The Corporate Income Tax Act provides for taxing a company’s profits when they are distributed, i.e. dividends are part of the taxable base. Yet the wording raises some practical questions. This article explores how the timing of a dividend calculation affects the period in which the profit distribution should be reported on the tax return.

Recent years have seen new players rapidly entering the financial services market: FinTech companies. The name itself suggests that these companies are operating where financial services meet technology. FinTech companies are promoting and developing the banking business and are themselves becoming an alternative to traditional banking. This article explores some key VAT issues facing FinTech companies.

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.

In its ruling C‑787/18 (Sögård Fastigheter AB) of 26 November 2020 the Court of Justice of the European Union (“CJEU”) looked into an obligation to adjust input tax on capital goods in a supply of real estate (“RE”) and which party is liable. This article explores some of the CJEU findings.

Under the Constitution every individual legally staying in the territory of Latvia is free to travel and choose a domicile. The domicile is a place freely chosen by the person and linked to real estate – the address the person will reside at and be reachable in their legal relationship with the state and the municipality. We are increasingly hearing questions such as who is required to declare their domicile address in Latvia, why and when. This article provides answers to these and other questions.

From 1 November 2020, Chapter 2 of the amended Enterprise Registry Act contains rules on reporting information to the State Revenue Service (“SRS”).

The new era of digitalisation sees companies increasingly adopting new tools and automations to stay competitive in the marketplace. Yet before implementing any new tool or automation, the company needs to consider a great deal of factors that can affect or stop it from achieving the desired result. Those factors are unique for each company, line of business, and internal processes. Automations and new digital tools are not magic bullets and don’t bring e-happiness. Adopting each solution has its own criteria that must be met to maximise returns on the time and capital invested.

Does the land owner – a taxable person registered for Latvian VAT – have a right to demand payment of VAT in a forced lease of land? And should the amount of VAT be included in or paid on top of the rent? In this article we are looking for answers.

Although Latvia has again announced a Covid-19 emergency situation from 9 November, aid measures are available under the Covid-19 Act effective from 10 June. This article explores how the Act governs the corporate income tax treatment of gifts and donations in 2020.

On 17 November the Supreme Court dismissed an appeal by the State Revenue Service (“SRS”) against the Regional Court’s ruling that had granted a petition for overturning the SRS’s decision.

The amended transfer pricing (“TP”) rules effective from 2018 authorise the State Revenue Service (“SRS”) to penalise taxpayers for TP breaches. This article explores when the SRS can impose a penalty and what procedures are in place to keep it in proportion.

On 6 November an emergency situation was again announced in Latvia, with a number of restrictions significantly affecting taxpayers’ business. The current state aid mechanism has been devised according to the guidelines adopted in the spring, but there are a number of differences we should consider to understand what aid measures are available to taxpayers this time round.

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.

An adverse economic environment poses certain difficulties in maintaining transfer pricing (“TP”) policies. However, a global economic crisis does not cancel the requirement that controlled transactions be arm’s length. Following our article on Covid-19 and financial transactions, this one explores some other implications of the pandemic for TP outcomes and provides suggestions for TP analysis.

Today’s finance function is looking to automate, but this drive may cover a variety of processes because the all-round concept of automation includes robotic process automation, artificial intelligence, machine learning and computer vision, as well as tasks set up in Excel using a macro writer. This article explores three main principles for automating small tasks in accounting.

This article serves as a reminder of who is liable to file Intrastat reports and how the information to be disclosed will change from 2021.

In September 2020 the State Revenue Service published an updated version of “How to complete the corporate income tax return.” In this article we summarise information on what has changed, and we look at some new examples offered by the SRS in explaining CIT treatment.

In our Flash News editions of 6 March and 15 May 2020 we said that the EU is planning to simplify the VAT treatment of e-commerce and Latvia is planning to amend the VAT Act on e-commerce. This article explores the progress in adopting these changes and the latest e-commerce developments in the UK.

On 1 January 2018 the Cabinet of Ministers’ Rule No. 655 on tax havens came into force, listing 25 jurisdictions. This article explores how the status of several jurisdictions has changed.

Collective agreements are a rare occurrence in Latvia, yet they can lay down employment terms such as minimum pay, extra pay and social guarantees applicable to a company in a given industry. These conditions can be enforced whether or not the employer belongs to the main group of employers, so each industry needs to monitor how the social dialogue between employers and workers is progressing. This article explores the significance of collective agreements and their key terms.

The results of a tax audit tend to come as a nasty surprise for the taxpayer. If challenging the tax decision has failed to bring a favourable solution and the option of litigation is not acceptable, the taxpayer can consider reaching a settlement with the SRS to minimise the adverse effects of the tax decision on the taxpayer’s business or financial position.

This article completes what we wrote last week.

We wrote a while ago about available corporate income tax (“CIT”) reliefs, including the possibility of deducting provisions made at the end of 2017 from taxable income. This article explores the CIT treatment and issues around a bonus expense accrued at 31 December 2017.

This article completes what we wrote last week.

Travel restrictions due to Covid-19 are affecting not only our plans to relax abroad but also trips we take for business purposes. For some workers this means having their regular business trips cancelled and spending more time videoconferencing, while others have their normal place of work changed. We can work from home for foreign as well as local companies. This article explores some aspects of employment income taxation for employees physically working abroad because of pandemic-related restrictions.

Providing information on the identity of a company’s ultimate beneficial owner (“UBO”) is still a hot topic even though plenty of rules, recommendations and guidelines have been issued.

An adverse economic environment poses certain difficulties in maintaining transfer pricing (“TP”) policies. However, a global economic crisis does not cancel the requirement that controlled transactions be arm’s length. Following our article on Covid-19 and financial transactions, this one explores some other implications of the pandemic for TP outcomes and provides suggestions for TP analysis.

On 28 September the European Commission announced a new action plan for the Customs Union aimed at making EU Customs smarter, more innovative and more efficient over the next four years. This article explores how these measures are to strengthen the significant role the Customs Union has to play.