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LEGAL ACTS OF THE REPUBLIC OF LATVIA
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Text consolidated by Valsts valodas centrs (State Language Centre) with amending laws of:

24 January 2013 [shall come into force from 21 February 2013];
19 September 2013 [shall come into force from 1 january 2014];
6 November 2013 [shall come into force from 1 January 2014];
21 November 2013 [shall come into force from 1 january 2014];
12 June 2014 [shall come into force from 1 October 2014];
19 February 2015 [shall come into force from 15 March 2015];
30 November 2015 [shall come into force from 1 January 2016];
17 December 2015 [shall come into force from 6 January 2016];
16 June 2016 [shall come into force from 1 July 2016];
23 November 2016 [shall come into force from 1 January 2017];
20 April 2017 [shall come into force from 1 June 2017];
27 July 2017 [shall come into force from 1 January 2018].

If a whole or part of a section has been amended, the date of the amending law appears in square brackets at the end of the section. If a whole section, paragraph or clause has been deleted, the date of the deletion appears in square brackets beside the deleted section, paragraph or clause.

The Saeima1 has adopted
and the President has proclaimed the following law:

Value Added Tax Law

Chapter I
General Provisions

Section 1. Terms Used in this Law

The following terms are used in this Law:

1) building land - a plot of land in relation to which a construction permit has been issued for building thereon or for the construction of engineering communications therein, or for the construction of roads, streets or engineering communications input scheme intended for it after 31 December 2009. The plot of land shall not be deemed a building land, if the construction permit for construction works has been issued:

a) until 31 December 2009 and has been extended or re-registered after 31 December 2009;

b) after 31 December 2009, but the purpose for the use of the plot of land has been changed and does not provide for the performance of building;

2) consideration - the monetary value of goods or services, which is received by a supplier of goods or services or which it should have received from a recipient of goods or services or another person as payment for the supply of goods or services without value added tax (hereinafter - the tax), irrespective of whether the payment is made in full or partially;

3) territory of a Member State - the territory of a certain Member State of the European Union (hereinafter - the Member State) to which Article 52 of the Treaty on European Union and Article 355 of the Treaty on the Functioning of the European Union is applicable, with the exception of third territories, as well as the Principality of Monaco, the Isle of Man and the United Kingdom Sovereign Base Areas of Akrotiri and Dhekelia which for the purpose of tax application are regarded as territories of France, United Kingdom or Cyprus respectively;

4) territory of the European Union - the aggregate of the territories of the Member States;

41) electronically supplied services - the services referred to in Article 7 of Council Implementing Regulation (EU) No 282/2011 of 15 March 2011 laying down implementing measures for Directive 2006/112/EC on the common system of value added tax (recast), including:

a) website supply, web-hosting, distance maintenance of programmes and equipment;

b) supply of software and updating thereof;

c) supply of images, text and information and making available of databases;

d) supply of music, films and games, including games of chance and gambling games, and of political, cultural, artistic, sporting, scientific and entertainment broadcasts and events;

e) supply of distance teaching;

5) fiscal representative - a registered taxable person which on the basis of a written contract pays tax into the State budget and represents a taxable person of another Member State or a taxable person of a third country or third territory (also conforming to the laws and regulations governing the excise duty and the circulation of excisable goods in respect of excisable goods) in the following transactions:

a) when carrying out importation with subsequent supply of such goods to a registered taxable person of another Member State;

b) when carrying out importation with subsequent supply of such goods inland;

c) when receiving goods inland, if such goods are received for the purpose of exporting them further and are located in a customs warehouse or excise duty warehouse, and carrying out further exportation of such goods;

d) when carrying out acquisition of goods in the territory of the European Union, if such goods are acquired for the purpose of exporting them further and are located in a customs warehouse or excise duty warehouse, and carrying out further exportation of such goods;

e) when carrying out acquisition of goods in the territory of the European Union, if such goods are actually received inland for the purpose of supplying them to another Member State;

6) inland - the territory of the Republic of Latvia;

7) auction price - the value which in accordance with the Civil Procedure Law conforms to full price bid at the auction, the highest price bid at the auction or the initial auction price in cases when the auction is declared as not having taken place;

8) special tax arrangement for transactions of importation of goods - suspending of the tax amount payable into the State budget for the performed importation of goods, which has been calculated in the customs declaration until indication of such sum in the tax return for the relevant taxation period;

9) new means of transport:

a) a motorised land vehicle the capacity of which exceeds 48 cubic centimetres or the power of which exceeds 7.2 kilowatts and which is intended for the transport of passengers or goods, if it has been used for less than six months or has travelled less than 6000 kilometres;

b) a vessel or other floating craft exceeding 7.5 metres in length and intended for the transport of passengers or goods if it has been used for less than three months or has sailed less than 100 hours, except for the vessels referred to in Section 47, Paragraph one of this Law;

c) an aircraft the take-off weight of which exceeds 1550 kilograms and which is intended for the transport of passengers or goods if it has been used for less than three months or has flown less than 40 hours, except for the aircraft referred to in Section 48, Paragraph one of this Law;

10) gift of small value - goods or services which are given without consideration and the value of which without the tax does not exceed EUR 15.00 during a calendar year per one person, except for goods or services related to advertising or representation expenses;

11) seat - legal address of a non-taxable person or address similar to the legal address in accordance with the laws and regulations of another state;

12) unused immovable property:

a) a newly built building or structure (also stationary equipment installed therein), or a part thereof, if it is not used after being accepted for service, and a land parcel or a part of a land parcel related thereto;

b) a newly built building or structure (also stationary equipment installed therein), or a part thereof, if such is used and sold for the first time within one year after being accepted for service, and a land parcel or a part of a land parcel related thereto;

c) a building or structure, or a part thereof, if after renewal, rebuilding or restoration works have been completed it is not used, and a land parcel or a part of a land parcel related thereto;

d) a building or structure, or a part thereof, if after renewal, rebuilding or restoration works have been completed it is used and sold for the first time within one year after being accepted for service, and a land parcel or a part of a land parcel related thereto;

e) an object of uncompleted construction or a part thereof - a building or structure, or a part thereof, if such building or structure has not been accepted for service, and a land parcel or a part of a land parcel related thereto;

f) a building or structure, or a part thereof, if such building or structure is being renewed, rebuilt or restored, but it has not been accepted for service yet, and a land parcel or a part of a land parcel related thereto;

13) hire purchase - a supply of goods in which the supplier of goods according to an entered into hire purchase contract supplies particular goods, which are transferred into the ownership of the recipient of goods within the time period laid down in the contract after performance of all payments laid down in the contract;

14) supply of services - a transaction which does not constitute the supply of goods; the following shall also be considered the supply of services:

a) the selling (transfer) of intangible property (intangible values and rights);

b) the obligation to refrain from some activity or action or to allow some activity or action;

c) the leasing of property;

d) the performance of construction work;

15) fixed establishment - any place other than a place of establishment of a business of a person which is characterised by sufficient degree of permanence and suitable structure in terms of human and technical resources enabling to ensure services provided thereby or to receive and use services which are provided for the needs of such fixed establishment;

16) VAT group - a group of two or more taxable persons which conforms to the conditions of this Law has been established on the basis of a memorandum of association of the VAT group for the performance of mutual transactions inland and has been registered with the State Revenue Service Value Added Tax Taxable Persons Register;

17) exportation of goods - supply of goods from the territory of the European Union to third countries or third territories;

18) acquisition of goods in the territory of the European Union - obtaining of the right to dispose of property as owner, if the dispatch or transportation of the property from one Member State to another Member State is carried out by the supplier of goods or receiver of the goods, or a third person on behalf of the supplier of goods or receiver of the goods;

19) importation of goods - the entry into the territory of the European Union of goods from third countries or third territories by releasing them for free circulation;

20) supply of goods - a transaction which is manifested as the transfer of the ownership rights of a property to another person, so that he may act with the property; the transactions with the following shall also be regarded as the supply of goods:

a) with immovable property or a part thereof;

b) with electricity, gas, thermal energy, heating, water, steam and cooling energy;

21) supply of goods in the territory of the European Union - the supply of goods if the goods are dispatched or transported from one Member State to another Member State and the dispatch or transportation of such goods is carried out by the supplier of goods or receiver of the goods, or a third person on behalf of the supplier of goods or receiver of the goods;

22) goods transport service in the territory of the European Union - goods transport service if the place of departure of transport of goods and the place of arrival of transport of goods are situated in two different Member States; if the place of departure and the place of arrival are situated within the territory of the same Member State, the transport of goods shall be treated as a stage of the goods transport service in the territory of the European Union, if such transport is a part of the transport service the place of departure and the place of arrival of which are situated in the territories of two different Member States;

23) place of arrival of transport of goods - the place where transport of the goods actually ends;

24) place of departure of transport of goods - the place where the transport of goods actually begins;

241) broadcasting services - the broadcasting services referred to in Article 6.b of Council Implementing Regulation (EU) No 282/2011 of 15 March 2011 laying down implementing measures for Directive 2006/112/EC on the common system of value added tax (recast) (in the wording of Council Implementing Regulation (EU) No 1042/2013 of 7 October 2013 amending Implementing Regulation (EU) No 282/2011 as regards the place of supply of services);

25) place of establishment of a business - the basic place of performing economic activity of a taxable person where the management of the referred to taxable person is located and where the main administrative decisions related to the performance of economic activity are taken;

26) intermediary - a taxable person who participates in the supply of services or in the supply of goods without becoming the owner of such goods or actual provider of services, in order to pursue the interests of other persons in transactions of the supply of goods or the supply of services. An intermediary shall issue a tax invoice and receive consideration only for an intermediary service provided by him;

27) market value - consideration for goods or services which at the time of supply would have to be paid by the recipient of the relevant goods or services, under conditions of fair competition, to another supplier who is not considered as a related party within the meaning of the law On Taxes and Duties. Where no comparable price for goods or services can be ascertained, market value shall mean:

a) in respect of goods - an amount which is not less than the purchase price of the relevant goods or of similar goods or, in the absence of a purchase price, the cost price, determined at the time of supply;

b) in respect of services - an amount that is not less than the full cost of providing the service;

28) third territories:

a) the following territories of the European Union forming part of the customs territory of the European Union - Mount Athos, the Canary Islands, the territories of France referred to in Articles 349 and 355(1) of the Treaty on the Functioning of the European Union, the Åland Islands, the Channel Islands,

b) the following territories of the European Union not forming part of the customs territory of the Community - the Island of Heligoland, the territory of Büsingen, Ceuta, Melilla, Livigno, Campione d'Italia, the Italian waters of Lake Lugano;

29) third countries - such countries or territories to which the Treaty on European Union and the Treaty on the Functioning of the European Union are not applicable;

30) electronic communications services - the services referred to in Article 6.a of Council Implementing Regulation (EU) No 282/2011 of 15 March 2011 laying down implementing measures for Directive 2006/112/EC on the common system of value added tax (recast) (in the wording of Council Implementing Regulation (EU) No 1042/2013 of 7 October 2013 amending Implementing Regulation (EU) No 282/2011 as regards the place of supply of services).

[19 September 2013; 6 November 2013; 12 June 2014; 19 February 2015; 23 November 2016; 20 April 2017]

Section 2. Scope of Application of this Law

This Law prescribes the taxable persons, the taxable transactions and taxable value thereof, the place of supply of goods and services, the tax rates and exemption from tax, the requirements for tax payment and administration, the procedures for the payment of tax into the State budget, the provisions for the deduction of input tax and tax refund, as well as other provisions for tax application inland and liability for infringing this Law.

Chapter II
Taxable Persons and Taxable Transactions

Section 3. Taxable Persons

(1) Taxable person shall be any person who independently carries out any economic activity in any place, irrespective of the purpose or results of that activity.

(2) Taxable persons are divided as follows:

1) inland taxable persons:

a) registered taxable persons - taxable persons which have been registered with the State Revenue Service Value Added Tax Taxable Persons Register;

b) non-registered taxable persons - taxable persons which have not been registered with the State Revenue Service Value Added Tax Taxable Persons Register, using the rights laid down in this Law;

2) taxable persons of another Member State:

a) registered taxable persons of another Member State - taxable persons which have been registered with the register of taxable persons of another Member State for tax payment purposes;

b) non-registered taxable persons of another Member State - taxable persons which have not been registered with the register of taxable persons of another Member State and the legal address or place or residence of which is in another Member State;

3) taxable persons of third countries or third territories:

a) registered taxable persons of third countries or third territories - taxable persons to whom an identification number of a taxable person or a similar number has been issued which allows to identify the taxable person for tax application purposes and is issued by the state in which the taxable person performs economic activity;

b) non-registered taxable persons of third countries or third territories - taxable persons to whom an identification number of a taxable person or a similar number has not been issued which allows to identify the taxable person for tax application purposes and is issued by the state in which the taxable person carries out economic activity.

(3) A fiscal representative and a VAT group shall also be regarded as a registered taxable person.

(4) Any person who on occasional basis supplies a new means of transport, which is dispatched or transported to the customer by the vendor, the customer, or by the third person on behalf of the vendor or the customer to a destination outside inland but within the territory of the European Union, shall be regarded as a taxable person.

(5) A non-taxable person shall be regarded as a registered taxable person for determination of the place for supply of services, if the State Revenue Service has issued a number for him with the State Revenue Service Value Added Tax Taxable Persons Register.

(6) For the purpose of determining the place of supply of services a customer of services may be regarded as a taxable person in conformity with Article 18 of Council Implementing Regulation (EU) No 282/2011 of 15 March 2011 laying down implementing measures for Directive 2006/112/EC on the common system of value added tax (recast).

(7) A State or local government institution or a local government shall also be regarded as a taxable person in respect of receipt of construction services in accordance with the procedures laid down in Section 142 of this Law.

(8) Bodies governed by public law, as well as private individuals, who in accordance with the State Administration Structure Law perform the tasks of State administration delegated or transferred to them through authorisation, shall not be regarded as taxable persons in respect of activities or transactions in which they engage for the performance of the State administration functions or tasks.

(9) The bodies governed by public law referred to in Paragraph eight of this Section shall be regarded as taxable persons in particular cases where their treatment as non-taxable persons would significantly affect the situation in the field of competition in respect of the market participants (present or potential) performing competitive activities or transactions and thus would lead to significant distortions of competition.

(10) In any event, a body governed by public law shall be regarded as a taxable person in respect of the following transactions, if it:

1) supplies electronic communications services;

2) supplies goods, including water, gas, electricity;

3) supplies goods transport services;

4) supplies port or airport services;

5) supplies passenger transport services;

6) performs transactions in respect of agricultural products, carried out by agricultural intervention agencies pursuant to conditions of Regulations on the common organisation of the market in those products;

7) organises trade fairs and exhibitions;

8) supplies warehousing services;

9) supplies advertising services of commercial nature;

10) supplies tourism services;

11) supplies television and radio services of commercial nature;

12) supplies catering services (conforming to the exemptions referred to in Section 53, Paragraph one of this Law);

13) supplies leasing services.

