In general, the same legal norms apply as for any other type of activity (trade). However, there are several nuances.
A website (homepage) or mobile application should also be registered with the State Revenue Service as a structural unit (website or mobile application) if a customer can order goods or services and/or pay for them there. If you conduct trade on a trading platform (for example, Amazon.com, Etsy.com, etc.), you must register your company's profile on the respective trading platform as a structural unit.
Within 10 days from the moment the decision on establishing a structural unit is made, the relevant form must be completed and submitted in the Electronic Declaration System (EDS).
In internet trade, payment accounts opened in a payment institution are often used. Such accounts must also be registered with the SRS (a free-form application can be submitted in EDS, indicating the necessary data about the account).
If the address of the website (trading platform) or data about the account in the payment institution changes, the relevant information must be submitted to the SRS.
In accordance with the Commercial Law and the Law on Information Society Services, the following information must be provided:
The information can be placed, for example, in the Contacts section of the website.
The obligation to register in the SRS VAT payers register arises if any of the following conditions is met (in accordance with the Value Added Tax Law):
For example, if you receive domain registration or hosting services from a person registered in the USA who does not conduct economic activity in Latvia (is not registered in the VAT payers register), then before receiving the service you have an obligation to register in the SRS register of persons subject to VAT (or use the special registration procedure if you meet the criteria).
Exception — distance selling of goods within the European Union. If you supply goods from one EU Member State to another EU Member State to a person who does not have a VAT number, the aforementioned thresholds do not apply. In this case, the sum of such transactions in a calendar year (together with certain electronic services) must be monitored. If the total sum exceeds 10,000 euros, the VAT rate of the buyer's country must be applied (you can register in the OSS regime).
If you purchase goods outside the EU (for example, in China) and sell them (the goods are sent) to a buyer located in the EU, two questions are important: where the goods are located at the moment when their dispatch to the buyer begins (place of supply of goods), and who imports the goods.
If the place of supply of the goods is outside the EU (i.e., the goods are sent directly to the buyer from a third country and ownership of the goods passes to the buyer while the goods are still outside the EU), such a transaction does not correspond to the transactions subject to VAT mentioned in Article 5 of the Law — that is, Latvian VAT norms are not applicable to the sale transaction itself. This principle mainly operates in transactions between businesses (B2B).
Regardless of this, VAT on import is paid by the person who carries out the import (completes the customs declaration) — this is a separate obligation that is not related to whether the sale of the goods itself is subject to VAT.
If the buyer is a private person or another person without a VAT number, the principle described in the previous section may not work — the law regulates such transactions separately with the rules on distance selling of imported goods. Here the 10,000 euro threshold mentioned earlier (for intra-EU distance selling) does not apply — VAT on import must be paid regardless of the amount, starting from the first cent.
| Value of the shipments | How VAT is applied |
|---|---|
| Up to 150 euros, and the seller is registered in the IOSS regime | The seller collects VAT from the buyer at the moment of sale. The buyer does not have to pay additional VAT upon receiving the goods. |
| Up to 150 euros, and the seller does not use IOSS | The buyer pays the VAT themselves upon receiving the goods (Article 201 of Directive 2006/112/EC). In such cases VAT is usually collected by the courier or postal operator. |
| Value of the shipments above 150 euros | The IOSS regime is not available for such transactions. The buyer pays the VAT themselves at the moment of receipt/import of the goods. In addition, customs duty may also be payable. |
What is planned to change in 2028? From 1 July 2028 the seller will become responsible for the payment of VAT — but only for consignments up to 150 euros (Directive (EU) 2025/1539). For shipments above 150 euros the buyer will still pay the VAT, unless further legislation changes this.
If your company imports goods, it is possible to choose to apply the special tax regime for import of goods.
