Tax rate by region Latvia

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The information provided on this page is intended for general informative purposes only. It should not be interpreted as tax advice, nor is it meant to be. For advice on your particular tax responsibilities, consult with an experienced tax expert. PayPro Global does not assume any responsibility for any action taken or not taken based on the information presented here.

Navigating SaaS Sales Tax in Latvia: A Comprehensive Guide

Latvia, aligned with the EU’s VAT system since 2004, imposes a standard 21% VAT rate on SaaS and other digital services. This serves as a vital revenue stream for the government and ensures businesses operate within a harmonized European tax framework. Monthly and quarterly VAT returns are mandatory, with payment deadlines falling on the 20th of April, July, October, and January for each respective quarter. Maintaining proper records of completed transactions for a minimum of 10 years is essential for verification purposes. Notably, Latvia mandates e-invoicing, requiring businesses to issue and receive invoices electronically to comply with tax regulations.

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Latvia

Latvia adopted the EU VAT system in 2004 to align its tax framework with European regulations.

Official government link: Valsts ieņēmumu dienests

21.00%

E-products and services VAT/Sales tax rate

5.00%

Reduced tax rate

Reduced tax rate product categories

Books, newspapers and journals may have a reduced VAT rate of 5%

Exempted product categories

No digital goods or services exempt

Reverse charge mechanism for B2B sales

Yes

Tax ID validation required

Yes

When do you have to register

Non-resident companies have to register as soon as goods are being delivered or services are being provided

Online registration possible

Yes

Local representative needed

Not mandatory

Registration procedure

When a company provides electronic services to non-taxable individuals, it can opt to register for VAT, OSS, or non-union OSS. The duration for VAT registration in Latvia varies based on the type of registration. Non-union OSS registration typically takes about one week, while VAT registration can take between 3 to 5 weeks. All required documents must be translated into Latvian.

List of digital and electronic services liable for tax

Website hosting;
Software;
Electronic images, text, and access to databases;
Online games, including gambling;
Downloadable and streaming music and films;
Distance learning.

Penalties

Undeclared VAT: Up to 30% of the unpaid VAT amount + 0.05% daily late fee.
Incorrect VAT Refunds: Up to 30% penalty on the improperly increased refund amount.
Illegal VAT Invoices: Fine equal to 100% of the illegally received tax amount.
Late Filings and Payments: 10% of the VAT due + 0.05% daily interest + fixed penalties up to EUR 722.

Registration threshold

No threshold, non-resident companies must register for VAT

Filing interval

Monthly & Quarterly

Filing deadline

20 April , for the first quarter ending 31 March
20 July , for the second quarter ending 30 June
20 October , for the third quarter ending 30 September
20 January , for the fourth quarter ending 31 December

E-invoicing requirements

Yes

Record keeping

Records of completed transactions must be maintained to verify the accuracy of tax returns and payments. These records should be retained for a period of 10 years.

How-To Guides: Latvia SaaS VAT

Step: 1 Threshold

Effective May 1, 2004, Latvia requires non-EU vendors (including online platforms) of digital services to consumers (B2C) in Latvia to register for and collect VAT, regardless of the sales amount. The obligation was expanded to EU-established digital services providers effective January 1, 2015.

 

Effective January 1, 2019, Latvia applies a VAT registration threshold of EUR 10,000 for EU-established digital services providers. The threshold does not apply to non-EU businesses.

 

  • €50,000 for domestic
  • €10,000 for EU-based entities.
  • €0 (registration required upon first sale unless using OSS) for non-EU businesses selling B2C digital services

Step: 2 Business Registration

The State Revenue Service (Valsts ieņēmumu dienests – VID) manages the VAT Register. Non-resident suppliers may register directly in Latvia or use the EU OSS scheme.

Step: 3 TIN/VAT Number

PVN (Pievienotās vērtības nodoklis) number  is issued by the VID and has the format LV followed by 11 digits.

Step: 1 Standard VAT Rate

Standard rate is 21% for SaaS and digital services.

Step: 2 VAT Formula

To calculate your tax amount, use the following formula: 

 

Tax Amount = Net Price x 21%

Step: 3 Reverse Charge (B2B)

It applies. For cross-border B2B SaaS, the liability shifts to the Latvian buyer. The seller does not charge VAT if a valid Latvian VAT ID is provided.

Step: 1 Selling B2C

Charge 21% Latvian VAT unless you are EU-based and under the €10,000 EU-wide threshold. Collect via the Union or Non-Union One-Stop Shop (OSS) to avoid multiple local registrations.

 

Step: 2 Selling B2B

Do not charge VAT. Verify the buyer’s VAT ID via VIES. Use the Reverse Charge Mechanism; the buyer self-assesses the tax.

Step: 3 Invoice Requirements

Must include:

  • Supplier Name/Address/VAT ID
  • Buyer Name/Address/VAT ID (for B2B)
  • Unique Sequential Number
  • Date of Issue; Description of Service (SaaS)
  • Net Price
  • VAT Rate (21% or 0% for B2B)
  • Total Amount; and the phrase “Reverse Charge” for B2B sales.

Step: 1 Filing Interval

Taxes are filed: 

  • Monthly (standard)
  • Quarterly (if annual turnover is below €50,000 and certain conditions are met)

Step: 2 Filing Deadline

Taxes are filed by y the 20th day of the following month (e.g., January return is due February 20th).

Step: 3 Submission

Taxes are filed via the VID Electronic Declaration System (EDS). Payments must be made to the Unified Tax Account by the 23rd day of the month.

Step: 4 Record Keepin

Records and invoices must be kept for 10 years for digital services (under EU OSS rules) or 5 years locally.

PayPro Global Solution: Simplified Registration & Fiscal Representation

Navigating Latvia’s VAT registration and fiscal representation can be daunting. PayPro Global acts as your Merchant of Record, handling these complexities, including VAT registration and fiscal representation where needed, so you can focus on your business.

Learn more about our MoR services.

FAQ

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