(11) A legal non-taxable person shall be regarded as a taxable person if it performs acquisition of goods in the territory of the European Union or receives services the place of supply of which is determined in accordance with Section 19, Paragraph one of this Law.

(12) A person shall not be regarded as a taxable person insofar as he is bound to an employer by a contract of employment or by any other legal ties creating the relationship of an employer and employee as regards working conditions, remuneration and the employer's liability.

Section 4. Economic Activity

(1) Economic activity shall mean any continuing, independent activity for consideration (including any activity of producers, traders or persons supplying services, agricultural activity).

(2) Exploitation of tangible or intangible property for the purposes of obtaining income therefrom on continuing basis shall be regarded as economic activity within the meaning of this Law.

Section 5. Taxable Transactions

(1) Taxable transactions shall be the following transactions carried out inland within the framework of economic activity:

1) supply of goods (including supply of goods in the territory of the European Union and exportation of goods) for consideration;

2) supply of services for consideration;

3) acquisition of goods in the territory of the European Union for consideration.

(2) Any importation of goods shall be taxable unless laid down otherwise in this Law.

(3) Acquisition of a new means of transport in the territory of the European Union carried out by a non-registered taxable person or a non-taxable person shall also be a taxable transaction.

(4) Supplies of new means of transport carried out on an occasional basis, where a new means of transport is dispatched or transported to the customer by the vendor, the customer, or by the third person on behalf of the vendor or the customer, from inland to a destination outside inland but within the territory of the European Union, shall also be a taxable transaction.

Section 6. Transactions Comparable to Supply of Goods and Services for Consideration

(1) Transfer of a part of assets to be used in economic activity of a registered taxable person for his private use or for that of his staff free of charge or their application for purposes other than those of his economic activity, shall be treated as a supply of goods for consideration, where the input tax on the relevant goods or the component parts thereof has been wholly or partly deducted.

(2) The following transactions of a registered taxable person shall be treated as a supply of services for consideration:

1) use of a part of assets of economic activity for his private use or for that of his staff or their application for purposes other than those of his economic activity, where the input tax on such parts of assets has been wholly or partly deducted;

2) supply of services carried out free of charge for his private use or for that of his staff or for purposes other than those of his economic activity.

(3) Where a taxable person acting in his own name but on behalf of another person takes part in a supply of service, he shall be deemed to have received and supplied those services himself.

(4) Paragraphs one and two of this Section shall not apply to cases when the restriction for the deduction of input tax specified in Section 100, Paragraph two of this Law is applicable to a registered taxable person.

[6 November 2013]

Section 7. Transactions which are not Regarded as Supply of Goods or Services for Consideration

(1) The use of goods intended for the needs of economic activity as samples or gifts of small value shall not be regarded as a supply of goods for consideration.

(2) The transfer of an undertaking (joint ownership of property or a part thereof that is expressed as transfer of assets and liabilities) into the ownership or use of another economic operator shall not be treated as a supply of goods for consideration, if in transferring assets and liabilities for consideration or without it or in investing into equity capital of a capital company or partnership investment (capital), the acquirer of the company becomes a transferee of rights and liabilities of the transferor within the meaning of the Commercial Law and economic activity not related to sale of the company or liquidation of the commercial company is continued.

(3) If the acquirer of an undertaking does not actually become a transferee of rights and liabilities of the transferor within the meaning of the Commercial Law and economic activity is not continued as a result of the transfer of the undertaking referred to in Paragraph two of this Section, transfer of assets and liabilities shall be treated as a separate supply of goods or services (acquired rights and other intangible assets) that are taxable in accordance with the procedures laid down in this Law.

Section 8. Transactions Comparable to Supply of Goods for Consideration in the Territory of the European Union

(1) Dispatch or transport of movable property - a part of assets to be used in economic activity of an inland taxable person - from inland to a destination in another Member State for the purposes of provision of his economic activity, if such transfer is carried out by an inland taxable person himself or by another person on behalf of him, shall be treated as a supply of goods for consideration in the territory of the European Union.

(2) The dispatch or transport of the goods referred to in Paragraph one of this Section to another Member State for the purposes of any of the following transactions shall not be treated as a transfer to another Member State from inland to a destination in another Member State:

1) the supply of goods intended for distance selling in accordance with Section 13, Paragraph one of this Law;

2) the supply of goods intended for installation or assembly, if installation or assembly of such goods is carried out by a supplier or by another person on behalf of him;

3) the supply of goods by the taxable person on board a ship, an aircraft or a train in the course of a passenger transport operation within the territory of the European Union;

4) the supply of gas to another Member State through the natural gas distribution system which is located in the territory of the European Union or any networks connected to such system, supply of electricity, thermal energy or cooling energy through thermal energy or cooling networks;

5) the supply of the goods referred to in Sections 43, 47, 48 and 50 of this Law to which the zero per cent tax rate is applied in the territory of the Member State where the dispatch or transport of such goods ends;

6) the supply of gold, coins and bank notes to central banks of the Member States;

7) the dispatch of goods to another Member State for the receipt of treatment, assessment, processing or repair services, if goods after receipt of the abovementioned services are returned to inland;

8) the dispatch of goods for temporary use within the territory of the destination Member State, which is related to services supplied by a taxable person conducting economic activity inland;

9) the dispatch of goods for temporary use, for a period not exceeding twenty-four months, within the territory of the destination Member State, in which the importation of the same goods for the purpose of their temporary use would be covered by the arrangements for temporary importation with full exemption from customs payments.

(3) If one of the conditions governing eligibility under Paragraph two of this Section is no longer met, the goods shall be regarded as having been dispatched or transported to another Member State. A transaction shall be deemed to take place in the territory of the European Union at the time when that condition ceases to be met.

(4) The dispatch or transport of goods to another Member State in accordance with Section 45, Paragraphs one and two of this Law after their release for free circulation inland shall be treated as a supply of goods for consideration in the territory of the European Union.

Section 9. Transactions Comparable to Acquisition of Goods for Consideration in the Territory of the European Union

(1) Dispatch or transport of a part of assets to be used in economic activity of a taxable person from another Member State to inland shall be treated as acquisition of goods for consideration in the territory of the European Union, if such transfer is regarded as dispatch or transport of goods to another Member State in accordance with Section 8 of this Law.

(2) The following transactions shall not be treated as an acquisition of goods for consideration in the territory of the European Union:

1) receipt of goods (except new means of transport) inland, if the goods are received by:

a) a non-registered taxable person until reaching the registration threshold laid down in Section 57, Paragraph one of this Law;

b) a non-taxable person;

2) receipt of new means of transport inland, provided that all of the following conditions are met:

a) a new means of transport as a personal property is brought in from another Member State and registered inland by a non-taxable person which has acquired such means of transport in another Member State during performance of official or services duties;

b) the tax laid down in another Member State has been paid for the acquisition of a new means of transport or exemption from the tax has been applied in accordance with the applicable legal acts in such State, and it can be proven by documentary means;

c) a new means of transport has been registered for the first time in another Member State where it was purchased;

3) the receipt of such goods at the inland customs warehouses or free zones for which export procedure of goods has been started in another Member State;

4) the receipt of gold, coins and bank notes in the Bank of Latvia.

(3) The receipt of goods inland in accordance with Section 45, Paragraphs one and two of this Law after their release for free circulation in another Member State shall be treated as an acquisition of goods for consideration in the territory of the European Union.

[20 April 2017]

Section 10. Transactions of Distance Selling of Goods

(1) Within the meaning of this Law distance selling of goods shall mean the supply of goods where a supplier of goods or a third person on behalf of the supplier of goods dispatches or transports goods from one Member State to another Member State if all of the following conditions are met:

1) the recipient of goods is non-registered taxable person, non-registered taxable person of another Member State or a non-taxable person;

2) the goods supplied are neither new means of transport nor goods intended for assembly or installation;

3) the total value (exclusive of tax) of the goods supplied in the previous or current calendar year has reached or exceeded the registration threshold in the taxable persons register laid down in the relevant Member State or the supplier of goods has chosen to register for the purposes of distance selling in the taxable persons register of the relevant Member State before reaching the registration threshold, or the goods supplied are excisable goods.

(2) The distance selling conditions referred to in Paragraph one of this Section shall not apply to supplies of second-hand goods, works of art, collector's items or antiques subject to tax in accordance with the special tax application arrangement.

Section 11. Transactions within the Framework of a VAT Group

(1) If registered inland taxable persons are participants to a VAT group, it shall be considered that economic activity of one participant of the VAT group is conducted by the whole VAT group and any supply of goods, supply of services or receipt of goods or services performed by a participant of the VAT group shall be treated as a supply of goods, supply of services or receipt of goods or services performed by the VAT group.

(2) The supply of goods or services performed by one participant of the VAT group to another participant of the same VAT group shall not be subject to the norms of this Law.

(3) If one participant in the transaction between two participants of the same VAT group uses his own registration number with the State Revenue Service Value Added Tax Taxable Persons Register, but the other - a registration number with the taxable persons register of another Member State, tax shall be applied in accordance with the general procedure laid down in this Law.

(4) If the supply of goods or services takes place between a participant of the VAT group and such person who has been excluded from such VAT group, tax shall be applied to the received advance payment performed until exclusion from the VAT group, in accordance with the general procedure laid down in this Law.

Chapter III
Place of Transaction

Section 12. Place of Supply of Goods

(1) Where goods are dispatched or transported, the place of supply of goods (also in respect of supply of goods in the territory of the European Union) shall be deemed to be the place where the goods are located at the time when the dispatch or transport of goods to the recipient of goods begins.

(2) Where goods are not dispatched or transported, the place of supply of goods shall be deemed to be the place where the goods are located at the time when the supply takes place.

(3) Where goods dispatched or transported by the supplier of goods, or by the recipient of goods or by a third person are assembled or installed by the supplier of goods or by a third person on his behalf, the place of supply shall be deemed to the place where the goods are assembled or installed.

Section 13. Place of Supply of Goods in Distance Selling Transactions

(1) In distance selling transactions the Member State in which the goods are located at the time when dispatch or transport of the goods to the recipient of goods ends shall be deemed to be the place of supply of goods.

(2) If excisable goods are supplied in accordance with the conditions for distance selling of goods, the place of supply thereof shall be the Member State, regardless of the registration threshold laid down in the relevant Member State, where the goods are located at the time when dispatch or transport thereof to the recipient of goods ends.

(3) In distance selling transactions the place of supply of goods shall be inland, if a taxable person of another Member State:

1) supplies excisable goods from another Member State to inland to a non-registered taxable person or non-taxable person;

2) supplies to a non-registered taxable person or non-taxable person from another Member State to inland of goods the value of which in the previous or current calendar year has reached or exceeded the registration threshold - EUR 35 000;

3) has chosen to register with the State Revenue Service Value Added Tax Taxable Persons Register prior to reaching the registration threshold referred to in Clause 2 of this Paragraph.

[19 September 2013]

Section 14. Place of Supply of Goods on Board Ships, Aircraft and Trains

(1) Where goods are supplied to passengers on board ships, aircraft or trains during the section of their transport operation effected within the territory of the European Union, the place of supply of goods shall be deemed to be at the point of departure of the passenger transport operation.

(2) Section of a passenger transport operation effected in the territory of the European Union shall mean the section of the operation effected without stopover outside the territory of the European Union between the point of departure and the point of arrival of the passenger transport operation.

(3) Point of departure of a passenger transport operation shall mean the first scheduled point of passenger embarkation within the territory of the European Union (also after a stopover outside the territory of the European Union).

(4) Point of arrival of a passenger transport operation shall mean the last scheduled point of disembarkation within the territory of the European Union of passengers who embarked on board ship, aircraft or train in the territory of the European Union (also before a stopover outside the territory of the European Union).

(5) In the case of a return trip, the return leg shall be regarded as a separate transport operation.

Section 15. Place of Supply of Gas, Thermal Energy, Electricity and Cooling Energy

(1) In the case of the supply of gas through the natural gas system located in the territory of the European Union or through networks connected to such system, as well as the supply of electricity, thermal energy or cooling energy that is ensured through thermal energy or cooling energy networks to a taxable person, the place of supply of such goods shall be deemed to be the place of establishment of a business of such person or a place where he has a fixed establishment, or, in the absence of such place of establishment of a business or fixed establishment, the declared place of residence, but, in the absence of such - place of permanent residence, provided that all of the following conditions are met:

1) economic activity of the taxable person is acquisition of gas, electricity, thermal energy or cooling energy and reselling thereof;

2) self-consumption of gas, electricity, thermal energy or cooling energy by the taxable person is negligible.

(2) Where conditions of Paragraph one of this Section do not apply to the supply of gas through the natural gas distribution system, which is located in the territory of the European Union, or networks which are connected to such system, to supply of electricity, thermal energy or cooling energy, which is ensured through thermal energy or cooling networks, the place of supply of goods shall be deemed the place where a recipient effectively consumes such gas, electricity, thermal energy or cooling energy.

(3) Where all or part of the gas, electricity, thermal energy or cooling energy is not effectively consumed by the recipient, those non-consumed goods shall be deemed to have been consumed at the place where the recipient of goods has his place of establishment of a business or at the place where he has a fixed establishment for which the goods are supplied, or in the absence of such place of establishment of a business or fixed establishment at his declared place of residence, but, in the absence of such - place of permanent residence.

[6 November 2013]

Section 16. Place of Acquisition of Goods in the Territory of the European Union

(1) Where the acquisition of goods has been carried out in the territory of the European Union the place of acquisition of goods shall be the Member State where dispatch or transport of the goods to the recipient of goods ends.

(2) The place where the acquisition of goods in the territory of the European Union has been carried out shall be inland where the goods are dispatched or transported from another Member State to inland.

(3) The place where the acquisition of goods in the territory of the European Union has been carried out shall be deemed to be inland where a registered taxable person in performing the supply of goods in the territory of the European Union has presented a valid value added tax registration number of a taxable person with the State Revenue Service, unless the registered taxable person acquiring the goods establishes that the tax has been applied in the Member State where the dispatch or transport of goods ends.

(4) Paragraph three of this Section shall not apply and tax shall be deemed to have been applied in accordance with Paragraph one of this Section in the Member State where the dispatch or transport of goods ends provided that:

1) a registered taxable person has carried out the acquisition of goods in the territory of the European Union from a registered taxable person of another Member State for the purpose of supplying such goods to a final recipient in the territory of the Member State which in accordance with Paragraph one of this Section is to be deemed as the place where the acquisition of such goods in the territory of the European Union has been carried out;

2) a final recipient of goods is a registered taxable person of the Member State referred to in Clause 1 of this Paragraph and is responsible for the payment of tax into the budget of his State as a recipient of such goods;

3) a registered taxable person has indicated the supply of goods referred to in Clause 1 of this Paragraph with special notation in a report on supply of goods and services in the territory of the European Union.

