VAT in Latvia: Incidental transactions, Intra-Community acquisition of new means of transport and group taxation.
In order to be a taxable person, the person must supply goods or services in the course or furtherance of business.
The exceptions to this rule are outlined below.
Intra-Community acquisition of new means of transport
An intra-Community acquisition of a new means of transport is always subject to VAT in Latvia. A non-taxable person who has become taxable only as a result of the intra-Community acquisition of a new means of transport does not have an obligation to register as a taxable person and apply all the other requirements of a taxable person, since the VAT on the acquisition has been paid. Any person acquiring a new means of transport also has to submit a report to the State Revenue Service regarding the tax payment made.
The VAT Act has allowed for group taxation since 1 January 2010. A VAT group may be formed by any number of taxable persons but no taxable person may belong to more than one VAT group at the same time. A VAT group may consist of companies that are members of the same group of companies and the Latvian branches of foreign companies, provided that the company concerned is a member of the same group as the other members of the VAT group. A VAT group may only be formed if at least one member recorded a taxable turnover of at least LVL 250,000 in the 12 calendar months prior to the month in which the application to form the VAT group is submitted. A VAT group is considered as a single taxable person with its own VAT registration. Once a VAT group has been formed, it may not apply to deregister before a period of 12 months following its registration (unless the conditions for group registration cease to be satisfied). A group must designate a principal member, responsible for filing the group’s VAT returns and the other obligations of a taxable person. Individual members of the group may request to leave the group only with the written permission of the principal member. Transactions between members of a VAT group are outside the scope of VAT.