Latvia VAT Guide 2026

Overview — VAT System in Latvia (PVN)

Latvia's PVN is governed by the VAT Law (Pievienotās vērtības nodokļa likums) and is administered by the State Revenue Service (VID). As an EU member state since 2004, Latvia's VAT system complies with the EU VAT Directive (2006/112/EC). The standard rate of 21% is the primary rate for most goods and services. VAT returns must be filed monthly or quarterly depending on the taxpayer's annual turnover. Latvia participated in the eurozone introduction in 2014.

Standard Rate — 21%

The standard Latvia VAT rate is 21% for 2026. This rate applies to most goods and services not covered by reduced rates or exemptions. The rate is applied to the taxable base (ex-VAT price) for B2B and B2C transactions. VAT-inclusive pricing is standard for B2C transactions. Latvia's standard rate is in line with the EU average.

Reduced Rate — 12%

The reduced VAT rate of 12% applies to specific goods and services:

• Accommodation services: Hotel, guesthouse, and short-term rental accommodation
• Books and publications: Printed books, newspapers, and periodicals (including e-books and digital publications)
• Medicines and medical devices: Prescription and OTC medicines, medical equipment for personal use
• Baby products: Nappies, baby food, and baby care products
• Funeral services: Coffins, urns, and funeral-related services
• Firewood and briquettes: For domestic heating

Zero Rate — 0%

The zero rate (0%) applies to:

• Exports of goods: Outside the EU (with input VAT recovery)
• Intra-EU supplies: Of goods to VAT-registered businesses in other EU member states
• International transport: Passenger and freight transport to/from third countries

Exempt Supplies

The following supplies are exempt from VAT (no VAT charged, input VAT recovery generally not available):

• Insurance and reinsurance
• Credit and financial services (loans, deposits, currency exchange)
• Educational services (public and private schools, universities)
• Medical and healthcare services (hospitals, doctors, dentists)
• Postal services (universal service)
• Rental of residential property (long-term)

VAT Registration Threshold

Businesses with annual turnover exceeding EUR 50,000 must register for VAT in Latvia. Small businesses below this threshold may benefit from the small business exemption. Voluntary registration is permitted for businesses below the threshold, allowing input VAT recovery. Non-established foreign businesses providing taxable supplies in Latvia must register regardless of turnover. Non-EU businesses must appoint a fiscal representative for VAT purposes.

VAT Filing and Returns

VAT returns are filed according to the taxpayer's status:

• Monthly: Taxpayers with annual turnover exceeding EUR 300,000
• Quarterly: Taxpayers with annual turnover below EUR 300,000
• Annual return: All registered taxpayers must file an annual VAT summary

Returns are due by the 15th of the month following the period. VAT credits can be carried forward or refunded. Latvia also participates in the EU VAT refund scheme for non-established businesses and the One-Stop Shop (OSS) for e-commerce and digital services.

Reverse Charge Mechanism

Latvia applies the reverse charge mechanism for B2B transactions in certain sectors, including construction services, real estate transfers (where the buyer is VAT-registered), and supplies of gas, electricity, and telecommunications services. The reverse charge shifts the VAT obligation from the supplier to the recipient, simplifying cross-border transactions and reducing fraud risks.

FAQs

What is the VAT rate for e-books in Latvia?

E-books and digital publications benefit from the reduced rate of 12%, the same as printed books and newspapers. This aligns with EU rules allowing reduced rates on digital publications.

Can foreign companies recover Latvia VAT?

Yes, EU businesses can claim VAT refunds through the EU VAT refund portal. Non-EU businesses can claim refunds directly from VID, subject to reciprocity rules.

What are the penalties for late VAT filing?

Late filing penalties range from EUR 70 to EUR 2,800 depending on the delay and turnover. Late payment interest accrues at 0.05% per day. Systematic non-compliance may result in tax audits and penalty assessments.

Disclaimer

This guide provides general information about Latvia VAT (PVN) for the 2026 tax year. Tax laws and rates may change. Always consult with a qualified Latvian tax advisor (nodokļu konsultants) or VID directly for advice specific to your situation. InvestmentKit does not provide tax advice.