Latvia: New VAT regulations

New tax payment deadline and payment details

As of 1 January 2021, a new payment deadline has been set for VAT which is calculated by submitting regular VAT returns, which is the 23rd day of the month following the reporting period (it was previously the 20th day of the following month).

When submitting a VAT payment notification (e.g. for purchasing a new means of transport from another EU country or for VAT payable to the budget after deregistration from the Latvian VAT register), VAT must be paid within 3 working days.

As of 1 January 2021, all tax payments, including VAT, must be paid to a new unified tax account of the tax authorities. Regarding the tax payments administered by the Latvian customs authorities (import duty, import VAT and excise duty), the existing budget accounts still have to be used. The respective payments to the unified tax account will have to be made only as of 2023.

Input VAT refunds

According to the new VAT overpayment refund procedure, in the event of an excess of input VAT over output VAT, a refund of VAT must be made by the tax authorities to a taxpayer within 30 days after filing a VAT return. Only in certain cases do the tax authorities have the right to delay the refund of the overpaid VAT (for example, in cases of tax audit or request for additional information).

Reduced VAT rates

The period of application of the reduced VAT rate of 5% for the supply of certain types of fresh fruit, berries and vegetables, including washed, peeled and packaged types, uncooked or otherwise prepared (for example, frozen, salted, dried) is extended until 31 December 2023. Previously, it was set until 31 December 2020.

As of 1 January 2021, a reduced rate of 0% VAT applies to the supply of the Covid-19 vaccine, registered in accordance with pharmaceutical regulations and in vitro tests recognised in the European Union and to the supply of services closely related to that vaccine and tests. The provision will be valid until 31 December 2022.

E-commerce

Latvia has implemented new VAT rules of e-commerce, in accordance with the amendments to Directive 2006/112/EC and will start to apply them as of 1 July 2021. The new rules also include that import VAT will be due on all low-value goods imported into Latvia from non-EU countries (currently, the importation of goods for personal use with a value not exceeding EUR 22 is exempt from VAT).

Read the WTS Global VAT Newsletter here