Section 17. Place of Acquisition of a New Means of Transport in the Territory of the European Union

(1) Where a non-registered taxable person or non-taxable person acquires a new means of transport in the territory of the European Union, the place of acquisition of such means of transport shall be the Member State in which the means of transport is registered.

(2) The place where the acquisition of a new means of transport in the territory of the European Union has been carried out shall be inland if such means of transport is to be registered in the relevant registers laid down in the Republic of Latvia.

Section 18. Place of Importation of Goods

(1) The place of importation of goods shall be the Member State within whose territory the customs procedure of importation of goods is ended.

(2) If the customs procedure of importation of goods is ended inland, the place of importation of goods shall be inland.

Section 19. General Provisions for Determination of the Place of Supply of Services

(1) If the service is provided to a taxable person, the place of supply of service, unless laid down otherwise in this Law, shall be:

1) the place of establishment of a business of a recipient of the service;

2) the place of location of the fixed establishment of a recipient of the service, where the service is provided to the fixed establishment of the recipient of the service which is not located at a place of establishment of a business of such person;

3) the declared place of residence of a recipient of the service, but, in the absence of such a place - the place of permanent residence, if the recipient of the service does not have a place of establishment of a business or fixed establishment.

(2) If the service is provided to a non-taxable person, the place of supply of service, unless laid down otherwise in this Law, shall be:

1) the place of establishment of a business of a provider of the service;

2) the place of location of the fixed establishment of a provider of the service, where the service is provided from the fixed establishment of the provider of the service which is not located at a place of establishment of a business of such person;

3) the declared place of residence of a provider of the service, but, in the absence of such a place - the place of permanent residence, if the provider of the service does not have a place of establishment of a business or fixed establishment.

Section 20. Place of Supply of Cultural, Artistic, Sporting, Scientific, Educational, Entertainment and Other Services of Similar Nature

(1) The place of supply of such service or ancillary service which is related to the acquisition of tickets for cultural, artistic, sporting, scientific, educational, entertainment or similar activities (for example, trade fairs, exhibitions), if they are supplied to a taxable person, shall be the place where the relevant event actually takes place.

(2) The place of supply of such service or ancillary service which is related to cultural, artistic, sporting, scientific, educational, entertainment or similar activities (for example, trade fairs, exhibitions), including the place where the service of organisers of such events is provided, if they are supplied to a non-taxable person, shall be the place where the relevant event actually takes place.

Section 21. Place of Supply of Passenger Transport Service

The place of supply of passenger transport service shall be the place where the passenger transport operation actually takes place in proportion to distances performed in inland and other states.

Section 22. Place of Supply of Goods Transport Service

(1) The place of supply of such goods transport service other than goods transport service within the territory of the European Union, where such service is supplied to a non-taxable person, shall be the place where goods transport actually takes place in proportion to distances performed in inland and other states.

(2) The place where goods transport services are supplied within the territory of the European Union, where such service is supplied to a non-taxable person, shall be the Member State in which the transportation of goods is started.

Section 23. Place of Supply of Service Connected with Transportation of Goods

Where loading, unloading, handling and storage of goods service, as well as another service connected with transportation of goods is supplied to a non-taxable person, the place of supply of service shall be the place where the service is actually supplied.

Section 24. Place of Supply of Service Connected with Movable Tangible Property

(1) Where the service connected with movable tangible property (including valuation, repair, maintenance, treatment, processing) is supplied to a non-taxable person, the place of supply of service shall be the place where the service is actually supplied.

(2) Provisions of Paragraph one of this Section shall not apply to hiring out of movable tangible property, including hiring out of all means of transport.

Section 25. Place of Supply of Service Connected with Immovable Property

The place of supply of services connected with immovable property, including the services of estate agents and experts, guest accommodation service, the immovable property lease service, construction service and services for the preparation (including the services of architects), coordination and supervision of construction work, shall be the place where the immovable property is located.

Section 26. Place of Supply of Service by Intermediary

Where an intermediary supplies a service to a non-taxable person, the place of supply of the service shall be the place where the transaction, in which the intermediary is involved, is performed in accordance with this Law.

Section 27. Place of Supply of Electronic Communications, Broadcasting and Electronically Supplied Service

(1) The place of supply of electronic communications, broadcasting and electronically supplied service, where it is supplied to a non-taxable person shall be the seat or declared place of residence of the non-taxable person, but in the absence of such - the permanent place of residence.

(2) The use of electronic mail between the service provider and recipient of the service shall not mean that it is an electronically supplied service.

[12 June 2014 / The new wording of the Section shall come into force on 1 January 2015. See Paragraph 19 of Transitional Provisions]

Section 28. Place of Supplying the Service of Hiring out a Means of Transport

(1) The place of supplying the service of hiring out a means of transport, where continuous possession or use of the means of transport does not exceed 30 days (in respect of vessels - 90 days), shall be the place where the means of transport is actually put at the disposal of the recipient of the service.

(2) The place of supplying the service of hiring out a means of transport, where the service is supplied to a non-taxable person and continuous possession or use of the means of transport exceeds 30 days (in respect of vessels - 90 days), shall be the seat, declared place of residence, but, in the absence of such - the place of permanent residence of the recipient of the service.

(3) Where a pleasure boat is hired out to a non-taxable person for a time period which exceeds 90 days, the place of supply of service shall be the place where the supplier of service actually puts the craft at the disposal of the recipient of the service, if the supplier of the service supplies such service from his place of establishment of a business or the place of fixed establishment.

Section 29. Place of Supply of Restaurant and Catering Services

(1) The place of supply of restaurant and catering services, except the cases when such services are supplied on board ships, aircraft or trains in the section of passenger transport operation in the territory of the European Union, shall be the place where such services are actually supplied.

(2) Where restaurant and catering services are supplied to passengers on board ships, aircraft or trains in the section of the passenger transport operation in the territory of the European Union between the point of departure and the point of arrival of the passenger transport operation (without stopover outside the territory of the European Union), the place of supply of the services shall be the point of departure of the passenger transport operation.

(3) Within the meaning of this Section the point of departure of a passenger transport operation shall mean the first scheduled point of passenger embarkation within the territory of the European Union (also after a stopover outside the territory of the European Union).

(4) Within the meaning of this Section the point of arrival of a passenger transport operation shall mean the last scheduled point of disembarkation within the territory of the European Union of passengers who embarked on board ship, aircraft or train in the territory of the European Union (also before a stopover outside the territory of the European Union).

(5) In the case of a return trip, within the meaning of this Section the return leg shall be regarded as a separate transport operation.

Section 30. Provisions for Determination of the Place of Supply of Other Services

(1) Where the service is supplied to a non-taxable person whose seat, declared place of residence, but, in the absence of such - place of permanent residence is outside the territory of the European Union, the place of supply of the service shall be the seat, declared place of residence, but, in the absence of such - the place of permanent residence for the following services:

1) assignments and transfers of copyrights, patents, licences, trade marks and similar rights to the disposal and control of other persons;

2) services connected with advertising and public relations;

3) legal, accounting, audit, consulting, translating, expert-examination, engineering, market research and other similar services, as well as data processing and provision of information;

4) obligations to refrain from pursuing or exercising, in whole or in part, any activity or action referred to in this Paragraph;

5) the supply of staff services, including personnel selection and staffing services, except preparation and training of such staff;

6) the services of the hiring out of movable tangible property, except hiring out of all means of transport;

7) [12 June 2014];

8) [12 June 2014];

9) financial and insurance services, including reinsurance, with the exception of the hire of safes;

10) the provision of access to natural gas distribution system, which is located in the territory of the European Union, or to the network connected to such system, to electricity, thermal energy or cooling energy network, as well as transmission and distribution services and other services directly linked thereto;

11) [12 June 2014].

(2) The place of supply of the goods transport service, if such service is provided to a registered taxable person or a registered taxable person of a third country or third territory, the electronic communications, broadcasting, and electronically supplied service, the service of hiring out of movable tangible property and hiring out of means of transport shall be:

1) outside the territory of the European Union, if the service is used outside the territory of the European Union, although in accordance with the requirements of this Law the place of supply of the service is inland;

2) inland, if the service is used inland, although in accordance with the requirements of this Law the place of supply of the service is outside the territory of the European Union.

(3) [12 June 2014]

[6 November 2013; 12 June 2014 / Amendments to the Section shall come into force on 1 January 2015. See Paragraph 19 of Transitional Provisions]

Chapter IV
Time of Transaction

Section 31. Time of Supply of Goods, Supply of Goods in the Territory of the European Union and Acquisition of Goods in the Territory of the European Union

(1) The time of supply of goods shall be the time when the supply of goods is physically carried out, but not later than the time when the goods are received by the recipient of goods, unless it is otherwise provided for in this Section.

(2) Where the goods are supplied permanently over a continuous time period (with the exception of hire purchase transactions) and tax invoices are issued at regular intervals for such supply of goods or such supply of goods causes further payments, it shall be deemed that the transaction has occurred at the time when the period to which such invoices or payments apply to ends, but not less than once in six months, unless it is otherwise provided for in this Section.

(3) Where the supply of goods within the territory of the European Union takes place permanently over a continuous time period and exceeds one calendar month, it shall be deemed that the transaction has occurred in the end of each calendar month until the time when the supply of goods is completely finished.

(4) The acquisition of goods in the territory of the European Union has taken place at the time when the acquisition of goods has been physically carried out, but not later than the time when the goods are received.

(5) If the goods brought in inland from another Member State for the treatment, evaluation, processing or repair are not brought out to the state from which such goods have been brought in, it shall be deemed that the acquisition of goods in the territory of the European Union has taken place in the taxation period in which the supply of such goods has taken place to any other person inland or outside it.

(6) If the goods brought out from inland in accordance with Section 8, Paragraph two, Clause 7 of this Law to another Member State for treatment, evaluation, processing or repair are not dispatched back to inland after the supply of the abovementioned services, it shall be deemed that the supply of goods in the territory of the European Union has taken place in the taxation period in which the supply of such goods to any other person has taken place in the relevant Member State or outside it.

(7) If the time period of the presence of goods dispatched from another Member State in inland exceeds the time limit laid down in Section 8, Paragraph two, Clause 9 of this Law, the acquisition of goods in the territory of the European Union has taken place in the taxation period when such time limit ends.

(8) If the time period of the presence of goods dispatched from inland in the Member State exceeds the time limit laid down in Section 8, Paragraph two, Clause 9 of this Law, the supply of goods in the territory of the European Union has taken place in the taxation period when such time limit ends.

(9) Supply of goods with assembly or installation shall be deemed as taken place when the assembly or installation is finished.

(10) If the acquisition of a new means of transport has been carried out in the territory of the European Union, the time of acquisition of the means of transport shall be determined in accordance with Paragraph four of this Section.

Section 32. Time of Supply and Receipt of Service

(1) Supply of service has taken place when the service is supplied to a recipient of the service, unless it is otherwise provided for in this Section.

(2) Receipt of a service has taken place, where the service is received.

(3) Where the service is supplied permanently over a continuous time period (with the exception of leasing of movable tangible property) and tax invoices are issued at regular intervals for such supply of services or such supply of services causes further payments, it shall be deemed that the transaction has occurred at the time when the period to which such invoices or payments apply to ends, but not less than once in six months, unless it is otherwise provided for in this Section.

(4) If services, for which the tax is paid by a recipient of services in accordance with Sections 88 and 89 of this Law, are provided permanently over a continuous time period exceeding one year and tax invoices are not issued or payments are not made during such time period for the supply of such services, it shall be deemed that the transaction has taken place in the end of each calendar year until the time when the supply of the service is completely finished.

(5) Construction service is supplied, when a statement on acceptance of construction object is signed regarding each stage of performance of construction works, but not less than once in 12 months.

(6) Goods transport service in the territory of the European Union or goods transport service related to exportation or transit of goods is supplied, when the freight is transferred to the recipient of goods and acceptance of freight is confirmed in a transport bill of lading.

(7) Hire purchase transaction regarding acquisition of immovable property shall be deemed as leasing service starting with the first hire purchase payment, if the conditions of the hire purchase contract are not fulfilled and therefore the hire purchase object remains in the ownership of the supplier.

Section 33. Time of Importation of Goods

Importation of goods has taken place when the goods are released for free circulation.

Chapter V
Taxable Value of Transaction

Section 34. General Provisions for Determination of Taxable Value of Transaction

(1) In respect of the supply of goods or services the taxable value shall include consideration obtained in return for the supply of goods or services.

(2) Taxable value of the supply of goods referred to in Section 6, Paragraph one of this Law shall be the acquisition value of the supplied goods or of similar goods or, in the absence of an acquisition value, the cost price of manufacture of goods.

(3) Taxable value of the services referred to in Section 6, Paragraph two of this Law shall include all costs related to the supply of service.

(4) Taxable value of the supply of goods in the territory of the European Union shall be consideration in return for the supplied goods or, if the supply of goods is carried out in territory of the European Union in accordance with Section 8, Paragraph one of this Law, the acquisition value of the relevant goods or of similar goods or, in the absence of an acquisition value, the cost price of manufacture of goods, determined at the time of supply.

(5) Taxable value of the acquisition of goods in the territory of the European Union shall be consideration in return for the acquired goods or, if the acquisition of goods is carried out in territory of the European Union in accordance with Section 9, Paragraph one of this Law, the acquisition value of the relevant goods or of similar goods or, in the absence of an acquisition value, the cost price of manufacture of goods, determined at the time of supply.

(6) Taxable value of the intermediation service shall be negotiation consideration.

(7) In respect of the leasing transaction the taxable value shall be all payments laid down in the leasing contract.

(8) In respect of the hire purchase transaction the taxable value shall be consideration laid down in the contract on a hire purchase object on the day of entering into the contract, as well as all additional payments laid down in the contract, except the interest on credit.

(9) In a transaction of supply of goods and services between related parties within the meaning of the law On Taxes and Duties the taxable value shall be the market value of the supply of goods and services, if the transaction value is:

1) less than the market value, and the recipient of goods or services has no right to deduct the input tax in full amount;

2) less than the market value, and the supplier of goods or services has no right to deduct the input tax in full amount, and the supply of goods or services is exempted from tax in accordance with Section 52, Paragraph one of this Law;

3) more than the market value, and the supplier of goods or services has no right to deduct the input tax in full amount.

