VAT in Latvia: Transfer of goods between Member States

When goods are transferred from a business in Latvia to another Member State, to be used in the other Member State in the course or furtherance of the business there, this is deemed to be a (zero rated) intra-Community supply in Latvia followed by an intra-Community acquisition in the other Member State. Such a deemed intra-Community transaction requires the transferor to register and fulfil all other administrative requirements in the Member State of arrival of the goods. An example of this situation is a business transferring a part of its stock from Latvia to a storage facility in Germany.

Excepted from this rule are the following supplies:

-    the transfer of goods to another Member State with a view to supplies which are taxable in that other Member State under the place-of-supply rules:

-    goods to be sold to a taxable person registered in another Member State (Intra-Community supply);

-    goods to be installed or assembled by the supplier;

-    supplies on board ships, aircraft, trains during transport with departure and destination in the European Union;

-    transfers of goods in connection with a subsequent zero-rated supply:

-    the transfer of goods by a person from his business in Latvia to his business in another Member State for the purpose of exporting the goods to a third country;

-    the transfer of goods to another Member State with a view to the supply, modification, repair, maintenance and hiring of certain sea-going vessels or aircraft (and their equipment) operating on international routes; and

-    the transfer to another Member State of gold which will be supplied to the Central Bank;

-    the transfer of goods for the purpose of having a service carried out on them, e.g. goods sent abroad to be repaired or valued. The exception does not apply if the goods are not returned to Latvia;

-    the temporary transfer of goods by a person to another Member State to be used by him for the supply of a service in that Member State. For example, a tradesman who brings his tools to another Member State in order to repair a machine, or an accountant taking his personal computer to audit a client's books, does not constitute a fictitious intra-Community supply; and

-    the temporary use of goods for a period, not exceeding 24 months, in another Member State, in cases where the temporary importation (from a third country) of the same goods into that other Member State would be eligible for full exemption from import duties. An example would be goods temporarily brought into a Member State or from outside the European Union for the purposes of an exhibition.

Safety net

The application by a taxable person for the purposes of his business of goods produced, constructed, extracted, processed, purchased or imported in the course of such business, where the VAT on such goods, had they been acquired from another taxable person, would not be wholly deductible is treated as a supply of goods.