Procedure of VAT Refunds made in Latvia to Legal Entities of European Union Member States

Starting 1 January 2010 the procedure of VAT refunds is changed in the Republic of Latvia in accordance with EU Council Directive 2008/9/EC, which sets out new rules for the refund of value added tax to taxpayers who do not do business in the Member State of refund (Republic of Latvia), but are doing business in another Member State.

All claims submitted by December 31, 2009 are considered in previous order.

Unlike the previous procedure requiring that foreign taxpayer submit VAT refund application in a written form directly to tax administration of the Republic of Latvia, the new procedure provides that the foreign taxpayer who is not doing business in the Republic of Latvia, addresses electronic application for the refund to Latvia by submitting the application in the Member State where the taxpayer does business and using the electronic portal established by that Member State.

Starting 1 January 2010 the refund of VAT to foreign taxpayers in the Republic of Latvia is made in accordance with Sections I,IV and V of the Regulations of the Cabinet of Ministers Nr 1639 of 22 December 2009 "Procedure of application for the refund of VAT in another Member State of the European Union and the procedure of refunding of the value added tax to a taxable person established in another Member state of the European Union".

Persons eligible to claim VAT refund in Latvia

VAT refund can be claimed by a taxpayer registered in another Member State of the European Union who is not engaged in business that must be registered in the Republic of Latvia for the value added tax which has been charged on goods acquired in the Republic of Latvia, services supplied and goods imported with the purpose of carrying out his own taxable transactions in the territory of the European Union.

Authorized representative of taxpayer

A VAT refund application may be also submitted by a taxpayer's authorized representative, a natural or a legal person, acting on the basis of an authorization. As the VAT refund application is filed in the Member State where a taxpayer carries out business activity, the authorization shall be submitted in that Member State and in compliance with national requirements of the Member State.

VAT is refunded if the taxable person in the refunding period meets the following conditions:

• has been registered in a VAT taxable persons register of another Member State;
• has not been registered at the VAT taxable persons Register of the State Revenue Service;
• has not been doing business that in accordance with existing legislation must be registered in the Republic of Latvia;
• has not been making taxable transactions in the Republic of Latvia (has not supplied goods and services which could be regarded as supplied in the Republic of Latvia), requiring the registration in the Register of VAT taxable persons at the State Revenue Service.

Requirements that must be met submitting the VAT refund application:

• the information included in the application form and the additional information must be in English or Latvian;
• the application must be filed by a specific date, i.e. no later than by 30 September of the calendary year following the refunding period. If the specific date has been exceeded, the application is disregarded and the tax is not refunded.
• the amount of claimed refund of the VAT must be indicated in national currency of the Republic of Latvia - lats;
• the amount of claimed tax refund cannot be less than 281,12 lats (EUR 400), if the refunding period is shorter than one calendary year but is not shorter than three months;
• the amount of claimed tax refund indicated in the application must not be smaller than 35,14 lats (EUR 50) if the refunding period is one calendary year or last months of the calendary year;
• the period of claim must not fully or partially overlap previously filed claim periods with the exception of the case when the claim covers a full calendary year and if the claims whose periods overlap are shorter than 1 calendary year;
• the description of taxpayer’s business activities shall be notified using statistical classification of economic activities NACE Revision 2 codes provided for by Council Regulation (EC) of 20 December 2006 Nr. 1893/2006;
• an electronic copy of tax invoice or importation document must be attached to the application in cases where the taxable amount indicated in the tax invoice or importation document amounts to or exceeds 702,80 lats (EUR 1 000). If the invoice refers to fuel then the threshold is 175,70 lats (EUR 250);
• additional electronically coded information (subcodes) must be submitted in relation with the following codes of goods and received services:

The tax is not refunded:

• for tax amounts included in the invoice issued by the taxable person (co called simplified invoice - Art 238 of the Directive 2006/112/EC), that does not conform with the requirements set out by the law "On Value Added Tax";
• for transaction that has not happened;
• for the acquisition of unused real property domestically and for services received domestically related to construction, reconstruction, renovation or repairing of the real property;
• for the goods purchased domestically and services received domestically for personal consumption (for example leasing of a car, service, repairs, maintenance, purchase of fuel, lubricants and spare parts for a car, catering (also restaurant), health care and entertainment expenses);
• to travelling (touristic) company or agency acting domestically in accordance with the special procedure of VAT application prescribed in Art 13.1 of the law "On Value Added Tax".

