Flash News offers the latest information on current tax, accounting, legal and other business issues.
Employee stock ownership plans are becoming increasingly popular as a way to boost staff motivation in companies around the world, including the Baltic States. The popularity of stock options is due to how they benefit both the company and the employee. Stock options give employees the right to receive or buy shares in their company after a specified period and for a price below the market value. The company benefits by having employees who are willing to work towards its goals and increase its stock value. Since the national rules for taxing this fringe benefit vary from country to country, it’s important to review the tax laws of Lithuania, Latvia and Estonia.
Globalisation means it’s common for companies to have their corporate clients and various procurement projects in countries other than their main place of business. To properly benefit from foreign procurement projects, it’s important to assess not only the benefits but also risks associated with such business opportunities, particularly tax risks. If your company has a permanent establishment (PE) in a foreign country, it’s important to be aware of the corporate income tax and payroll tax implications of operating there. In this article, we take a look at employment tax risks and key issues to consider.
This summer has brought many changes to the Commerce Act. Some of the amendments came into force on 1 June and others on 1 July. All these changes to a greater or lesser extent affect particular persons that are subject to the Commerce Act, and in this article we explore some of the effective amendments.
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.
In our previous articles we discussed the transfer pricing (TP) aspects of guarantees and looked at methods that can be used to arrive at an arm’s length price. We will close out this series of articles with key insights from international case law and compare how the tax authorities treat the validation of guarantee transactions in a TP file.
One of the preconditions for securing positive customer experience is a robust organisational culture. Customer satisfaction is critical to any company seeking to maintain long-term profitability and competitiveness on the market.
In this article we will look at ways to automate processes using various solutions, that is, how to process incoming PDF invoices that are manually entered into your system, the easiest way to compare data between your systems, and what tools you can use for creating solutions.
In Latvia the rights and obligations of taxpayers and tax authorities, including the SRS, are prescribed by the Taxes and Duties Act and the State Revenue Service Act. Under this legislation, the primary onus is on the taxpayer to compute and pay their taxes to the government.
EU funds and other similar financial assistance instruments have provided support and contributed to the rapid growth, modernisation and development of many businesses. Given the large amount of information and various programme offerings currently available, it’s important to know how to navigate this maze and select assistance instruments that are suitable for your company. This will help you identify relevant assistance programmes, gauge the funding they offer, and understand the criteria for potential project applicants and applications.
Our experience suggests that intragroup services represent the most common centralised activities in a multinational enterprise (MNE) group and they are also transactions being scrutinised by the tax authority.
The crypto-asset sector has made changes to the payment and investment markets and challenged the tax authorities to trace capital gains arising on crypto-asset trades. On 16 May 2023 the EU Council supported the European Commission’s proposal to require crypto-asset service providers to report on transactions their EU customers perform in crypto-asset markets. This will help the tax authorities monitor crypto-asset trading and revenues, thereby reducing the risk of tax fraud and tax evasion. The reporting system is to be implemented with amendments to the Directive on Administrative Cooperation (“DAC”), which is the main system for exchanging data between the tax authorities. The new reporting rules have been passed in addition to the Regulation on Markets in Crypto Assets (“MiCA”) amending Directive (EU) 2019/1937, and to the Regulation on information accompanying transfers of funds, and these rules are fully consistent with the OECD’s crypto-asset reporting initiative.
We have written before about the corporate income tax treatment for the acquisition and maintenance costs of an electric vehicle (EV). Yet employees often charge their corporate EVs at home. This article explores how a company could reimburse an employee’s electricity costs.
Taking care of employees’ mental health is not merely idle chatter or a formal work safety obligation. An employer that fails to pay attention to staff overload issues may face some real legal consequences. This article examines the legal implications of a worker being diagnosed with burnout syndrome and offers a practical overview of how the employer could respond.
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.
We have written before about changes to labour law affecting tax matters. Tax authorities are now scrutinising compliance with local and international law that provides for giving posted workers employment conditions that are consistent with the host country’s national law, including prescribed working hours, rest periods, protection at work and minimum pay. This article explores the rules governing pay and their tax implications.
