Real estate related services

From January 1, 2017, new rules went into force determining the VAT (value added tax) of real estate related services. These rules are defined in the EU Council Implementing Regulation No 1042/2013 (read in Latvian: http://publications.europa.eu/lv/publication-detail/-/publication/842df1fb-3e0c-11e3-a247-01aa75ed71a1/language-lv). The regulation provides the definition of real estate that is binding for VAT payers in Latvia and other EU Members. It also provides a list of services considered to be related to real estate.

It is important to note that this regulation applies directly and will not be re-written in the VAT Act of Republic of Latvia- therefore, taxpayers must be aware of the regulation and its content. The extensive clarification of the regulation is prepared by EU Commission Taxation and Customs Union Directorate General, Latvian translation of which can be read here: https://www.vid.gov.lv/sites/default/files/veidlapas_un_iesniegumi/pievienotas_vertibas_nodoklis/ek_pvn_ni_vadlinijas.pdf.

Reverse charge mechanism in VAT payment procedure

From the January 1, 2017, the reverse charge procedure of VAT payment was introduced in the VAT Act, concerning the transactions with raw precious metals, precious metal alloys and metal clad with precious metal (the full list of goods can be found in Article 143 of the VAT Act).

Deduction limit of input tax

From 2017, the term „representative vehicle“ broadened to also include cars with a full mass of up to 3000 kg registered as a cargo van (category N1) with more than three seats (including the driver’s seat), and the purchase price without VAT exceeding 50 000 euros. It is not allowed to deduct input tax for the purchase, lease, import, or maintenance of such cars. The closer details of the regulation can be found in the Article 100 of the VAT Act.  

Taxation period and VAT reporting

As of the beginning of 2017, the former six month taxation period shortens to one or three month period. The quarterly tax period applies to state and local authorities or municipalities that are registered as VAT payers for obtaining construction services.

Whereas, agricultural product processors are waived to submit SRS a separate report for the fiscal year in relation to agricultural production quantity and value received by each farmer.

Read more on our Latvian website: http://leinonen.lv/news/news-2017/vat-update-at-beginning-of-year-2017