In the case of intermediation in the sale of goods, if the buyer is an EU person who does not have a VAT number, Article 26 of the Law must be taken into account. The place of provision of intermediation services is the place where, in accordance with the VAT Law, the "principal" transaction is carried out. If the place of performance of the "principal" transaction is outside the EU (for example, in the China example described earlier), the place of provision of the intermediation service for the purposes of applying the Law is also outside the EU.
| Situation | What VAT rate is applied | Basis |
|---|---|---|
| Usually | The rate of the service recipient's country | Article 27, paragraph 1 In Latvia you can register for the application of the OSS regime |
| Exception (automatic) | Latvian 21 % | If the company operates only in Latvia and during calendar year the sum of electronic services + distance selling of goods is ≤ 10,000 € (Article 27, paragraphs 3 and 4) |
| Choice | You can choose the buyer's country rate already from the 1st euro | Article 27, paragraph 5 This choice is binding for at least 2 years |
Transactions must be sufficiently documented so that, if necessary, the course of the transaction can be traced — from the acquisition or import of goods to the sale of goods to the final buyer and receipt of payment.
In the event of an SRS inspection, the "chain" of transactions (for example, the movement of goods and money) will have to be "shown". For example, you buy goods from a Chinese company and sell them on a trading platform to an EU natural person; the goods are sent directly from China to the buyer. The following documents would be necessary:
A particular problem may arise if the platform report shows only the total amount paid out, but there is not sufficient information about individual buyers and transactions. In such a case, additional detailing must be ensured so that the specific sale, buyer, payment and dispatch of goods can be mutually linked.
If you sell goods on a trading platform, the platform programme may automatically prepare a sales document and send it to the buyer. However, this in itself does not mean that the document prepared by the platform always fulfils the tax invoice requirements applicable to your company. It must be clarified who in the specific transaction is responsible for issuing the tax invoice and what details must be indicated in it.
In practice, a problem may also arise with the identification of the final buyer. If the trading platform does not provide the seller with sufficient information about the buyer, the company may have difficulties obtaining the transaction information necessary for accounting and tax accounting.
Note: In certain cases the platform may be considered a deemed supplier in accordance with Article 6, paragraphs 5 and 6 of the VAT Law. In such a situation your company's obligations regarding the issuance of invoices may differ.
An online retailer may use a self-developed invoicing system. It may be convenient for processing orders and sending invoices to customers, but it does not always provide all the information required for accounting purposes.
For example, the data intended for accounting may contain incorrect sales information, an incorrectly stated currency, or other information that does not correspond to the actual transaction. The accounting records, in turn, must allow transactions to be recorded completely and accurately, and accounting entries must be supported by source documents.
An online retailer may use different payment service providers. Reports from these service providers do not always contain sufficiently detailed information about settlements. For example, a report may not show the balance at the end of each month, or it may be difficult to determine which customer paid for a particular sale and on what date.
Therefore, accounting for online sales should ensure that:
It must be ensured that your company's OSS or IOSS identification data is not used in other transactions without your knowledge. If another person maliciously uses the company's OSS/IOSS number and such transactions are declared in the name of your company, the company may need to prove that it did not carry out the specific sale.
Therefore it is essential to retain data that can prove which orders were actually received, to whom the goods were sold and which payments were received.
If an error is detected after the submission of an OSS declaration and in some Member State the payable VAT amount increases, evidence of the performed declaration correction and additional VAT payment must be ensured.
In practice it must also be taken into account that the question about a specific transaction may be raised later. Therefore the calculations, corrections, payments and supporting documents related to OSS declarations must be properly retained.
If goods are sent directly from the supplier, for example a Chinese company, your company does not have complete control over packing and delivery.There may be situations where the wrong goods are sent or the goods are sent to the wrong address. This may cause buyer complaints, negative reviews, refund requests and additional costs.
Therefore it must be possible to identify at least the order, the sent goods, the recipient's address, the shipment tracking number and the delivery status.
You should be check whether the goods sold by your company or the services provided (for example delivery, update of software) are those that can be used for military purposes. Regarding to the circulation (movement) of goods of strategic importance you can consult Strategic Goods Control Division of the Ministry of Foreign Affairs of the Republic of Latvia.
Before carrying out a transaction, the transaction partner and other persons involved in the transaction must be checked. This is especially important in order to make sure that sanctions or other requirements do not apply to the person or the transaction.
It must be verified whether the transaction partner is not registered (is not located) in high-risk third countries (current lists are available on the websites of FATF and the Financial Intelligence Unit).
Additional attention must be paid if you buy goods from a natural person.
In all cases the amount paid to the natural person must be reported to the SRS.