If you provide freelance services 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.
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.
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.
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 as a freelancer in Latvia, 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:
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