(10) If the value of taxable supply of goods and services of a non-registered taxable person exceeds the registration threshold laid down in Section 59, Paragraph one of this Law during 12 months, the taxable value of such taxable person until the time of registration shall be the amount which exceeds EUR 40 000. The calculated tax amount shall be included in the transaction value.

(11) If the total value of taxable acquisition of goods in the territory of the European Union of a non-registered taxable person exceeds the registration threshold laid down in Section 57, Paragraph one of this Law within a calendar year, the taxable value of such taxable person until the time of registration shall be the amount which exceeds EUR 10 000. The calculated tax amount shall be included in the transaction value.

(12) If a taxable person of another Member State carries out the supply of goods in accordance with Section 10 of this Law and the total value of taxable supplies of goods (excluding the value of supplied excisable goods) during the previous or current calendar year exceeds the registration threshold laid down in Section 60, Paragraph two of this Law, the taxable value shall be the amount which exceeds the registration threshold laid down. The calculated tax amount shall be included in the transaction value.

(13) Paragraph twelve of this Section shall not apply if a taxable person of another Member State supplies excisable goods. In such case the taxable value shall be the value of the supplied excisable goods.

[19 September 2013; 27 July 2017]

Section 35. Costs and Payments to be Included in the Value of Supply of Goods and Service

(1) The value of supply of goods shall include all costs including costs for intermediation, insurance, packaging, transport, as well as all taxes, duties and other mandatory payments to be paid in accordance with laws and regulations, except value added tax.

(2) The value of assembly or installation service of goods shall be included in the value of supply of goods, if a supplier or a third person also installs and assembles them on behalf of the supplier.

(3) The value of service shall include all costs, as well as all taxes, duties and other mandatory payments to be paid in accordance with laws and regulations, except value added tax.

(4) The value of State and local government financing shall be included in the value of supply of goods and service, if the financing is received to cover, in full or partly, expenditures related to production of goods or supply of services and is directly related to the price of such goods or services.

(5) Paragraph four of this Section shall not apply to:

1) State and local government financing to budgetary institutions;

2) State and local government financing for compensation of losses in public passenger transport inland.

Section 36. Taxable Value in Carrying out Importation of Goods

(1) When carrying out importation of goods, such customs value of imported goods shall be taxable to which the following costs are added:

1) value of services, if services are directly related to the importation of goods and if the value of such services (including commission, as well as transport, packing and insurance costs caused until the first destination in inland) is not included in the customs value of the imported goods;

2) costs for transport of goods to a recipient of goods in another Member State, if such place is known at the time of importation of goods;

3) taxes, duties and other mandatory payments laid down in laws and regulations that are calculated for the importation of goods, except value added tax.

(2) If the destination of the supply of goods is not specifically indicated in the transport bill of lading, then in determining the value of the goods transport service to be included in the taxable value, the address of the receipt of goods indicated in the customs declaration shall be deemed as the place of receipt of goods.

(3) Natural resources tax and car and motorcycle tax shall not be included in the taxable value of goods.

(4) A taxable value of goods shall be the value of processing or treatment service, if a taxable person in accordance with the laws and regulations in the field of customs has brought out any movable tangible property to process or treat it in the third country or third territory and then brings it again in inland.

Section 37. Taxable Value in Transactions with Immovable Property

(1) Taxable value in a transaction of supply of goods - unused immovable property and building land - shall be consideration in return for the supplied immovable property.

(2) If the unused immovable property referred to in Section 1, Clause 12, Sub-clause "c", "d" or "f" of this Law is being sold, the difference between the sales value of a building or structure and the value of such building or structure before the commencement of renewal, rebuilding or restoration works shall be taxable.

(3) If a hire purchase contract on the supply of immovable property has been entered into, but the provisions of the contract are not conformed to and therefore the immovable property remains in the ownership of the supplier, the tax shall be applied as for leasing transaction and shall be applied to all previously made hire purchase payments (except the interest on credit). Such leasing shall not be applicable to hire purchase transactions of residential premises, if the residential premises are not used for economic activity.

(4) If immovable property, the content of which includes such buildings, structures or groups of premises, which are a cadastre object and which conform to the status of an unused immovable property, are being sold, the part of consideration calculated in proportion to the part of the unused immovable property against all immovable property shall be taxable.

(5) If a registered taxable person sells immovable property acquired at an auction, it has the right to take into account the status of immovable property determined by a bailiff in accordance with Section 40 of this Law in determining the taxable value. Such right may not be exercised, if the immovable property of a registered taxable person to be sold as a result of transactions does not conform to the status of an unused immovable property or building land determined by a bailiff.

[6 November 2013; 20 April 2017]

Section 38. Value of Service in Financial Transactions

(1) The value of crediting and monetary loan allocation and control service shall be the value of the interest on credit and the consideration in return for the service supplied determined by the grantor of credit or creditor.

(2) The value of service that is related to the trade of payment instruments (currency), other money market instruments, derived financial instruments and transferable securities within the meaning of the Financial Instrument Market Law (including future transactions of currency) shall be the difference between the purchase and sales price of payment instruments (currency), other money market instruments, derived financial instruments and transferable securities, taking into account the total amount of all the aforementioned transactions performed in the taxation period. A registered taxable person, who has carried out the transactions referred to in this Paragraph, when submitting an annual return, shall take into account the total amount of such transactions for the taxation year by summing up positive and negative values.

(3) If the holder of securities or capital shares sells the transferable securities or capital shares for a price that exceeds the nominal value of a transferable security or a capital share, and the surcharge of an investment share (the difference between the sales price and the nominal value of the sold security or capital share) is not included in the capital of a commercial company as a capital increase, the value of the service shall be the difference between the sales price and nominal value of the sold transferable security (capital share). A registered taxable person, who has carried out the transactions referred to in this Paragraph, when submitting an annual return, shall take into account the total amount of such transactions for the taxation year by summing up positive and negative values.

Section 39. Values which are not Included in the Taxable Value of the Transaction

(1) Taxable value of the transaction shall be determined taking into account the reduction in price (in the form of discount) that the supplier of goods or service has granted to the recipient of goods or service at the time of supply of goods or service.

(2) Taxable value of the transaction, when issuing a tax invoice that amends the initial invoice, shall be determined taking into account the deduction in price (in the form of discount) that the supplier of goods or service has granted to the recipient of goods or service on the basis of early payment for particular goods or service or any price discount that is granted to the recipient of goods or service after receipt of particular goods or service.

(3) The following shall not be included in the taxable value of the transaction:

1) amount which the supplier of goods or service has received from the recipient of goods or service as reimbursement of such costs which have been performed on behalf and in the interests of recipient of goods or service;

2) deferred excise duty payment, which is applied in accordance the laws and regulations in the field of excise duty;

3) deposit payment for reusable packaging that is laid down in laws and regulations;

4) interest payments that the recipient of goods and service pays to the supplier of goods or service for the possibility to defer payment for a definite time period for the supply of goods or supply of service performed.

Section 40. Taxable Value of the Transaction, if the Property of a Registered Taxable Person is Sold at an Auction by a Bailiff or Administrator of Insolvency Proceedings

(1) If the property of a registered taxable person is sold at an auction by a bailiff or administrator of insolvency proceedings, the auction price of the property shall be taxable in conformity with the taxable value laid down in the law.

(2) If the property of a registered taxable person is sold at an auction by a bailiff, the taxable value shall be laid down on the basis of the information provided by the registered taxable person to the bailiff before announcing the auction.

(3) If a registered taxable person has failed to provide the information referred to in Paragraph two of this Section and the bailiff determines that on the day of announcing the auction the property to be sold on auction is movable tangible property, the auction price shall be taxable.

(4) If a registered taxable person has not provided the information referred to in Paragraph two of this Section to a bailiff and the bailiff determines that on the day of announcing the auction the property to be sold on auction is an immovable property, the bailiff shall assess whether the abovementioned immovable property conforms to the status of unused immovable property in accordance with Section 1, Clause 12 of this Law or the status of building land in accordance with Section 1, Clause 1 of this Law.

(5) If a bailiff when carrying out the assessment laid down in Paragraph four of this Section, determines that on the day of announcing the auction the property to be sold on auction conforms to the status of unused immovable property or building land referred to in Section 1, Clause 12, Sub-paragraph "a", "b" or "e" of this Law, the auction price shall be taxable.

(6) If a bailiff when carrying out the assessment laid down in Paragraph four of this Section, determines that on the day of announcing the auction the property to be sold on auction conforms to the status of unused immovable property referred to in Section 1, Clause 12, Sub-paragraph "c", "d" or "f" of this Law, the difference between the acquisition price of the immovable property according to the information available in the Land Register and the auction price of such immovable property shall be taxable.

(7) If a bailiff when performing the assessment laid down in Paragraph four of this Section determines that the property to be sold on auction fails to conform to the status of unused immovable property in accordance with Section 1, Clause 12 of this Law or the status of building land in accordance with Section 1, Clause 1 of this Law, such transaction shall not be taxable.

(8) The Cabinet shall determine the information which the bailiff must find out to determine the conformity of the immovable property with the status of unused immovable property or building land.

Chapter VI
Tax Rates

Section 41. Applicable Tax Rates

(1) The following rates shall be applicable to taxable transactions:

1) standard rate of tax in the amount of 21 per cent (hereinafter - the standard tax rate), unless laid down otherwise in this Law;

2) reduced rate of tax in the amount of 12 per cent (hereinafter - the reduced tax rate) in accordance with Section 42 of this Law;

3) the zero per cent tax rate in accordance with Sections 43, 44, 45, 46, 47, 48, 49 and 50 of this Law.

(2) If goods are supplied as a set, each of these goods shall be subject to the corresponding tax rate as laid down in the Law.

Section 42. Application of the Reduced Tax Rate

(1) The reduced tax rate shall be applied for the acquisition of the following medicinal products:

1) medicinal products registered in accordance with the registration procedure of the European Agency for the Evaluation of Medicinal Products;

2) medicinal products included in the list of medicinal products registered in the Republic of Latvia;

3) medicinal products for which the relevant permit of the State Agency of Medicines is issued;

4) medicinal products the registration of which is not necessary in accordance with the laws and regulations in the field of pharmacy.

(2) The reduced tax rate shall be applied for supply of medical devices (also complementary parts, spare parts and accessories thereof), if they are put into circulation in accordance with the procedures laid down in the laws and regulations regarding registration of medical devices and they are usually used for treatment or relief of functional disorders of the body, as well as are intended only for individual use by persons with functional disorders of the body.

(3) The reduced tax rate shall be applied to supplies of the following specialised food products intended for infants, if it is provided for in the labelling of the product that the product is intended for the nutrition of infants and a document attesting the harmlessness of the product is appended thereto:

1) milk and dairy products;

2) dry and liquid milk mixtures and dairy products of such mixtures;

3) soy products, dry and liquid soy mixtures;

4) fruit, berry and vegetable juices, squashes and purees;

5) special easily digestible meat products and homogenised mixed-ingredient products;

6) drinks for infant nutrition - juices diluted with tea, specially prepared infant teas, water which is adapted for infants and put in a special packaging (still);

7) therapeutic diet enteral nutrition products;

8) mixtures of aminoacids;

9) protein hydrolysates;

10) mixtures with low lactose content or without lactose;

11) gluten-free products for infants who suffer from coeliac disease;

12) gluten-free products for infants who suffer from phenylketonuria;

13) special products for infants who have hereditary pathology of metabolism;

14) mixtures with lowered or elevated protein content and products which do not contain proteins (for example, artificial sago, flour, macaroni, bread, biscuits, groats, dry flakes);

15) products and mixtures with lowered or elevated fat content;

16) products and mixtures with lowered or elevated carbohydrate content.

(4) The reduced tax rate shall be applied to scheduled inland passenger transport services and services of transporting their luggage.

(5) The reduced tax rate shall be applied to supply of school literature and original literature issued in the form of printed publication or electronic publication (literary works - fiction, children's literature, scientific and popular science literature, reference literature, religious literature, literary memoirs - and their translation), except supply of the abovementioned literature online or by downloading it.

(6) An opinion regarding conformity of the publication with the status of school literature, as well as regarding the conformity of publications of the original literature with Paragraph five of this Section upon request by the State Revenue Service shall be provided by the National Library of Latvia.

(7) The reduced tax rate shall be applied to supply of such newspapers, magazines, newsletters and other periodical publications in the form of printed publication or electronic publication (except supply of the abovementioned periodical publications online or by downloading them) which are issued not less once in three months and one-off circulation of which exceeds 100 copies, as well as to a subscription fee thereof.

(8) Paragraph seven of this Section shall not apply to publications of erotic and pornographic nature, as well as to such publications the thematic content and task of which is publishing of advertising or commercials.

(9) The reduced tax rate shall also be applied to the supplements of magazines in the form of a compact disc which are appended to the magazines without additional charge and are an integral part of the magazine if the information included in the compact disc supplements the information provided in the magazines.

(10) The reduced tax rate shall be applied to accommodation services in tourist accommodation.

(11) The reduced tax rate shall be applied to supplies of the following firewood, if the actual consumer thereof is an inhabitant who purchases and consumes firewood for domestic needs:

1) wood in the form of round timber, logs, branches, bundles of branches or similar;

2) wood chips or shavings;

3) sawdust and wood residues;

4) sawdust and wood residues in the form of agglomerated or non-agglomerated briquettes, granules or similar.

(12) The reduced tax rate shall be applied to supplies of thermal energy, if the actual consumer thereof is an inhabitant who purchases and consumes thermal energy for domestic needs.

(13) If a natural person purchases and consumes thermal energy and firewood for the needs of his economic activity, also for his professional activity, he shall notify a supplier or a person who ensures administration of the residential house regarding the purpose of use of the thermal energy and firewood.

(14) Apartment departments, housing departments, houseowners and other persons who according to the contract entered into receive a fee together with the tax for the goods supplied in Paragraphs eleven and twelve of this Section and transfer it in full amount to registered taxable persons who have supplied such goods or services, shall apply the reduced tax rate when issuing tax invoices to inhabitants.

(15) The reduced tax rate shall also be applied to importation of goods to which reduced rate shall be applicable and to acquisition of such goods in the territory of the European Union.

Section 43. Application of the Zero Per cent Tax Rate to Supplies of Goods

(1) The zero per cent tax rate shall be applied to exportation of goods.

(2) The zero per cent tax rate shall be applied to goods dispatched to a fiscal representative within the framework of exportation of goods, if such goods are dispatched for the purpose of exporting them further and they are placed in a customs warehouse or excise duty warehouse.

(3) The zero per cent tax rate shall be applied to supply of the following goods to customs warehouse and free zones:

1) supply of such goods which are brought into the territory of the European Union from third countries or third territories and which are not released for free circulation;

2) supply of such goods for which exportation procedure is initiated in another Member State and which are brought inland for further exportation.

