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22.11.2019

New rules on debt assignment (1/47/19)

Tax CIT

We have informed our MindLink subscribers about proposals for amending the Corporate Income Tax (CIT) Act. This article explores the proposed new rules for assigning receivables.

15.11.2019

Cash flow statement: meaning and practical use (3) (3/46/19)

Accounting Tax

This article completes what we wrote in the last two weeks.

15.11.2019

Transaction recognised as transfer of business, not supply of goods (2/46/19)

Legal Tax VAT

Hiding the true substance of one transaction by substituting another to obtain a tax advantage is not an unusual case heard by the courts. This time the court ruled in favour of the State Revenue Service (SRS) after finding that a taxable person had wrongly deducted input VAT according to a supplier’s pro forma invoices for the purchase of movables, because the real transactions are recognised as the transfer of a business as a going concern, which is outside the scope of VAT.

15.11.2019

Paying dividends in 2019: aspects to consider (1/46/19)

Tax CIT PIT

Under the transition rules of the Personal Income Tax (PIT) Act, 2019 is the last year in which dividends an individual receives out of profits arising before 2018 qualify for a reduced rate of PIT. This article explores some aspects to consider where a Latvian company pays dividends to individuals in 2019.

12.11.2019

Paying dividends in 2019: aspects to consider 1/46/19

Free access Tax CIT PIT

Under the transition rules of the Personal Income Tax (PIT) Act, 2019 is the last year in which dividends an individual receives out of profits arising before 2018 qualify for a reduced rate of PIT. This article explores some aspects to consider where a Latvian company pays dividends to individuals in 2019.

08.11.2019

Cash flow statement: meaning and practical use (2) (2/45/19)

Accounting Tax

This article picks up where we left off last week.

08.11.2019

Is input VAT deductible after breach of industry rules? (1/45/19)

Tax VAT

We have written earlier about the Supreme Court of Latvia asking the Court of Justice of the European Union (CJEU) to make a preliminary ruling on Altic SIA (the “Company”) vs the Latvian State Revenue Service (SRS) regarding a possible breach of food industry rules in relation to input tax deduction rights. This article explores the CJEU’s Ruling C-329/18.

07.11.2019

Tax developments in Estonia (3/45/19)

Tax CIT

This article highlights two important pending changes to Estonian tax laws.

02.11.2019

Economic substance (3/44/19)

Legal Tax CIT

To fight fraud and tax avoidance at national and international level, EU authorities are drawing up appropriate rules and explaining relevant concepts. Recent years have seen member states passing anti-avoidance rules into their national legislation and double tax treaties according to OECD guidelines. These circumstances emphasise the need to assess the commercial content and business purpose of transactions carried out by multinational enterprises. Economic substance is a key criterion we should assess to determine whether a company’s profit is taxed where it is really earned and whether there is any tax avoidance. This article explores the concept of economic substance.

02.11.2019

Cash flow statement: meaning and practical use (2/44/19)

Accounting Tax

The cash flow statement (CFS) is a statutory financial statement to be prepared in Latvia by only medium and large companies (sizes defined by the Company and Consolidated Accounts Act). There are not many companies of this size against the total number of companies in Latvia, and even the ones covered by this requirement often approach the CFS as a formal requirement that gives no benefit to their management. Is that true? Not quite, and let’s explore why.

02.11.2019

Cash pool: transfer pricing aspects (3) (1/44/19)

Tax Transfer pricing

To complete our series of articles on the transfer pricing (TP) aspects of a cash pool, this article explores what data and sources are used in practice for setting fees (interest rates) for cash pool members depositing and borrowing cash.

29.10.2019

Cash pool: transfer pricing aspects (3) 1/44/19

Free access Tax VAT

To complete our series of articles on the transfer pricing (TP) aspects of a cash pool, this article explores what data and sources are used in practice for setting fees (interest rates) for cash pool members depositing and borrowing cash.

25.10.2019

Can access to foreign warehouse create permanent establishment? (3/43/19)

Tax CIT

Companies are increasingly expanding their operations around the world by hiring staff to research the local market, negotiate contracts and prices with local customers, and conduct marketing and other activities that promote the company’s business. It is important to find out whether those activities are likely to create a permanent establishment (PE) in the country where they are carried out. This article explores recent changes to the interpretation of law that will affect future PE risk when it comes to assessing the availability of a company’s warehouse abroad.

25.10.2019

Cash pool: transfer pricing aspects (2) (2/43/19)

Tax Transfer pricing

To pick up where we left off about the transfer pricing aspects of a cash pool, this article explores ways of setting fees for cash pool members, including the treasurer, according to the OECD Base Erosion and Profit Shifting (BEPS) discussion draft on financial transactions published in July 2018 (“BEPS report”).

