Latvia Clarifies VAT Rules for Small Online Businesses
The Latvian State Revenue Service has issued new guidance on Value Added Tax (VAT) for businesses using online platforms, particularly those with low annual EU turnover. This update clarifies VAT exemptions, registration procedures, and the use of the One-Stop-Shop (OSS) system.
Small businesses with an annual EU turnover below 100,000 euros (US$104,576) may qualify for VAT exemptions on supplies of goods and services in other EU countries, under certain conditions. These exemptions simplify tax compliance for small operators.
The new guidance details VAT registration procedures for businesses operating on online platforms. It advises reviewing the platform's terms for VAT obligations, including rules for distance selling. However, it does not specify companies related to VAT method materials or those authorized to use the OSS system. Businesses involved in VAT compliance typically include tax consulting firms and organizations.
For cross-border transactions, businesses can use the OSS system for VAT compliance. This system allows businesses to submit a single VAT return and payment for all their cross-border supplies.
The standard VAT rate in Latvia is 21%, with reduced rates of 5%, 12%, and 0% for certain goods and services. VAT treatment depends on the type of goods or services supplied and the location of the transaction. The Latvian State Revenue Service's methodological material provides clarity on VAT rules for online platform transactions, helping businesses navigate their VAT obligations effectively.
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