(4) The zero per cent tax rate shall be applied to supply of goods in the territory of the European Union, if both of the following conditions are conformed to:

1) the recipient of goods indicated in goods transport accompanying documents and tax invoice has presented a registration number of a taxable person of another Member State valid at the time of transaction;

2) goods are dispatched or transported from inland to destination in another Member State and it is attested by goods transport accompanying documents at the disposal of the supplier of goods.

(5) [6 November 2013]

(6) The zero per cent tax rate shall be applied to supply of new means of transport to any person of another Member State.

(7) The zero per cent tax rate shall be applied to supplies of goods carried out in duty-free shops to natural persons who are departing from inland to third countries or third territories.

[6 November 2013]

Section 44. Application of the Zero Per cent Tax Rate to Acquisition of Goods Carried out by a Fiscal Representative in the Territory of the European Union

The zero per cent tax rate shall be applied to acquisition of goods carried out by a fiscal representative, if the relevant goods are supplied to such fiscal representative for the purpose of exporting and placing them in a customs warehouse or excise duty warehouse.

Section 45. Application of the Zero Per cent Tax Rate to Importation of Goods

(1) The zero per cent tax rate shall be applied to importation of goods, if a registered taxable person who is acting on behalf of a registered taxable person of another Member State, supplies such goods within 30 calendar days after their importation in unchanged form to the recipient of goods to another Member State which is a registered taxable person of another Member State.

(2) The zero per cent tax rate shall be applied to importation of goods, if the fiscal representative who is representing a registered taxable person of a third country or third territory or a registered taxable person of another Member State supplies such goods to a recipient of goods which is a registered taxable person of another Member State to another Member State within 30 calendar days after their importation.

(3) If a registered taxable person in accordance with Paragraph one or Paragraph two of this Section applies the zero per cent tax rate, the documents attesting that the imported goods are or will be dispatched to another Member State shall be at the disposal thereof.

(4) The State Revenue Service is entitled to request documents from a registered taxable person who in accordance with Paragraph one or two of this Section applies the zero per cent tax rate, proving that the imported goods are intended to be transported or dispatched to another Member State.

(5) A registered taxable person referred to in Paragraph one or two of this Section after importation of goods by dispatch to another Member State shall indicate supply of goods in his tax return and report on supplies of goods and services in the territory of the European Union.

(6) The Cabinet shall determine the procedures for the application of the zero per cent tax rate in the cases referred to in Paragraphs one and two of this Section.

Section 46. Application of the Zero Per cent Tax Rate to Services

(1) The zero per cent tax rate shall be applied if services are:

1) directly related to exportation of goods, including also exportation of such goods for which customs procedure has been initiated in another Member State;

2) directly related to importation of goods when the value of such services are to be included in the value of taxable transaction in accordance with Section 36, Paragraph one of this Law;

3) directly related to transit traffic operations;

4) supplied in the free zone or customs warehouse and are directly related to goods brought in the territory of the European Union from third countries or third territories and are not released for free circulation.

(2) The Cabinet shall determine the procedures for the application of the zero per cent tax rate for the services referred to in Paragraph one of this Section.

(3) The zero per cent tax rate shall be applied to passenger transport operations on international routes, also to passenger transport operations to other Member States, if a passenger crosses the State border of the Republic of Latvia, as well as to the luggage transport operations which the passenger carries with him and to his vehicle transport operations with which he is travelling.

(4) The zero per cent tax rate shall be applied to intermediary services which are supplied by the intermediary by selling tickets for the passenger transport operations on international routes referred to in Paragraph three of this Section.

Section 47. Application of the Zero Per cent Tax Rate to Supplies of Vessels, Supplies of Goods to Vessels and Services Related to Such Supplies

(1) The zero per cent tax rate shall be applied to supply and importation of such vessels which are used for:

1) navigation in international waters and which are carrying passengers for reward or used for the purpose of commercial, fishing or industrial activities;

2) rescue or assistance at sea;

3) inshore fishing.

(2) The zero per cent tax rate shall also be applied to supply and importation of spare parts for the vessels referred to in Paragraph one of this Section and equipment, including fishing equipment, incorporated or used therein, as well as to fuelling of such vessels.

(3) The zero per cent tax rate shall be applied to:

1) supply of goods intended for provisioning of the vessels referred to in Paragraph one, Clauses 1 and 2 of this Section;

2) modification, repair, technical maintenance, chartering and hiring of the vessels referred to in Paragraph one of this Section;

3) repair, technical maintenance and hiring of equipment, including fishing equipment, incorporated or used in vessels referred to in Paragraph one of this Section;

4) services which are not referred to in this Paragraph and which are supplied in order to meet the direct needs of the vessels referred to in Paragraph one of this Section or of their cargoes, including services provided by ship agents.

(4) The zero per cent tax rate shall be applied to fuelling and supply of goods intended for provisioning of fighting ships, falling within the combined nomenclature code 8906 10 00 laid down in Annex I to Council Regulation (EEC) No 2658/87 of 23 July 1987 on the tariff and statistical nomenclature and on the Common Customs Tariff (hereinafter - the Combined nomenclature), and which are leaving the state and bound for ports or anchorages in other Member States or third countries, or third territories.

Section 48. Application of the Zero Per cent Tax Rate to Supplies of Aircraft, Supplies of Goods to Aircraft and Services Related to Such Supplies

(1) The zero per cent tax rate shall be applied to supply and importation of such aircraft which are used by airlines operating for reward chiefly on international routes.

(2) The zero per cent tax rate shall also be applied to supply and importation of spare parts for the aircraft referred to in Paragraph one of this Section and equipment incorporated or used therein, as well as to fuelling of such aircraft.

(3) The zero per cent tax rate shall be applied to:

1) supply of goods intended for provisioning of the aircraft referred to in Paragraph one of this Section;

2) modification, repair, technical maintenance, chartering and hiring of the aircraft referred to in Paragraph one of this Section;

3) repair, technical maintenance and hiring of equipment incorporated or used in the aircraft referred to in Paragraph one of this Section;

4) services which are not referred to in this Paragraph and which are supplied in order to meet the direct needs of the aircraft referred to in Paragraph one of this Section or of their cargoes, including services provided by aircraft agents.

(4) It shall be considered that an airline is operating chiefly on international routes, if both of these conditions are conformed to:

1) annual turnover of the airline on international routes is at least 80 per cent of the total turnover;

2) number of the airline's routes on international routes is at least 80 per cent of the total turnover.

Section 49. Application of the Zero Per cent Tax Rate to Supplies of Goods, if a Natural Person of Third Country or Third Territory who is a Non-taxable Person in the Territory of the European Union Brings the Goods Acquired Inland out of the Territory of the European Union

(1) The zero per cent tax rate shall be applied in accordance with the procedures laid down by the Cabinet to supplies of goods, if a natural person of third country or third territory, who is a non-taxable person in the territory of the European Union, brings the goods acquired inland out of the territory of the European Union.

(2) The zero per cent tax rate shall be applied indirectly by refunding the tax paid.

(3) A registered taxable person who conforms to the criteria laid down by the Cabinet, shall refund the tax paid for the goods acquired inland to a natural person of third country or third territory, who is a non-taxable person in the territory of the European Union, if:

1) the value of goods (without tax) supplied by the supplier of goods within one day is not less than EUR 35.00;

2) the natural person brings out the goods from the territory of the European Union.

(4) The Cabinet shall determine:

1) the procedures for the application of the zero per cent tax rate to supplies of goods, if a natural person of third country or third territory, who is non-taxable person in the territory of the European Union, brings the goods acquired inland out of the territory of the European Union;

2) the criteria which determine the right of a registered taxable person to refund the tax;

3) the procedures for the tax refund and the procedures for completing a submission of a registered taxable person and submitting to the State Revenue Service;

4) the procedures for examining a submission of a registered taxable person by the State Revenue Service and granting, suspending and cancelling a permission for a registered taxable person to refund the tax paid for the goods acquired in inland to natural persons of third countries or third territories, who are not registered in the territory of the European Union;

5) the procedures by which a registered taxable person and a seller of goods shall settle mutual accounts and accounts with the State budget.

[19 September 2013; 6 November 2013; 23 November 2016]

Section 50. Application of the Zero Per cent Tax Rate to Supplies of Goods and Services, which are Supplied to Diplomatic and Consular Missions, International Organisations, European Union Institutions and North Atlantic Treaty Organisation (NATO)

(1) The zero per cent tax rate shall be applied indirectly, by refunding the tax paid, to supplies of goods and services which are provided in inland to the following bodies registered in the Republic of Latvia:

1) diplomatic and consular missions of third countries, diplomatic and consular agents thereof, administrative technical personnel, as well as family members of the abovementioned persons - in conformity with the parity principle;

2) diplomatic and consular missions of other Member States, diplomatic and consular agents thereof, administrative technical personnel, as well as family members of the abovementioned persons;

3) European Union institutions or their representations and persons related thereto or bodies established by legal acts of the European Union, to which Protocol on the Privileges and Immunities of the European Union of 8 April 1965 is applied - within the limits and under the conditions laid down in the abovementioned protocol and implementation agreements or headquarter agreements thereof;

4) international bodies which are not referred to in Paragraph one, Clause 3 of this Section and which have been recognised as such by the competent authorities of the Republic of Latvia, and members of such bodies - within the limits and under the conditions laid down by the international conventions establishing the bodies or by headquarters agreements;

5) international organisations or their representations, and employees of such organisations or their representations who have a diplomatic status in the territory of the Republic of Latvia - within the limits and under the conditions laid down by the international conventions establishing such organisations or by headquarters agreements.

(2) The zero per cent tax rate shall be applied indirectly by refunding the tax paid for supplies of goods and services, which have been supplied in inland to the units of armed forces of other States party to the North Atlantic Treaty Organisation (NATO) which are staying in the territory of the Republic of Latvia (except the National Armed Force of the Republic of Latvia), including for the needs of civilian staff accompanying them or for supplying messes or canteens of the units of such armed forces.

(3) Competent authorities of the Republic of Latvia shall confirm Value Added Tax and Excise Duty Exemption Certificate which conforms to Council Implementing Regulation (EU) No 282/2011 of 15 March 2011 laying down implementing measures for Directive 2006/112/EC on the common system of value added tax (hereinafter - the certificate), which is drawn up for the acquisition of goods and receipt of services of the person referred to in this Section in another Member State or inland.

(4) The zero per cent tax rate shall be applied directly on the basis of a certificate approved by the competent authority of the relevant Member State for supplies of goods and services which are provided inland to the following bodies registered in other Member States:

1) diplomatic and consular missions of third countries, their diplomatic and consular agents, administrative technical personnel, as well as family members of the abovementioned persons;

2) diplomatic and consular missions of the Member States, their diplomatic and consular agents, administrative technical personnel, as well as family members of the abovementioned persons;

3) European Union institutions or representations thereof in the territory of the European Union and persons related thereto, the European Atomic Energy Community, the European Central Bank, the European Investment Bank or bodies established by legal acts of the European Union, to which Protocol on the Privileges and Immunities of the European Union of 8 April 1965 is applied - within the limits and under the conditions laid down in the abovementioned protocol and implementation agreements or headquarter agreements thereof;

4) international bodies which are not referred to in Paragraph four, Clause 3 of this Section and which have been recognised as such by the competent authorities of the relevant Member State, and members of such bodies - within the limits and under the conditions laid down by the international conventions establishing such bodies or by headquarters agreements;

5) international organisations or their representations and employees of such organisations or their representations who have a diplomatic status in the territory of the relevant Member State - within the limits and under the conditions laid down by the international conventions establishing such organisations or by headquarters agreements.

(5) The zero per cent tax rate shall be applied directly on the basis of a certificate approved by the competent authority of the relevant Member State for supplies of goods and services which are provided inland to the following:

1) units of the North Atlantic Treaty Organisation (NATO) in accordance with the international agreement entered into, if it is paid for the goods supplied and services supplied from the resources of the North Atlantic Treaty Organisation;

2) units of armed forces of other States party to the North Atlantic Treaty Organisation (NATO) arriving in the territory of the Republic of Latvia to take part in the common defence effort of the States party to the NATO, including for the use of the civilian staff accompanying them, or for supplying messes or canteens of such units of armed forces.

(6) The zero per cent tax rate shall be applied directly on the basis of the certificate approved by the competent authorities of the Republic of Latvia, supplies of goods and services that are supplied inland to diplomatic and consular missions registered in the Republic of Latvia or to European Union institutions or representations thereof, or in accordance with bodies established by the legal acts of the European Union, to which Protocol on the Privileges and Immunities of the European Union of 8 April 1965 is applied, or international bodies which are not referred to in Paragraph one, Clause 3 of this Section and which have been recognised as such by the competent authorities of the Republic of Latvia, and members of such bodies, or international organisations or representations thereof, the units of armed forces of other States party to the North Atlantic Treaty Organisation (NATO) which are staying in the territory of the Republic of Latvia (except the National Armed Forces of the Republic of Latvia), if:

1) such persons are building an immovable property inland for official needs - for the acquisition of goods intended for the construction of such immovable property and for the supply of services during implementations of the construction project, indicated in the certificate;

2) such persons or persons related thereto acquire excisable goods from a excise duty warehouse inland - for the acquisition of excisable goods specified in the certificate.

(7) The zero per cent tax rate shall be applied directly, on the basis of the certificate approved by the competent authorities of the Republic of Latvia, for the supplies of goods and services which are supplied inland to the persons referred to in Paragraph five of this Section arriving in the Republic of Latvia from the state in which the certificate cannot be drawn up - for the acquisitions of goods and receipt of services specified in the certificate.

(71) The zero per cent tax rate shall be applied directly to:

1) the supplies of goods and services that are provided inland to the members of the Allied Headquarters recognised in the Republic of Latvia and dependants thereof, except for the citizens and permanent residents of the Republic of Latvia, in the shop of the Allied Headquarters in accordance with conditions and restrictions of the Agreement between the Republic of Latvia and the Supreme Headquarters Allied Powers Europe and Headquarters, Supreme Allied Commander Transformation to Supplement the Paris Protocol;

2) the supplies of fuel inland to the United States Embassy in the Republic of Latvia and diplomatic and consular agents and administrative technical personnel thereof.

(8) The Cabinet shall determine:

1) the procedures for the application of the zero per cent tax rate to supplies of goods and services, which are supplied to diplomatic and consular missions, international organisations, European Union institutions and North Atlantic Treaty Organisation (NATO);

2) the procedures for the approval of a certificate and the procedures by which the right to use the certificate without approval shall be granted or withdrawn;

3) the procedures by which the certificate approved by the competent authorities of the Republic of Latvia shall be used inland;

4) the procedures by which the zero percent tax rate shall be applied to:

a) the supplies of goods and services that are provided inland to the members of the Allied Headquarters recognised in the Republic of Latvia and dependants thereof, except for the citizens and permanent residents of the Republic of Latvia, in the shop of the Allied Headquarters;

b) the supplies of fuel inland to the United States Embassy in the Republic of Latvia and diplomatic and consular agents and administrative technical personnel thereof.

