT) liability. This article explores the case in detail.

The Latvian Labour Code is amended on a regular basis and sometimes even more than once a year, but recent years have not seen so sweeping amendments as those coming into force on 1 August 2022. This article will help you navigate the new provisions of labour law.