25.10.2019

Proposed penalty for failure to file country by country report (1/43/19)

Stamp Tax Transfer pricing

On 1 October 2019 the Cabinet of Ministers debated and supported proposals for amending the Taxes and Duties Act to impose a new penalty for failure to duly file a country-by-country report.

22.10.2019

Proposed penalty for failure to file country by country report 1/43/19

Free access Tax Transfer pricing

On 1 October 2019 the Cabinet of Ministers debated and supported proposals for amending the Taxes and Duties Act to impose a new penalty for failure to duly file a country-by-country report.

18.10.2019

Employer’s disclosure of contributions to private pension funds: advance tax ruling (3/42/19)

Tax PIT

In July 2019, the State Revenue Service (SRS) published an advance tax ruling that explains how to correctly disclose information in employer statements where an employer’s contributions to private pension funds for a worker come from the employer’s money and where they come from the worker’s money through the employer.

18.10.2019

New service: business income account (2/42/19)

Business Tax

The Ministry of Finance, the State Revenue Service (SRS) and commercial banks are planning to launch a business income account (BIA) as a new service for taxpayers, according to a report posted on the SRS website.

11.10.2019

Bullying in workplace: statute and case law (3/41/19)

Legal Tax Employees

Last week we wrote about emotional or psychological bullying against a worker. This article explores the legislation and recent case law dealing with emotional bullying.

11.10.2019

Changing over to paperless accounting (2/41/19)

Accounting Tax

In the age of digital economy, the business community needs to keep abreast of industry trends. In accounting, the trend is towards a paperless future, but this raises some questions. How do we go about this? What tools do we need? What legislation must we comply with?

08.10.2019

Monitoring compliance with AML/CTPF Act 1/41/19

Free access Legal Tax AML

The State Revenue Service (SRS) is in the process of reviewing external accounting service providers and tax consultancies for compliance with the Anti Money Laundering and Counter Terrorism and Proliferation Financing (AML/CTPF) Act.

04.10.2019

Emotional bullying in workplace (3/40/19)

Legal Tax Employees

A favourable working environment is among the factors that drive staff productivity, but a worker may also face a consistently negative attitude to them in the workplace. As a result, the person may find it intolerable to be there. This article explores the forms and characteristics of emotional bullying and ways of fighting it.

04.10.2019

Intragroup loan: tax authority’s ruling confirms cases where retained earnings do not need reducing (2/40/19)

Tax CIT

After the corporate income tax (CIT) reform, loans to related parties may be taxable, raising the question of whether a loan can be made with no CIT implications. This article looks at a new ruling published by the State Revenue Service (SRS) explaining how to apply statutory exclusions.

01.10.2019

26.09.2019

Workplace video surveillance (2) (3/39/19)

Legal Tax Employees

This article completes what we wrote last week.

26.09.2019

CIT Act to be amended: permanent establishment (2/39/19)

Tax CIT

We have informed our MindLink.lv subscribers about proposals for amending the Corporate Income Tax (CIT) Act. This article explores only proposals relating to a permanent establishment (PE).

20.09.2019

Intragroup mobility of third country nationals: easier, faster, and lawful (3/38/19)

Legal Tax Employees

Nationals of a third-country such as Belarus holding a Latvian work permit are not allowed to work in other EU member states. This article explores how third-country nationals can lawfully move within multinational enterprises across the EU.

20.09.2019

Workplace video surveillance (2/38/19)

Legal Tax Employees

The National Data Office has stated that installing video surveillance devices in the workplace with audio recording is unlawful unless the law expressly permits their use. This article explores video surveillance in the light of the General Data Protection Regulation.

20.09.2019

Rule No. 969 on business trip expenses to be amended (1/38/19)

Accounting Tax Employees

The Finance Ministry’s proposals for amending the Cabinet of Ministers’ Rule No. 969 were announced at a meeting of state secretaries on 18 July 2019. This article explores some of the proposals to be debated soon.

13.09.2019

Adverse consequences of widening State Revenue Service’s powers (3/37/19)

Legal Tax

At various stages of their control measures, the State Revenue Service (SRS) has the power to apply means of securing enforcement of their potential decisions. The SRS’s powers were expanded on this matter a year ago, and this expansion is affecting any entities and individuals that are being scrutinised by the SRS. However, those newly acquired powers appear to be exercised in a formal manner improperly restricting taxpayers’ rights.

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