[20 April 2017 / Paragraph 7.1 and Clause 4 of Paragraph eight shall come into force on 1 January 2018. See Paragraph 29 of Transitional Provisions]

Section 51. Restrictions on Application of the Zero Per cent Tax Rate

(1) The zero per cent tax rate shall not be applied, if a registered taxable person who has performed a transaction for which zero per cent tax rate is to be applied in accordance with Sections 43, 44, 45, 46, 47 and 48 of this Law, cannot present documents attesting exportation of goods or documents which attest the application of the zero per cent tax rate.

(2) The Cabinet shall determine the documents which are considered as documents attesting the exportation of goods referred to in Paragraph one of this Section and documents which attest the application of the zero per cent tax rate.

(3) The zero per cent tax rate shall not be applied, if a registered taxable person has failed to observe the time limit of dispatch of goods laid down in Section 45, Paragraphs one and two of this Law and cannot justify it by objective forced circumstances.

(4) The zero per cent tax rate shall not be applied, if a registered taxable person has received advance payment for the goods or service indicated in a tax invoice on request of advance payment, to which the zero per cent tax rate is to be applied in accordance with Section 43, Paragraphs one, two, three, six and seven, Sections 44, 45, 46, 47 and 48, but within six months from the day of receipt of advance payment the goods have not been dispatched or supply of service has not started.

(5) Paragraph four of this Section shall not be applied, if a registered taxable person in accordance with the agreements entered into has received an advance payment for the supply of such goods the technological process of manufacture (production) of which is more than six months, or if the supply of goods or service has been started at the time of receipt of the advance payment.

Chapter VII
Exemptions from Tax

Section 52. Non-taxable Supplies of Goods and Services

(1) The following supplies of goods and services shall not be taxable:

1) the postal services provided by a provider of the universal postal service:

a) the collection, sorting, carriage and delivery of such letter-post items the weight of which does not exceed two kilograms;

b) the collection, sorting, carriage and delivery of such postal parcel items the weight of which does not exceed 10 kilograms;

2) means of postal prepayment which are put into circulation and supplied in accordance with the Postal Law;

3) the following medicinal services:

a) medicinal services determined by the Cabinet and provided by a medical treatment institution to a patient using the medical technologies approved in accordance with the procedures laid down in the laws and regulations (except forensic-medicine expert-examination in criminal cases or civil cases, disablement expert-examination which is performed by the State Medical Commission for the Assessment of Health Condition and Working Ability and the divisions thereof, provision of opinions regarding the quality of medical care and work disability expert-examination in medical treatment institutions, evaluation of the state of health of military persons for granting of a service pension, as well as cosmetic surgeries and cosmetologist services without medicinal indications and solarium services);

b) mandatory health examinations which are necessary on recruitment and health examinations which are necessary due to environmental factors harmful to health and special work conditions, as well as health examinations which are necessary for a person for the implementation of any rights granted or duties specified in another law or regulation;

4) the following services related to medicine which are necessary to ensure the supply of medicinal services laid down in Paragraph 3 of this Section:

a) transport of a patient by means of vehicle that is specially equipped with medical devices samples of which have been registered in accordance with the procedures laid down in laws and regulations;

b) provision of catering services, which is ensured by a medical treatment institution to a patient during medical treatment process;

c) accommodation which is ensured by a medical treatment institution to a patient and a person who stays with the patient;

d) assessment of conformity of the medical treatment institutions with the mandatory requirements and services of certification of medical treatment institutions;

e) clinical diagnosis laboratory services, which are ensured in other medical treatment institutions;

5) the supplies of human organs, milk and human blood (including blood plasma and blood cells);

6) dental services;

7) the supply of services by dental technicians and dental hygienists to a patient;

8) [20 April 2017].

9) social care, vocational and social rehabilitation, social assistance and social work services that are supplied to inhabitants by persons who are registered in the register of social service providers, as well as catering services which are supplied by a social service provider in accordance with its programmes;

10) the supplies of goods and services for the purposes of protecting children and young persons carried out by public benefit organisations;

11) services of stay of children and preschool education services supplied by preschool educational institutions;

12) services of State recognised educational institutions in the field of general education, vocational education, higher education and interest-related education, as well as supply of services and goods closely linked to such educational services carried out by the abovementioned educational institutions;

13) educational services the supply of which to the educational institutions referred to in Clause 12 of this Paragraph is ensured by educational institutions of other states;

14) educational services supplied by teachers giving private classes within the framework of general education, vocational education and higher education study programmes;

15) the part of a schoolchildren transport service which is financed from local government budgets and which is carried out by licensed carriers in accordance with the Law On Local Governments;

16) services of occupational training or retraining of unemployed persons organised by the State Employment Agency;

17) the following cultural services:

a) theatre and circus performances;

b) concerts;

c) events intended for children, events of amateur art groups and events intended for charity purposes;

d) visits to State recognised museums, libraries, exhibitions, zoological gardens and botanical gardens and cultural and cultural education measures organised by such institutions;

e) services of provision of public access to and use of the information present in the library collection;

18) the royalty received by the author for his work and use thereof, as well as the consideration received by the performer and phonogram producer for the subject of related rights and use thereof;

19) the supply of gold, coins and bank notes to the Bank of Latvia;

20) insurance and reinsurance services in accordance with the Law On Insurance Companies and Supervision Thereof, as well as insurance and reinsurance intermediary services in accordance with the Activities of Insurance and Reinsurance Intermediaries Law;

21) the following financial transactions:

a) crediting and monetary loan allocating (including intermediation), as well as credit management, carried out by the creditor;

b) transactions with credit guarantees or any other security for money (including intermediation), as well as the management of credit guarantees carried out by the creditor;

c) services (including intermediation) which apply to investment and current accounts and attraction of other repayable funds, performance of payments in cash and non-cash means of payments, fiduciary (trust) operations;

d) services (including intermediation) which apply to issuing and servicing of payment instruments, as well as trade (including intermediation) with payment instruments and other money market instruments, except the payment instruments which are supplied for collecting purposes or which contain precious metal;

e) services (including intermediation) which apply to investments in capital, derivative financial instruments and securities (including their emission, storage, alienation, supervision carried out by the custodian bank, but except for other supervision), except investment in capital, management of derivative financial instruments and securities;

22) management of investment funds, State funded pension scheme investments, closed and open pension funds, risk capital funds, as well as insurance companies and other investment portfolios, which are collective investments or are established on the basis of the requirements laid down by such funds (including technical reserves and guarantee funds), if it is related to lawful or actual decision-making powers;

23) gambling, drawings by lot and lotteries, including the gambling and drawings by lot that are organised via electronic communications services;

24) sale of immovable property, except sale of unused immovable property and building land;

25) the following services supplied to inhabitants:

a) residential tenancy (except accommodation services at accommodation facilities - hotels, motels, guest houses, houses used for rural tourism, camp sites and tourist accommodations);

b) [30 November 2015].

(2) Exemption from tax in respect of the services referred to in Paragraph one, Clause 17 of this Section shall be applied also by persons other than public persons, if in providing such services the profit is not gained on regular basis. If profit is gained, exemption shall be applied in cases when the profit gained is channelled or invested for improvement of the supply of such services.

(3) The supply of goods shall not be taxable, if a registered taxable person has not deducted the input tax for the relevant goods and the goods are acquired or used for ensuring the transactions referred to in Paragraph one of this Section or for the performance of State administration tasks.

(31) The supply of goods for the acquisition or use of which a registered taxable person has not deducted the input tax shall not be taxable, because they were intended for other purposes and not for the provision of taxable transactions (including luxury goods, goods for the private needs and entertainment of a registered taxable person, its staff or other persons).

(32) Services supplied by a participant of the independent group of persons to other participants of such group shall not be taxable, if:

1) participants of such group are persons who permanently perform non-taxable transactions in accordance with Paragraph one of this Section, or transactions to which this Law does not apply;

2) services are necessary only for the provision of non-taxable transactions performed by the participants of such group or for the provision of such transactions to which this Law does not apply;

3) the value of services is their cost price;

4) costs of services are covered by the participants of such group according to their share in the total expenses;

5) situation of market participants performing competitive activities or transactions (current or potential) in the field of competition is not affected significantly and thus significant distortions of competition are not caused.

(33) In order to apply Paragraph 3.2 of this Section, all of the following conditions must be met:

1) there is a written agreement between participants of the independent group of persons regarding provision of services within the scope of the group;

2) participants of the independent group of persons are inland taxable persons, taxable persons of another Member State or taxable persons of third countries or third territories;

3) the participant of the independent group of persons, within the scope of which services are supplied to other participants of the group, is an inland taxable person or a taxable person of another Member State;

4) if the participant of the independent group of persons also performs taxable transactions, it shall ensure record-keeping justifying that services received within the scope of the group of independent persons are used for transactions exempted from the tax in accordance with Paragraph one of this Section, or transactions, to which this Law does not apply.

(34) If the conditions referred to in Paragraph 3.3of this Section are met, Paragraph 3.2 of this Section shall also apply in cases when the independent group of persons, in providing the service to other participants of such group, requests that they refund their share in the joint expenses, applying the corrective coefficient of the market price, in order to meet the requirements laid down in national laws and regulations in relation to the regulation of transfer prices, in which the taxable person supplying services within the scope of the independent group of persons to other participants of such group, is registered.

(4) The Cabinet shall determine the procedures for the application of exemption from tax to the following supplies of goods and services:

1) dental services;

2) services of State recognised educational institutions in the field of general education, vocational education, higher education and interest-related education, as well as supply of services and goods closely linked to such educational services carried out by the abovementioned educational institutions;

3) educational services supplied by teachers giving private classes within the framework of general education, vocational education and higher education study programmes;

4) cultural services;

5) financial transactions;

6) gambling, drawings by lot and lotteries;

7) supply of immovable property;

8) services of the rent residential premises supplied to inhabitants.

[6 November 2013; 12 June 2014; 30 November 2015; 20 April 2017]

Section 53. Non-taxable Importation of Goods

(1) The importation of goods referred to in Section 52, Paragraph one of this Law shall not be taxable.

(2) The importation of gas transported through the natural gas distribution system or networks which are connected to such system, or gas cargo ships, and which is pumped in any natural gas system or long-distance pipeline network, the importation of electricity, thermal energy or cooling energy through thermal energy or cooling networks shall not be taxable.

(3) The importation of goods which is not subject to customs duty in accordance Council Regulation (EC) No 1186/2009 of 16 November 2009 setting up a Community system of reliefs from customs duty (codified version), except the consignments of goods referred to in Article 23 of Regulation, shall not be taxable.

(4) The consignments of goods referred to in Article 23 of Council Regulation (EC) No 1186/2009 of 16 November 2009 setting up a Community system of reliefs from customs duty (codified version) shall not be taxable, if the value of the consignment does not exceed EUR 22.

(5) The importation of goods for commercial purposes shall not be taxable if the total value thereof does not exceed EUR 22.

(6) [19 September 2013]

(7) The importation of goods shall not be taxable if it is carried out by:

1) European Union institutions or their representations in the territory of the European Union, the European Atomic Energy Community, the European Central Bank, the European Investment Bank or bodies established by legal acts of the European Union, to which Protocol on the Privileges and Immunities of the European Union of 8 April 1965 is applied - within the limits and under the conditions laid down in the abovementioned protocol and implementation agreements or headquarter agreements thereof;

2) international bodies, organisations which are not referred to in Clause 1 of this Paragraph and which have been recognised as such by the competent authorities of the relevant Member State, and members of such bodies - within the limits and under the conditions laid down by the international conventions establishing the bodies or by headquarters agreements;

3) international organisations or their representations in the territory of the European Union - within the limits and under the conditions laid down by the international conventions establishing the organisations or by headquarters agreements;

4) units of the North Atlantic Treaty Organisation (NATO) for the needs of implementation of international agreements or units of armed forces of other States party to the NATO (except the National Armed Forces of the Republic of Latvia), staying in the territory of the Republic of Latvia, for their own use or for use of the persons in the composition thereof;

5) diplomatic and consular missions of Member States and third countries registered in the Republic of Latvia to which Protocol on the Privileges and Immunities of the European Union of 8 April 1965 is applied, if the goods are exempted from the customs duty in accordance with Paragraph three of this Section.

(8) The importation into ports, by a person operating in the fisheries sector, of its catches, unprocessed or after undergoing preservation for marketing, but before supplied, shall not be taxable.

(9) Re-importation of goods in inland after temporary exportation shall not be taxable, if it is carried out by a person who exported the goods and if such goods conform to the requirements which are laid down in respect of exemption from customs duties.

(10) The importation of such goods which are brought in inland in the personal luggage of a natural person who is arriving from a third country or third territory (hereinafter in this Section - the traveller) shall not be taxable, if such importation of goods is not carried out for commercial purposes.

(11) The luggage, which a traveller presents to the customs authorities at the time of arrival, as well as the luggage, which the traveller presents later to the same customs authorities when proving that such luggage was registered at the time of departure as the luggage to be carried with him in the company providing a journey, shall be deemed as a personal luggage referred to in Paragraph ten of this Section.

(12) It shall be deemed that the importation of goods is not carried out for commercial purposes within the meaning of Paragraph ten of this Section, if the importation of goods conforms to all the following conditions referred to in this Paragraph of Section:

1) the importation of goods is not carried out on regular basis;

2) only the goods intended for the traveller's personal or family use or for gift are imported.

(13) The type and amount of goods referred to in Paragraph twelve of this Section shall be such which do not point to importation of the goods for commercial purposes.

(14) The goods which are imported by a traveller in his personal luggage shall not be taxable, taking into account the following conditions and restrictions for the value of goods:

1) the total value of goods per one person does not exceed:

a) EUR 300, if the traveller arrives by land;

b) EUR 430, if the traveller arrives by air or sea transport;

2) for travellers who are younger than 15 years of age, regardless of the type of arrival, the total value of goods per one person does not exceed EUR 285;

3) the following is not included in the total value of goods referred to in Clause 1 of this Paragraph:

a) the value of the personal luggage which is imported temporarily or re-imported by the traveller after temporary exportation;

b) the value of medicinal products necessary for the personal needs of the traveller;

c) the value of goods indicated in Paragraph fifteen of this Section;

4) the value of one goods cannot be divided.

