VAT changes in EU and Latvian laws as of 2020

From 1 January 2020 changes in VAT have been introduced at both – EU and national level.

To learn more about VAT changes in EU and Latvian laws, read the informative letter prepared by certificate tax consultant - Anna Vilka.

From 1 January 2020 changes in VAT have been introduced at both – EU and national level. Summary of the most substantial changes is provided below:

• Documents to apply 0% VAT rate (source: Regulation (EU) No 2018/1912 amending Regulation (EU) No 282/2011, Article 45.a);
• Call-of stock transactions (source: national VAT law, Article 8.1; corresponding EU directive, Article 17.a);
• Chain transactions (source: national VAT law, Article 43.1; corresponding EU directive, Article 36.a);
• Other VAT changes (source: national VAT law).

Documents to apply 0% VAT rate (for EU deliveries)

* Non-contradictory evidence issues by two parties independent of each other, of the vendor and the acquirer

** Ultimately 10th day of the month following supply

Call-of stock

Ownership of goods:

• The property right to the goods shall be transferred to the registered taxable person which is the recipient of goods only at the time of reselling or use

Who controls access to and use of the stock:

• Purchaser has control of the storage (or controlled by the seller, but the purchaser knows the details of deliveries into storage);
• Purchaser is aware of stock movements.

Declaration after January 1, 2020:

• Seller (Latvia) declares the delivery two times:

1. EU delivery of the goods at the moment of movement (0.00 EUR value, E code);
2. EU delivery of the goods with its value at the moment of transferring of property rights (EUR value, N code).

VAT registration:

• VAT registration will not be required if conditions are met.

Preconditions:

• Can be stored <= 12 months;
• Regular supply from call-off stock;
• Purchaser is a VAT payer where goods are stored;
• Substitution of purchaser is allowed;
• Supply of goods from call-off stock to third party is not allowed;
• Return of goods to Latvia is allowed;
• Supplier must keep a special register.

Chain transactions – example of simplified chain transaction

Other VAT changes (national)

This is a summary of other important VAT changes in VAT law of Latvia as of 1 January 2020:

• More detail regulations are provided about the input VAT adjustments for intangible assets invested in company’s share capital (such as software or licenses);
• Articles 141 and 143 have been amended to specify cashless transactions in timber supply and related services as well as scrap metal supply and related services;
• Special former VAT regime for supply of construction products, household electronic devices and household electrical equipment has been abolished; and
• From now on, VAT exemptions apply also on following services:
  • dental technicians in their profession as well as dental prostheses supplied by the dentists and dental technicians (irrespective of the status of the recipient of these goods or services); and
  • medical services provided by a medical institution to a patient of another medical institution under a cooperation agreement (also on basis of a written mutual agreement between two medical institutions).

This is a toolkit of VAT changes effective from 01/01/2020 prepared in the collaboration with Baker Tilly Netherlands’ office. Our regular flash news on changes in Corporate income tax of Latvia will soon follow. Meanwhile, if you have any questions concerning the taxation of your business, do not hesitate calling or writing to Baker Tilly's Riga office.

Contact:
Anna Vilka
anna@bakertilly.lv
phone: 67 321 000