Latvia has gazetted amendments to the Value Added Tax (VAT) Law implementing EU directives to support small businesses on 28 December 2024. The Law was passed by the parliament on 12 December 2024. These changes went into effect on 1 January 2025.
The amendments align with the Amending Directive to the VAT Directive (2020/285), adopted on 18 February 2020, concerning a special scheme for small enterprises. The changes also incorporate the provisions of the Amending Directive to the VAT Directive (2022/542), introduced on 5 April 2022.
The Amending Directive to the VAT Directive (2020/285) allows small EU businesses to benefit from VAT exemptions in their home country and other Member States if their turnover stays within the relevant thresholds, including an EU-wide turnover limit of EUR 100,000.
The amendments change the VAT registration threshold for businesses in Latvia. Under the new rules, businesses don’t need to register for VAT if their total goods and services in Latvia, excluding VAT, are under EUR 50,000 annually.
The total value includes taxable and specific exempt supplies, such as immovable property transactions and financial or insurance services.
Under current VAT registration rules, taxable persons are not required to register if the total value of goods and services supplied in the past 12 months is below EUR 50,000.
The amendments introduce VAT adjustments, including a 0% VAT rate for exports related to humanitarian aid, a special regime for second-hand goods and antiques, clarified rules for goods acquisition within the EU, and simplified 0% VAT options for supplies to diplomatic missions in Latvia.