(15) Tobacco products, alcoholic beverages and fuel which is imported by a traveller in his personal luggage, in conformity with the provisions of the Law On Excise Duty and restrictions for quantity of such goods, shall not be taxable.

[19 September 2013]

Section 54. Non-taxable Acquisition of Goods in the Territory of the European Union

(1) Acquisition of goods in the territory of the European Union for the supply of which in inland exemption would be applicable in accordance with Section 52 of this Law shall not be taxable.

(2) Acquisition of goods in the territory of the European Union the importation of which would be exempted from tax in accordance with Section 53, Paragraph three, four, five or nine of this Law shall not be taxable.

(3) Acquisition of goods in the territory of the European Union performed in inland shall not be taxable, if:

1) the acquisition of goods in the territory of the European Union is carried out by a registered taxable person of another Member State who does not conduct economic activity in inland for the purpose of supplying such goods further to a registered taxable person in inland;

2) goods are sent to inland directly from the Member State other than the Member State of establishment of a taxable person of another Member State referred to in Clause 1 of this Paragraph;

3) the registered taxable person referred to in Clause 1 of this Paragraph in accordance with Section 86, Paragraph eight of this Law is liable for payment of tax into the State budget.

(4) The exemption laid down in Paragraph three of this Section shall not be applied if a registered taxable person of another Member State referred to in Paragraph three, Clause 1 of this Section is also registered with the State Revenue Service Value Added Tax Taxable Persons Register.

Chapter VIII
Registration of a Taxable Person with the State Revenue Service Value Added Tax Taxable Persons Register

Section 55. General Provisions for Registration of a Taxable Person with the State Revenue Service Value Added Tax Taxable Persons Register

(1) A taxable person shall register with the State Revenue Service Value Added Tax Taxable Persons Register before he:

1) carries out taxable transactions;

2) receives such services in inland the place of supply of which is determined in accordance with Section 19, Paragraph one of this Law;

3) supplies such services, the place of supply of which in accordance with Section 19, Paragraph one of this Law is another Member State and in relation to which the recipient of services is responsible for payment of taxes.

(2) A taxable person has the right to register with the State Revenue Service Value Added Tax Taxable Persons Register for a definite period of time, which he indicates for the carrying out of taxable transactions in the submission for registration referred to in Section 66, Paragraph one of this Law.

[6 November 2013]

Section 56. Registration of a Taxable Person with the State Revenue Service Value Added Tax Taxable Persons Register

(1) The following persons shall be registered with the State Revenue Service Value Added Tax Taxable Persons Register:

1) natural persons;

2) legal persons;

3) partnerships;

4) an authorised natural person of a group of persons, if the group of persons is operating on the basis of an agreement for the performance of joint economic activity;

5) a VAT group, indicating the principal undertaking of the VAT group which undertakes the commitments to submit a tax return on behalf of the VAT group and perform other obligations of a registered taxable person (hereinafter - the principal undertaking);

6) a fiscal representative.

(2) If a taxable person of another Member State carries out at least one taxable transaction inland, one of the following persons shall be registered with the State Revenue Service Value Added Tax Taxable Persons Register of the State Revenue Service:

1) a taxable person of another Member State;

2) his authorised person inland.

(3) If a taxable person of a third country or third territory carries out at least one taxable transaction inland, the State Revenue Service shall register at least one of the following persons with the State Revenue Service Value Added Tax Taxable Persons Register:

1) a taxable person of a third country or third territory;

2) his authorised person inland.

[6 November 2013]

Section 57. Provisions for Registration of an Inland Taxable Person with the State Revenue Service Value Added Tax Taxable Persons Register for the Acquisition of Goods in the Territory of European Union

(1) If a non-registered taxable person has performed acquisition of goods in the territory of the European Union and if the total value of such goods without tax in a current calendar year reaches or exceeds EUR 10 000, a taxable person shall submit a submission to the State Revenue Service for the registration referred to in Section 66, Paragraph one of this Law by the fifteenth date of the month following the taxation period in which the registration threshold - EUR 10 000 - laid down in this Law was reached or exceeded.

(2) A non-registered taxable person is entitled not to apply Paragraph one of this Section, if after one acquisition of goods in the territory of the European Union by which the registration threshold - EUR 10 000 - is reached or exceeded, it is not intended to carry out other acquisitions of goods in the territory of the European Union in the next calendar year the total value of which would exceed EUR 10 000. In such case the abovementioned person shall pay the tax into the State budget in accordance with the procedures laid down in Section 121, Paragraph three of this Law without registering with the State Revenue Service Value Added Tax Taxable Persons Register.

(3) If an inland taxable person has registered with the State Revenue Service Value Added Tax Taxable Persons Register before reaching the sum referred to in Paragraph one of this Section, then after registering with the State Revenue Service Value Added Tax Taxable Persons Register a taxable person who carries out the acquisition of goods in the territory of the European Union is entitled to withdraw from it voluntarily not later than after two years from the day of registration.

(4) This Section is not applicable in respect of such taxable person of another Member State or taxable person of third country or third territory who carries out taxable transactions inland.

[19 September 2013]

Section 58. Provisions for Registration of a State or Local Government Institution or a Local Government with the State Revenue Service Value Added Tax Taxable Persons Register for the Receipt of Construction Services

(1) A State or local government institution or local government, which is not registered with the State Revenue Service Value Added Tax Taxable Persons Register and which has entered into an agreement with a supplier of construction services for the receipt of the construction services referred to in Section 142, Paragraph four of this Law in accordance with the procurement procedure laid down in the Public Procurement Law or is involved as a public partner in a project of public-private partnership in accordance with the Law On Public-Private Partnership, shall register with the State Revenue Service Value Added Tax Taxable Persons Register before receipt of such services.

(2) A registration number of the State Revenue Service Value Added Tax Taxable Persons Register shall be issued to persons registered in accordance with Paragraph one of this Section, which is to be used for receipt of the construction services referred to in Section 142, Paragraph four of this Law.

Section 59. Right of an Inland Taxable Person not to Register with the State Revenue Service Value Added Tax Taxable Persons Register

(1) An inland taxable person is entitled not to register with the State Revenue Service Value Added Tax Taxable Persons Register if the total value of taxable supply of goods and services carried out by him has not exceeded EUR 40 000 during the previous 12 months.

(2) An inland taxable person shall, not later than until the fifteenth date of the month following the month when the registration threshold laid down in Paragraph one of this Section was exceeded, submit a submission to the State Revenue Service for the registration referred to in Section 66, Paragraph one of this Section.

(3) The sum referred to in Paragraph one of this Section shall not include the value of fixed assets and intangible investments supplied by an inland taxable person, if such supply is carried out once within a time period of 12 months.

(4) Paragraph one of this Section shall not be applied, if a taxable person supplies services to a taxable person of another Member State the place of supply of which is determined in accordance with Section 19, Paragraph one of this Law.

(5) A taxable person is entitled not to apply Paragraph one of this Section, if after one transaction by which the registration threshold laid down in this Paragraph is exceeded it is not intended to carry out other taxable transactions during the next 12 months. In such case the abovementioned person shall pay the tax into the State budget in accordance with the procedures laid down in Section 34, Paragraph ten and Section 119, Paragraph two of this Law without registering with the State Revenue Service Value Added Tax Taxable Persons Register.

(6) Paragraph one of this Section shall not be applied, if a taxable person receives services from a person from another Member State or from any third country or third territory, which does not conduct economic activity inland, the place of supply of which is determined in accordance with Section 19, Paragraph one of this Law.

(7) The persons referred to in Section 3, Paragraph four of this Law do not have a duty to register with the State Revenue Service Value Added Tax Taxable Persons Register.

(8) This Section is not applicable in respect of such taxable person of another Member State or taxable person of third country or third territory which carries out taxable transactions in inland.

[19 September 2013; 27 July 2017]

Section 60. Provisions for Registration of a Taxable Person of Another Member State with the State Revenue Service Value Added Tax Taxable Persons Register

(1) If a taxable person of another Member State supplies goods to a person which is not a taxable person or is a non-registered taxable person and such goods are assembled or installed inland, then such taxable person of another Member State prior to carrying out the transaction shall register with the State Revenue Service Value Added Tax Taxable Persons Register regardless of the value of assembled or installed goods.

(2) A taxable person of another Member State shall register with the State Revenue Service Value Added Tax Taxable Persons Register in case of distance selling of goods:

1) within 30 days from the time when the total value of supplies of goods in the previous or current calendar year has reached or exceeded EUR 35 000;

2) prior to carrying out the transaction, if such goods are supplied which are subject to excise duty inland regardless of the value of the excisable goods supplied.

(3) In transactions of distance selling of goods a taxable person of another Member State has the right to register with the State Revenue Service Value Added Tax Taxable Persons Register also prior to reaching the registration threshold referred to in Paragraph two, Clause 1 of this Section.

(4) If an inland fixed establishment of a taxable person of another Member State gets involved in supply of goods or services of such person inland, it shall register with the State Revenue Service Value Added Tax Taxable Persons Register prior to carrying out such transactions.

[19 September 2013]

Section 61. Right of a Taxable Person of Another Member State not to Register with the State Revenue Service Value Added Tax Taxable Persons Register

(1) A taxable person of another Member State is entitled not to register with the State Revenue Service Value Added Tax Taxable Persons Register, if he carries out such supply of goods or services the tax for which is paid in the State budget by the recipient of goods or services.

(2) A taxable person of another Member State is entitled not to register with the State Revenue Service Value Added Tax Taxable Persons Register, if he or she only carries out transactions of supplies of goods in a customs warehouse or free zone with the goods which are the Union goods within the meaning of the Regulation (EU) No 952/2013 of the European Parliament and of the Council of 9 October 2013 laying down the Union Customs Code (hereinafter - the Union goods) for which goods export procedure has been commenced, as well as with the goods that are non-Union goods within the meaning of this Regulation (hereinafter - the non-Union goods).

(3) A taxable person of another Member State who is carrying out the transactions of supplies of goods, by moving the non-Union goods from one inland customs warehouse or free zone to other inland customs warehouses or free zones or customs warehouses or free zones of another Member State, as well as such Union goods for which the goods bringing-out procedure has been commenced, is entitled not to register with the State Revenue Service Value Added Tax Taxable Persons Register.

(4) A registered taxable person of another Member State is entitled not to register with the State Revenue Service Value Added Tax Taxable Persons Register, if he supplies stocks of production goods or stocks of wholesale goods to a registered taxable person and, in accordance with an agreement entered into between such persons, the property right to the abovementioned goods shall be transferred to the registered taxable person which is the recipient of goods only at the time of reselling or use.

(5) A registered taxable person of another Member State who carries out inland acquisition of goods in the territory of the European Union and supply of goods, participating to the supply of goods referred to in Section 54, Paragraph three of this Law, need not register with the State Revenue Service Value Added Tax Taxable Persons Register.

(6) A taxable person of another Member State, who does not conduct economic activity inland, is entitled not to register with the State Revenue Service Value Added Tax Taxable Persons Register, if he carries out supply of such goods which are dispatched or transported by the taxable person or another person on his behalf from inland to a destination outside the territory of the European Union, except goods which are intended for equipping or supplying pleasure boats, private aircraft or any other means of transport for private use.

(7) If a taxable person of another Member State is represented by a fiscal representative in the relevant inland transactions, the taxable person of another Member State need not register with the State Revenue Service Value Added Tax Taxable Persons Register in conformity with Section 55, Paragraph one of this Law.

(8) A taxable person of another Member State is entitled not to register with the State Revenue Service Value Added Tax Taxable Persons Register, if he or she supplies goods or services inland only to the Allied Headquarters recognised in the Republic of Latvia.

[20 April 2017 / Paragraph eight shall come into force form 1 January 2018. See Paragraph 29 of Transitional Provisions]

Section 62. Provisions for Registration of an Inland Fixed Establishment of a Taxable Person of a Third Country or Third Territory with the State Revenue Service Value Added Tax Taxable Persons Register

If an inland fixed establishment of a taxable person of a third country or third territory gets involved in supply of goods or services of such person, it shall register with the State Revenue Service Value Added Tax Taxable Persons Register prior to carrying out of such transactions.

Section 63. Right of a Taxable Person of a Third Country or Third Territory not to Register with the State Revenue Service Value Added Tax Taxable Persons Register

(1) A taxable person of a third country or third territory is entitled not to register with the State Revenue Service Value Added Tax Taxable Persons Register, if he carries out such supply of goods or services the tax for which is paid in the State budget by the recipient of goods or services.

(2) A taxable person of a third country or third territory who is only carrying out transactions of supplies of goods with non-Union goods, as well as with such Union goods for which the goods exportation procedure has been commenced in a customs warehouse or free zone, is entitled not to register with the State Revenue Service Value Added Tax Taxable Persons Register.

(3) A taxable person of a third country or third territory who is carrying out transactions of supplies of goods by moving non-Union goods from one inland customs warehouse or free zone to other inland customs warehouses or free zones or customs warehouses or free zones of another Member State, as well as such Union goods for which the goods exportation procedure has been commenced, is entitled not to register with the State Revenue Service Value Added Tax Taxable Persons Register.

(4) If a taxable person of a third country or third territory is represented by a fiscal representative in the relevant inland transactions, a taxable person of such third country or third territory need not register with the State Revenue Service Value Added Tax Taxable Persons Register in conformity with Section 55, Paragraph one of this Law.

(5) A taxable person of a third country or third territory, who does not conduct economic activity inland, is entitled not to register with the State Revenue Service Value Added Tax Taxable Persons Register, if he carries out supply of such goods which are dispatched or transported by the taxable person or another person on his behalf from inland to a destination outside the territory of the European Union, except goods which are intended for equipping or supplying pleasure boats, private aircraft or any other means of transport for private use.

(6) A taxable person of a third country or third territory is entitled not to register with the State Revenue Service Value Added Tax Taxable Persons Register, if he or she supplies goods or services inland only to the Allied Headquarters recognised in the Republic of Latvia.

[20 April 2017 / Paragraph six shall come into force form 1 January 2018. See Paragraph 29 of Transitional Provisions]

Section 64. Conditions for Registration of a VAT Group with the State Revenue Service Value Added Tax Taxable Persons Register and for Registration of Participants in a VAT Group

(1) Conditions for registration of a VAT group and for registration of participants in a VAT group shall be as follows:

1) participants of a VAT group may only be registered taxable persons;

2) the maximum number of participants in a VAT group is not limited;

3) a registered taxable person may not be concurrently a participant of another VAT group;

4) a VAT group may be formed, if the total value of taxable supply of goods and services of at least one participant of the VAT group is at least EUR 350 000 during the previous 12 calendar months until the month when a submission for registration of a VAT group is submitted;

5) participants of a VAT group may be:

a) capital companies which are in one group of companies (in conformity with the Group of Companies Law),

b) a branch of a foreign merchant (legal person) in the Republic of Latvia, if such foreign merchant is in the composition of the same group of companies in which contains the other participants of the VAT group in conformity with the Group of Companies Law;

6) an agreement on establishing a VAT group has been entered into between the participants of the VAT group in which the principal undertaking is indicated;

7) the participants of the VAT group are accessible at their legal address.

