Do you use these services? Register under the special VAT payment scheme!

A brief overview of the new VAT registration procedure

VAT must now be calculated and paid only on:

• services received from partners in EU or third countries;
• goods purchased within the territory of the EU.

You must meet the following criteria:

• the total value of goods supplied and services provided (annual turnover) within Latvia does not exceed EUR 50,000;
• you do not provide services to VAT-registered taxpayers in other EU Member States.

A few practical examples

Self-employed and small business owners often use various electronic services provided by foreign online platforms. Even if this happens only once and other conditions do not apply, there is still an obligation to register as a VAT payer. The new scheme is designed precisely for such situations and makes VAT administration much easier.

To help you identify such cases and not miss the moment when VAT registration becomes necessary, here are some of the most common examples:

• using paid advertising services from Facebook, Instagram or other foreign social media platforms;
• using paid Google services;
• providing services on Booking.com when renting out your property;
• selling goods on international platforms such as Shopify, Etsy and similar sites;
• subscribing to artificial intelligence tools such as ChatGPT to search for information or create content to promote your business;
• using foreign software (e.g. Adobe) for photo editing or creating visual materials for business purposes;
• using foreign mobile applications for business purposes - for example, for video editing, photo processing, or creating social media content.

Remember:

• if you wish to classify these expenses as business-related, you must register as a VAT payer;
• the expenses must genuinely relate to your business activity;
• every expense must be supported by proper documentation - when using such online services, this will most likely be an electronic invoice.

Restrictions when registered under the new scheme:

• the VAT registration number cannot be used for other transactions not covered by this scheme;
• the right to deduct input VAT, as provided for by law, does not apply.

Participation in the new scheme is voluntary. If you meet the criteria and wish to take advantage of it, visit eds.gov.lv and complete the form “Application for registration under the special VAT scheme or for exclusion from it”.

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