Value Added Tax registration in Latvia
Registration of Value Added Tax (VAT) taxable persons at the State Revenue Service (SRS) is governed by the Law on Value Added Tax listing VAT taxable transactions and their taxable value, as well as by the Cabinet Regulations No. 933 “Procedures for the Application of Provisions of the Law on Value Added Tax” adopted on 14 November 2006.
- In order to be registered as a VAT payer by the State Revenue Service, the tax payer must submit an application to the State Revenue Service upon presentation of a personal identification document or drivers licence, or a relevant authorisation, if the application is submitted by an authorised person.
- After assessment and inspection of the application and completion of other measures, the SRS makes a decision on registration of the tax payer in the Register of VAT Taxable Persons within 10 days.
- The SRS is entitled to obtain information on companies, inspect manufacturing facilities, ask for information on the company’s key partners, nature of its operations, etc.
- The documents necessary for registration by the SRS in the Register of VAT Taxable Persons may be submitted to any customer service centre of the SRS electronically by using a secure e-signature or to any regional department of the Register of Enterprises upon registering the company.
Refusal of registration
The SRS is entitled to refuse the registration, if an applicant cannot be reached at his or her declared place of residence or registered address, has not given the necessary information upon request by an employee of the SRS or has given false information on his or her material, technical and financial possibilities to perform economic activities.
The decision on refusal of registration in the Register of VAT Taxable Persons can be contested within 30 days by submitting a written application to the customer service centre which the decision was made at. An applicant may improve the registration application and resubmit it to the SRS.
Acquiring the status of a VAT taxpayer
A taxpayer becomes a VAT taxpayer starting from the date on which the decision is made. As of that moment, the VAT is imposed on all transactions made by this person, and the rights to deduct the input tax are obtained starting from this date.
A taxpayer is notified of the decision on registration in a way of his or her own choosing – either by sending a written decision via mail or by publishing the fact of registration on the webpage of the SRS: www.vid.gov.lv.
- If a person is notified of the decision via mail, registration is considered to be completed on the seventh day after the transfer of such decision to the post office.
- If the information is published on the webpage of the SRS, a person is considered to be registered in the Register of VAT Taxable Persons on the next day after the announcement of such decision. The webpage of the SRS also provides information on counterparties, thus ensuring the possibility to find out whether they are VAT taxable persons or not.
Previously, a person had to be registered in the Register of VAT Taxable Persons if the taxable income exceeded LVL 10,000. Starting from 1 January 2011, a person must register if the taxable income exceeds LVL 35,000 during the previous 12 months.
A person has the right not to register in the Register of VAT Taxpayers, if this taxpayer has purchased goods within the territory of the European Union exceeding the registration threshold of LVL 7,000 at least once, but does not intend to purchase other goods in the territory of the European Union in the next calendar year, the total value of which could exceed LVL 7,000.
Since 1 January 2011, the basic VAT rate imposed on goods and services is 22 % out of the total transaction value, instead of the previous 21 %. The reduced rate is 12 %. The goods and services which the reduced rate is imposed upon are listed in the Article 62 of the Law on Value Added Tax.
The registration is voluntary if the taxable income is less than LVL 35,000. The benefit of this requirement is that the VAT paid can be deducted as input tax when purchasing goods and services. It means that the amount of the input tax paid by the taxpayer when purchasing goods and services to secure the taxable transactions may be deducted from the amount to be paid in the budget for the completed transactions.
Submission of declarations
Starting from the moment of registration, a VAT taxpayer must submit VAT declarations. After registration, declarations are to be submitted once every quarter. At the end of the calendar year, taxpayers set the taxation period for the next year. Those, whose taxable income in the previous year has been less than LVL 10,000, must submit VAT declarations once every six months. In their turn, those, whose taxable income is between LVL 10,000 and LVL 35,000, must submit a declaration once every quarter. However, those, whose taxable income in the previous year has been more than LVL 35,000, become monthly payers.
Delivery of goods to the EU
Taxpayers delivering goods to the Member States of the European Union pay VAT every month. The first monthly taxation period is the month of starting deliveries to the European Union. In this case, the VAT is paid every month, as well as declarations are submitted every month till the end of the calendar year. The taxation period for the next year is set according to the value of taxable transactions in the previous calendar year.
A VAT declaration must be submitted according to the following procedure:
- If the declaration is submitted in writing, it must be done till the 15th day of the month after the end of taxation period;
- If the declaration is submitted by using the electronic declaration system, then it must be done till the 20th day of the month after the end of taxation period.
The VAT is paid into the state budget by the 20th day of the month following the taxation period.
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