On 30th May 2019, the following main amendments to the Latvian VAT Law were adopted and generally came into effect as of 1st July 2019:
- The reverse charge VAT regime for supplies of metalwork services is withdrawn. Instead such services which include cutting, bending and welding are subject to VAT.
- The application of the reverse charge in relation to semi-finished metal products (ferrous and non-ferrous) is restricted to a narrower range of supplies. This qualifying category of goods, listed on the Latvian tax authority’s website is still subject to parliamentary approval.
- The voucher rules are more closely aligned with that of the EU vouchers directive by replacing the terms “gift card” and ”prepaid calling card” with “voucher”, “single purpose voucher” and “multi-purpose voucher”.
- Implementation of the EU Directive 2017/2455 providing for EU-wide simplification rules for companies carrying out cross-border business-to-consumer sales of electronic services.
- As of 1st January 2020, the reverse charge currently applicable (contra EU law) to construction products, consumer electronic equipment and electrical household appliances is removed.
It is important for traders to know if their supplies are subject to the reverse charge or whether the general VAT arrangements apply. It will be interesting to see if the commission will finally grant Latvia’s request to derogate from the general arrangements to apply the mechanism to construction products, consumer electronic equipment and electrical household appliances. If so, the system will probably be extended beyond 2020.
Contact our VAT experts now and find out how this change could affect your business.