VAT Law
On 1 January 2020, amendments to the VAT Law
become effective.
Delivery of goods to a
warehouse in the EU Member State.
Value Added Tax Law
(hereinafter — VAT Law) has been supplemented with Section 8
1 Delivery
of goods to a warehouse in another Member States that includes conditions that
the VAT payer has to comply with not to have to register in another Member
State if conducting transportation of goods to a warehouse in another EU Member
State and performing further deliveries later. The conditions are as follows:
·
Before
transportation of goods is started the recipient of goods and VAT registration
number have to be known;
·
A registered taxpayer who sends or transports goods from Latvia to
another Member State does not have any place of business or other permanent
structure established in the other Member State;
·
Transportation of goods have to be registered with a special register
and delivery of the goods has to be declared in a report on deliveries of goods
and services provided in the territory of the European Union.
The new provision also
means that the supplier of goods is not obliged to
register with the VAT payers’ register of the other EU Member State to be able
to declare purchase of goods in the territory of the European Union. If these
conditions apply, a taxpayer from another EU Member State is also not obliged
to register as a VAT payer in Latvia.
If
the condition in regard to deliveries of goods to a warehouse in another Member
State does not apply (for example, the goods will not be transported from the
warehouse within 12 months), the transaction will be requalified as a
delivery of goods in the territory of the EU, therefore the supplier of goods
has to register with the VAT payers’ register of the other Member State and
declare purchase of goods in the territory of the EU and further delivery of
goods.
Chain Transactions
Pursuant
to Directive 2018/1910, chain transactions refer to successive supplies of the
same goods which are subject to a single intra-Community transportation between
two Member States. Consequently, transportation of goods is applicable to only
one delivery within the chain of transactions and the VAT rate of 0 % to a
delivery of goods in the territory of the EU can be applied only to one part of
the chain.
Pursuant
to the general provision, the VAT rate of 0 % is applicable only to the
delivery of goods performed by the intermediary of the chain of transactions.
When the intermediary of the chain of transactions has notified the supplier of
goods of its VAT registration number in the Member State from which goods are
sent or transported, the VAT rate of 0 % is applicable to the delivery of
goods performed by the intermediary of the chain of transactions.
Considering
the above, the VAT Law has been supplemented with Section 43
1 on
applicability of 0 % rate in a chain of transactions.
Conditions to apply the
VAT rate of 0 %
The
VAT rate of 0 %
will not be applied to delivery of goods in the
territory of the EU, if the supplier of goods has not submitted a report on
deliveries of goods and services provided in the territory of the EU, or in the
report, accurate information on the respective transaction has not been
provided.
The
conditions and period for submission of report on deliveries of goods and
services provided have been specified. Monthly report shall be submitted if one
of three criteria applies: delivery of goods has been performed, service has
been provided or delivery of goods has been performed to a warehouse in another
EU Member State.
Pursuant
to conclusions drawn in Case No. C-401/05 of the European Court of
Justice, the rights of taxpayer to apply release of VAT to such transactions as
services provided by the dental technicians and dental hygienists, as well as
deliveries of dentures performed by dentists and medical services. Namely,
before it was stipulated that VAT is applied to these transactions if those are
provided to patients. Amendments provide that VAT release is applicable
regardless of the status of the recipient of goods or services.
Law On Taxes and Duties
On 13 January 2020, amendments to the Law On Taxes
and Duties became effective whereby the regulatory framework of the
Latvian Code of Administrative Violations was overtaken in regard to violations in the sphere of taxes and
the law was supplemented with Chapter
XVI stipulating sanctions for the following violations:
Moreover, a new administrative violation
has been specified: performing prohibited transactions, if taxpayer’s economic
activities have been suspended.
The law will become effective on 1 July 2020
along with amendments to the Latvian Code of
Administrative Violations (as of 1 July 2020 Law of Administrative
Responsibility).