A document is regarded as tax invoice if the following information is included:

• the date of issuance of the invoice;
• the invoice number;
• the name of the goods supplier or service provider (for a natural person - first name, surname, personal ID number) and the legal address (for a natural person - the place of permanent residence);
• the registration number of the goods supplier or service provider in the register of persons subject to VAT in the State Revenue Service of Latvia;
• the name of the recipient of goods or services (for a natural person - first name, surname, personal ID number) and the legal address (for a natural person - the place of permanent residence);
• the VAT registration number of the recipient of goods or services in the SRS register of VAT taxable persons or in the register of VAT taxable persons of another Member State if applicable ;
• the date of goods supply or services provision if it differs from the date of invoice or date when advance payment was received if this date is known and it differs from the date when invoice was issued;
• the title, quantity (amount) and unit of measurement of the goods supplied or services provided;
• the price (the value per one unit exclusive of the VAT) of the goods supplied or services provided;
• the discount applied, in case the discount is not deducted from the value of a single unit;
• the VAT rate applied;
• the calculated amount of VAT;
• the total amount of the transaction exclusive of the VAT.

In Latvia the VAT refunds to foreign taxpayers are made by the Department of Large Taxpayers of the State Revenue Service (1 Jeruzalemes Street, Riga, LV- 1010, Latvia).

Contact persons:

Ilona Bogomola
+371 67016751 (in Latvian, Russian, English),
Kristīne Košinska
+371 67016810 (in Latvian, Russian, English),

; 

Information provided to the applicant of VAT refund claim:

About the receipt of the document
After the receipt of VAT refund claim application the State Revenue Service electronically sends to the competent tax authority of the other Member State the confirmation of the receipt indicating the date of receipt. The applicant himself is informed about the confirmation.

About the necessary additional information
If the information included in the refund claim of another Member State is insufficient to take the decision on full or partial refund, the State Revenue Service may in four months after the receipt of the application request from the applicant of the claim of another Member State additional information in electronic form by sending such a request to the applicant or to a person authorised by him to the e-mail address indicated in the application form.

About the decision
In four months time after the receipt of the application the State Revenue Service notifies about the decision to confirm or deny the application the competent authority of the other Member State which then informs the applicant about the decision.

Correction of the deductible part of the tax and other adjustments
If corrections have been made in the deductible part of the tax after the submission of VAT refund claim, the taxpayer of the other Member state makes the corrections of the claimed or already paid amount. If the State Revenue Service has already taken the decision, the correction can be made by filing a separate document concerning the deductible part of the tax.

If no decision on the claim has yet been made, the correction must be made in the refund claim within the calendary year following the respective period of refund or - in case if the taxable person of the other Member State does not file refund claim in that calendary year, a separate document is filed concerning the correction of deductible part of the tax.

Other corrections in the VAT refund claim can be made by sending in an adjustment of the VAT refund claim. The adjustment can be submitted until 30 September of the year following the refunding period if no decision has been taken on the initial claim by the day of the receipt of the adjustment. If the decision on the initial claim has already been taken, the SRS disregards the adjustment.

Appeal of the Decision
As of 1 January 2010 it will not be possible to submit renewed application. The claimant of the other Member State has the right to appeal the decision taken by the State Revenue Service to Director General of the State Revenue Service by submitting the appeal to the SRS Large Taxpayers’ Department at 1 Jeruzalemes Str., Riga, LV-1010.