As new types of assets and transactions emerge, amendments are made to Council Directive 2011/16/EU on administrative cooperation in the field of taxation. The European Commission has proposed new tax transparency rules for all service providers handling crypto-assets. On 16 May 2023 the EU finance ministers agreed on the compromise text of DAC8, which is coming up for approval soon.
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 18 April 2023 the Supreme Court ruled on case No. A420131521 concerning the classification of non-business expenses for corporate income tax (CIT) purposes, application of the concept of labour lease, and additional taxes charged by the State Revenue Service (SRS) in the construction sector, where subcontracted labour was used. By its ruling the Supreme Court refused the company’s request for reversal of the SRS’s decision, which remains unchanged and has taken effect. We feel MindLink subscribers should become familiar with this decision by which the SRS charged CIT and national social insurance (NSI) contributions, as well as a late fee and a penalty. For personal income tax (PIT) purposes, only a penalty was charged.
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.
One EU individual on average discards 11 kg of textiles a year. Globally, a consignment of textiles is buried or incinerated every second. The global production of textiles almost doubled over the period from 2000 to 2015. Clothing and footwear consumption is expected to grow by 63% by 2030. In this article we’ll be looking at some of the EU’s proposed measures to address the problem of textile waste, as well as discussing what’s being done in Latvia and what we can expect in taxation.
On 27 April 2023, Parliament approved amendments to the Corporate Income Tax (CIT) Act in their final reading. The amendments set a higher threshold for luxury executive vehicles – EUR 75,000 instead of EUR 50,000 (excluding VAT). The new threshold will apply to company cars acquired after 1 June 2023.
This statement does not seem to make sense and is contrary to what the law says about capital gains tax being payable only on income that results from a disposal of real estate (RE). However, a certain taxpayer had to fight in court for his right to be exempt from a tax liability on an RE disposal.
Our previous article looked at the need for a taxpayer’s transfer pricing (TP) file to support his guarantee transactions, and explored a general approach to assessing whether a guarantee transaction is arm’s length. In this article we are discussing aspects to consider when the substance of guarantee transactions is analysed, and we are taking a closer look at methods used in analysing such transactions.
During the pandemic, Latvian companies faced unprecedented challenges around remote working, when the entire corporate culture came up for overhaul. The biggest challenges arose from the need for flexibility as the traditional eight-hour working day at the office was upgraded with the option to connect remotely at the employee’s convenience. Some companies cancelled the full-time office presence requirement altogether and set up alternative working arrangements with variable hours, places and conditions. Flexibility became a key aspect in keeping employees motivated and loyal. This article explores the rapid development of flexible reward schemes.
To trace related-party transactions and particular steps they include, as well as the initiator of those transactions, the State Revenue Service (SRS) uses a variety of methods for obtaining information. We have discovered that as part of tax controls, silent administrative cooperation appears to occur in how information on the actual existence of transactions is exchanged. To obtain objective arguments and evidence and to identify the actual proceedings of transactions, the SRS requests explanations from persons named in documents supporting the transactions, including from the taxpayer’s former employees. In this article we explore how this cooperation takes place.
Artificial intelligence (AI) has recently aroused interest in most people. Some are depicting end-of-the-world scenes with AI taking over people’s jobs and later ruling the whole world. Others believe there is no reason to fear AI tools. As always, the truth lies somewhere in between. One of the most popular AI tools today is ChatGPT, which everyone can try out and see what it’s capable of, as we wrote in our recent Flash News. But why are the data protection authorities of European countries beginning to raise the alarm?
People often confuse the terms “public benefit organisation” and “social enterprise”, and there is no readily available explanation about advantages of having either status when it comes to attracting donations and grants. How a public benefit organisation operates makes it different from a company in the classic sense and from an entity with social enterprise status. This article explores the differences between these forms of business and how they can attract financial and other support.