If you supply goods or services consumed in Latvia, you may be required to charge VAT to your customers and pay VAT to the Latvian government. The State Revenue Service is the formal authority responsible for VAT management and other tax-related activities in Latvia. You can find information and updates regarding VAT laws on their website.
In short, if you are a freelancer conducting taxable business activity within Latvian territory, you be liable for VAT once your sales revenue exceeds the annual threshold of EUR 40,000. The standard VAT rate in Latvia is 21%, but the government also levies reduced rates of 12% and 5%, which are charged based on the category of products you supply. While Latvia has its VAT registration protocols, they are based on the European Union’s VAT directives. EU VAT directives can sometimes override local Latvian legislation.
Understanding everything about VAT can get confusing, so we’ve come up with a guide that explains the nitty-gritty of VAT registration for freelancers in Latvia. Let’s get started!
The State Revenue Service has published three distinct VAT rates in Latvia. Based on the type of goods and service you produce, you should charge a specific rate to your customers and include that information in your invoices.
Here is a detailed list of goods and services that come under each category of VAT rates.
If the total value of taxable goods and services you sell over a year exceeds EUR 40,000, you are liable to register for VAT in Latvia. In contrast, freelancers making intra-EU distance sales of goods are responsible for VAT registration once your turnover exceeds EUR 10,000.
The economic activities that qualify for VAT registration include:
In addition to these conditions, you should regularly check the State Revenue Service (SRS) website for other scenarios when you must register for VAT.
As a freelancer in Latvia, you simply have to submit an application for registration provided in the SRS VAT payer register. If your solopreneurship is based in a different EU country or a non-EU country, you should fill out the Application of Taxpayers of another Member State and of a Third Country or Third Territory form in the SRS VAT Payer Register. For the latter, if your legal representative files the application, a written power of attorney must be submitted along with the application.
Before applying for VAT registration, you should register with SRS. After doing so, your application and supporting documents can be submitted, either through:
After applying, the SRS will issue you a VAT number within 15 working days. Once you are registered for VAT, it is your responsibility to report and pay VAT to the Latvian government on time.
Alternatively, you can hire an accountant or agency to handle your VAT registration and returns with the SRS. Xolo provides services like Xolo Go and Xolo Leap, which help with precisely this and any other VAT concerns you may have.
Registering for VAT is only the first step towards being VAT compliant in Latvia. Once you’ve successfully registered, you are required to:
To pay VAT, you can opt for one of two payment arrangements:
You have to report VAT monthly, on the 20th day of the month following the reporting period.
You need to maintain the following financial records, either digitally or physically, in a clear, readable and complete format:
These incredibly important records are easy to accidentally misplace, lose, or damage. However, with Xolo, your records are stored, organized, and maintained electronically for as long as you need in our systems, so they are easily accessible whenever you want them.
The tax registration process can be tricky at times, but we hope this guide has helped clear your doubts! If you’re still confused about the different schemes and numbers and paperwork, Xolo offers a range of solutions that handle all the hassle while you focus on your core competencies.
With Xolo Go, you can easily freelance and invoice your clients, even without a registered company or LLC.
Simply put, we do the hefty work for you so that you can enjoy the freedom of freelancing. So connect with us immediately, and we’ll help you get your one-person business up and running in Latvia in no time!