E-Commerce & B2C Services in Latvia
E-commerce has undergone developments to improve the VAT environment for online businesses. The ECOFIN Council approved measures on December 5, 2017, which became effective on July 1, 2021. These regulations expand the existing system for e-services and ensure that VAT is paid in the Member State where the end consumers are located.
As of July 1, 2021, businesses selling products and services to non-business consumers in other EU Member States can manage their VAT obligations within the EU using a single, user-friendly online platform known as the “One-Stop-Shop” (OSS). This platform allows for simplified reporting and payment of VAT in the Member State of consumption.
Read more about B2C services & E-Commerce in Latvia in our comprehensive guide.
E-commerce in Latvia
Since July 1, 2021, new rules regarding the location of distance sales of goods from another EU Member State or third countries to non-taxable persons have been implemented. The majority of these transactions are now subject to taxation in the Member State of consumption.
To streamline reporting and payment obligations for businesses, the optional scheme known as the One-Stop-Shop (OSS) was introduced within the EU. This scheme enables businesses to declare and pay VAT to a single Member State, eliminating the need to register for VAT in multiple Member States where consumption occurs. The OSS covers services provided to non-taxable individuals, distance sales of intra-Community products, and sales of goods from foreign countries to non-taxable individuals in the EU for consignments valued at EUR 150 or less. Additionally, the Import one-stop-shop (IOSS) was introduced to facilitate this process.
GVC (Global VAT Compliance) can help you with your OSS/IOSS requirements visit globalvatcompliance.com for more information about our services.
GVC can help you with your OSS/IOSS requirements visit our dedicated page by clicking here for more information about our services.
Selling in Latvia?
B2C services in Latvia
The provision of services, as per Article 1(14) of the Latvian VAT Law, refers to any transaction that does not involve the supply of goods.
Here are a few additional examples of service supplies:
- Supply of the acquisition of intangible assets, including property or rights.
- Obligations to perform or refrain from performing specific acts or activities.
- Leasing of real estate.
- Transfer of property following the completion of construction work (property referred to as unused real estate).
Time of Supply
In general, the provision of services is deemed to have taken place when the service is rendered or received, as outlined in Article 32 of the Latvian VAT Law. However, if the services are provided continuously, there are specific rules that apply, and the time of supply is determined accordingly.
If payment has been made in advance before the service is rendered or received, the service becomes subject to taxation at the time of the advance payment. In the case of construction services, they are considered to be supplied at each stage of the work’s completion, but no less than once every 12 months.
Digital Services
Telecommunications, broadcasting, and electronically delivered B2C (business-to-consumer) services are categorized as “TBE services” according to Article 27 of the Latvian VAT Law when determining the location of supply.
When a service is provided electronically, it typically takes place over the internet or another electronic network and is automated with minimal or no human involvement. This poses challenges in terms of verification, often requiring the use of information technology.
TBE services encompass a range of activities, including providing websites, hosting services, remote program and equipment maintenance, as well as delivering software and updates through electronic means.
In compliance with European Council Directive 2008/8/EC, the Latvian VAT Law, specifically Articles 27 and 1401, incorporates EU place of supply regulations. As of July 1, 2021, VAT will be imposed on certain low-value “distance sales” of products imported from outside the EU or supplied within the EU to non-taxable individuals by taxable persons not located in the EU. This applies specifically to “online marketplace operators.”
Global VAT Compliance is up to date with all new rules & regulations and provides VAT/GST solutions to companies offering digital services worldwide.
Last Updated:16/10/2023
Disclaimer
The information provided by Global VAT Compliance B.V. on this webpage is intended for general informational purposes only. Global VAT Compliance B.V. is not responsible for the accuracy of the information on these pages, and cannot be held liable for claims or losses deriving from the use of this information. If you wish to receive VAT related information please contact our experts at support@gvc.tax