(2) Participants of a VAT group shall use their registration number of the State Revenue Service Value Added Tax Taxable Persons Register in all transactions with persons other than participants of such VAT group. The registration number issued to the VAT group shall be used only for the needs of drawing up a tax return of the VAT group and for payment of tax.

[19 September 2013; 23 November 2016]

Section 65. Conditions for Registration of a Fiscal Representative with the State Revenue Service Value Added Tax Taxable Persons Register

(1) A registered taxable person shall be registered with the State Revenue Service Value Added Tax Taxable Persons Register as a fiscal representative, issuing a separate registration number of the fiscal representative with the State Revenue Service Value Added Tax Taxable Persons Register (hereinafter - the registration number of a fiscal representative), if he conforms to all of the conditions provided hereinafter:

1) counting from the day when the relevant registered taxable person has submitted a submission for registration with the State Revenue Service of Value Added Tax Taxable Persons, he has registered economic activity inland more than two years ago and has conducted economic activity continuously since the day of registration;

2) on the day when the relevant registered taxable person has submitted a submission for registration with the State Revenue Service Value Added Tax Taxable Persons Register he has no tax debts or the time limits for the relevant payments have been extended (deferred, divided) in accordance with the procedures laid down in the laws and regulations regarding taxes and duties and such person fulfils his debt obligations;

3) a natural person or a person entitled to represent a legal person has no criminal proceedings in respect of fraud, falsification of documents, tax evasion and similar non-payment or criminal offences which may affect the determination of the amount of a tax liability;

4) the relevant registered taxable person submits tax returns and informative declarations to the State Revenue Service within the time limits laid down in the laws and regulations governing the field of taxes and submits the requested additional information within the time limit laid down by the State Revenue Service in writing, necessary for determination of the tax amount payable into the State budget or the tax overpayment;

5) the relevant registered taxable person is accessible at his legal address or declared place of residence;

6) the relevant registered taxable person submits any of the following confirmations for covering of the possible tax debt:

a) a confirmation issued by a bank on the fact that monetary accumulation has been established in a deposit account for activities of a fiscal representative for the covering of the possible tax debt; such accumulation on the day of registration of a fiscal representative is EUR 14 200 and during activities of a fiscal representative - in amount of at least 20 per cent of the average total value of taxable transactions determined in tax returns of a fiscal representative for the previous three taxation periods, however not less than EUR 14 200. A fiscal representative shall ascertain after the end of each taxation period and ensure that the accumulated amount conforms to the conditions of this Sub-clause;

b) a confirmation issued by the bank or insurance company attesting that the relevant institution will provide guarantee of not less than EUR 285 000 necessary for the operation of a fiscal representative for covering of the possible tax debt. A fiscal representative shall ascertain after the end of each taxation period that the amount of the possible tax debt is not more than the amount of the guarantee referred to in this Sub-clause. If the amount of the guarantee is not sufficient in order to cover the possible tax debt, the fiscal representative shall ensure the increase thereof;

7) the relevant registered taxable person is a registered client in the Electronic Declaration System of the State Revenue Service.

(2) A registered taxable person shall be registered with the State Revenue Service Value Added Tax Taxable Persons Register as a fiscal representative on the basis of a submission for registration to be submitted to the State Revenue Service. If the submission for registration is signed by an authorised person, he shall submit a power of attorney concurrently with such submission. The submission may also be submitted electronically by using a secure electronic signature or the Electronic Declaration System of the State Revenue Service.

(3) The Cabinet shall determine:

1) a sample form for a submission for registration of a registered taxable person as a fiscal representative with the State Revenue Service Value Added Tax Taxable Persons Register, the procedures for completing, signing and submitting of the form;

2) the conditions and procedures for the covering of a possible tax debt in the deposit account of monetary accumulation indicated in the confirmation issued by the bank or insurance company or for the reduction of the amount of the guarantee provided and granting of exemption from submitting of such confirmation;

3) duties of a fiscal representative in respect of covering a possible tax debt in the deposit account of monetary accumulation indicated in the confirmation issued by the bank or insurance company or in respect of conformity with the amount of a guarantee provided.

[19 September 2013; 23 November 2016]

Section 66. General Procedure for Registration with the State Revenue Service Value Added Tax Taxable Persons Register

(1) A non-registered taxable person, taxable person of another Member State or taxable person of a third country or third territory shall be registered with the State Revenue Service Value Added Tax Taxable Persons Register on the basis of a submission for registration to be submitted to the State Revenue Service. If the submission for registration is signed by an authorised person, he shall submit a power of attorney concurrently with such submission. The submission may also be submitted electronically by using a secure electronic signature or the Electronic Declaration System of the State Revenue Service.

(2) The submission for registration referred to in Paragraph one of this Section may be submitted to the Enterprise Register concurrently with the application for entering of a merchant in the Commercial Register.

(3) The State Revenue Service shall take a decision to register a taxable person (including a VAT group and a fiscal representative, as well as to add a new participant to the VAT group) with the State Revenue Service Value Added Tax Taxable Persons Register or a decision to refuse registration within five working days after receipt of a submission for registration. If the court has proclaimed insolvency proceedings for a taxable person - legal person - and it has been excluded from the State Revenue Service Value Added Tax Taxable Persons Register until proclaiming insolvency proceedings on the basis of any of the conditions referred to in Section 73, Paragraph one, Clause 1, 4, 5, 6, 11 or 12, or Paragraph three of this Law, registration with the State Revenue Service Value Added Tax Taxable Persons Register shall not be refused.

(4) If the State Revenue Service after receipt of a submission for registration has requested information from a taxable person on his material, technical and financial possibilities to conduct the declared economic activity, the State Revenue Service shall take a decision to register the taxable person with the State Revenue Service Value Added Tax Taxable Persons Register or a decision to refuse to register within five working days after receipt of the requested information.

(5) A decision to register a person (except a VAT group) with the State Revenue Service Value Added Tax Taxable Persons Register shall be notified on the website of the State Revenue Service, the Electronic Declaration System of the State Revenue Service, if the person is a user of such system, or by post. The person shall indicate in the submission on his registration with the State Revenue Service Value Added Tax Taxable Persons Register how he wishes to receive the decision taken by the State Revenue Service.

(6) A decision to register a VAT group with the State Revenue Service Value Added Tax Taxable Persons Register or a decision to add a new participant to the VAT group shall be notified by post.

(7) If a decision has been taken in accordance with Paragraph three of this Section to refuse to register with the State Revenue Service Value Added Tax Taxable Persons Register, the State Revenue Service shall send it by post to a person or principal undertaking of the VAT group within five working days, indicating the reasons for refusal.

(8) The Cabinet shall determine sample forms of submissions for registration of the non-registered taxable persons referred to in Paragraph one of this Section, taxable persons of another Member State or taxable persons of third country or third territory, the procedures for the completing, signing and submitting thereof.

[12 June 2014; 17 December 2015]

Section 67. Time of Registration with the State Revenue Service Value Added Tax Taxable Persons Register

(1) If the State Revenue Service notifies on the website thereof on the fact that a decision has been taken to register a taxable person with the State Revenue Service Value Added Tax Taxable Persons Register, a taxable person (except a VAT group) shall be deemed as registered with the State Revenue Service Value Added Tax Taxable Persons Register starting from the next day after notification of such decision.

(2) If the State Revenue Service notifies by post on the fact that a decision has been taken to register a taxable person with the State Revenue Service Value Added Tax Taxable Persons Register, a taxable person (except a VAT group) shall be deemed as registered with the State Revenue Service Value Added Tax Taxable Persons Register starting from the seventh day after delivering of such decision to the post office.

(21) If the State Revenue Service notifies on the fact that a decision has been taken to register a taxable person with the State Revenue Service Value Added Tax Taxable Persons Register by posting the decision in the Electronic Declaration System of the State Revenue Service, a taxable person (except a VAT group) shall be deemed registered with the State Revenue Service Value Added Tax Taxable Persons Register starting from the second working day after posting the decision in the Electronic Declaration System of the State Revenue Service.

(3) A VAT group shall be deemed as registered with the State Revenue Service Register of Value Added Tax Register and a new participant shall be deemed as added to a VAT group starting from the first date of the next taxation period after the State Revenue Service has taken the relevant decision.

(4) The State Revenue Service shall post information on registration with the State Revenue Service Value Added Tax Taxable Persons Register, except information on registration of a VAT group or on adding of a new participant to a VAT group, on the website thereof within one working day after taking of a decision to register.

[12 June 2014]

Section 68. Registration of a New Participant in a VAT Group and Exclusion of a Participant from a VAT Group

(1) When adding a new participant to a VAT group, the principal undertaking of the VAT group shall submit a submission to the State Revenue Service, which is signed by the principal undertaking and the registered taxable person to be added to the VAT group, concurrently submitting an accordingly amended agreement on the establishment of a VAT group.

(2) The State Revenue Service shall take a decision to refuse to add a new participant to a VAT group, if the new participant fails to conform to the conditions of Section 64 of this Law.

(3) A participant is entitled to withdraw from a VAT group not earlier than 12 calendar months after adding thereof to the VAT group, except the cases when he no longer conforms to the conditions of Section 64 of this Law.

(4) For a participant to withdraw from a VAT group the principal undertaking shall submit a submission to the State Revenue Service regarding exclusion of a participant from the VAT group, which is signed by the principal undertaking and the participant of the VAT group to be excluded, concurrently submitting an accordingly amended agreement on the establishment of a VAT group.

(5) If a participant no longer conforms to the conditions of Section 64 of this Law, the principal undertaking shall submit a submission on exclusion of the abovementioned participant from a VAT group and an accordingly amended agreement on the establishment of a VAT group within two months from the day when the abovementioned participant no longer conforms to the conditions of Section 64 of this Law.

(6) For a principal undertaking to withdraw from a VAT group it shall submit a submission to the State Revenue Service regarding exclusion thereof from the VAT group, which is signed by the principal undertaking and the participant of the VAT group which will henceforward be the principal undertaking, concurrently submitting an accordingly amended agreement on the establishment of a VAT group. The participant, which will henceforward be the principal undertaking, shall be the successor of commitments and responsibilities in respect of commitments and responsibilities of the VAT group in relation to the State Revenue Service.

(7) A participant of a VAT group shall be deemed as excluded from the VAT group starting from the first date of the next taxation period after the State Revenue Service has taken a decision to exclude the participant from the VAT group.

Section 69. Refusal to Register a Taxable Person with the State Revenue Service Value Added Tax Taxable Persons Register

(1) The State Revenue Service shall take a decision to refuse to register an inland taxable person with the State Revenue Service Value Added Tax Taxable Persons Register (except a VAT group), if at least one of the following conditions exists:

1) the taxable person is not accessible at the legal address indicated by him or at the address of his declared place of residence or in fact such address does not exist;

2) the taxable person does not provide information upon request of the State Revenue Service or provides unjustified or false information regarding material, technical and financial possibilities thereof to conduct the declared economic activity;

3) economic activity of the taxable person has been suspended in accordance with the law On Taxes and Duties;

4) the address of the taxable person conforms to the conditions of risk address in conformity with the law On Taxes and Duties;

5) the taxable person or its official, proctor or authorised person, if the abovementioned persons are residents of the Republic of Latvia, has no address of the declared place of residence in Latvia;

6) an official of the legal person - the taxable person, or the taxable person - natural person has been included in the list of persons of risk in accordance with the law On Taxes and Duties;

7) activities of the taxable person - merchant have been suspended on the basis of his or her decision in accordance with the Commercial Law.

(2) The State Revenue shall take a decision to refuse to register a taxable person of another Member State or a taxable person of a third country or third territory with the State Revenue Service Value Added Tax Taxable Persons Register, if he has not provided all required information in the submission for registration or has not submitted all documents to be appended to the submission.

(3) The State Revenue Service shall take a decision to refuse to register a taxable person of another Member State or a taxable person of a third country or third territory with the State Revenue Service Value Added Tax Taxable Persons Register, if an authorised person of the taxable person of another Member State or of the taxable person of a third country or third territory has not provided all information on the person represented by him, or has not submitted all documents to be appended to the submission.

(4) The State Revenue Service shall take a decision to refuse to register a VAT group with the State Revenue Service Value Added Tax Taxable Persons Register, if the VAT group does not conform to the conditions of Section 64 of this Law.

(5) A taxable person who has received a decision of the State Revenue Service to refuse to register with the State Revenue Service Value Added Tax Taxable Persons Register, has the right to eliminate the reasons for refusal of registration referred to in Paragraph one of this Section - to adjust the submission for registration referred to in Section 66, Paragraph one of this Law and to submit it repeatedly to the State Revenue Service.

[17 December 2015]

Section 70. Repeat Registration with the State Revenue Service Value Added Tax Taxable Persons Register

(1) A taxable person who has been excluded from the State Revenue Service Value Added Tax Taxable Persons Register in accordance with Section 73, Paragraph one, Clause 4, 5, 6 or 11, or Paragraph three of this Law, shall be registered repeatedly with the State Revenue Service Value Added Tax Taxable Persons Register in accordance with the procedures laid down in Section 66 of this Law after fulfilment of the conditions of Section 104, Paragraph three of this Law and after:

1) submitting of the tax returns not submitted in time and payment of the tax amount payable into the State budget included in those tax returns, late payment charge, as well as fines calculated for failure to submit tax returns in time;

2) correction of false information provided in the tax return determined during tax review carried out by the State Revenue Service and payment of the tax amount payable into the State budget and late payment charge;

3) submission of the information requested by the State Revenue Service (documents supporting business revenues and expenditures, accounting records, and also other information describing the activities which affected or could have affected the assessment and payment of tax);

4) adjustment of information regarding the legal address or the declared place of residence;

5) a decision of the State Revenue Service to renew economic activity of a taxable person;

6) a decision of the State Revenue Service to exclude an official of the legal person - the taxable person, or the taxable person - natural person from the list of persons of risk in accordance with the law On Taxes and Duties;

7) replacement of an official of the legal person - the taxable person, or the taxable person - natural person who has been included in the list of persons of risk in accordance with the law on Taxes and Duties with an official who has not been included in the said list of persons of risk;

8) submission of complete and justified information regarding material, technical and financial possibilities of a registered taxable person to conduct economic activity.

(2) If a taxable person - legal person - for which insolvency proceedings have been proclaimed has been excluded from the State Revenue Service Value Added Tax Taxable Persons Register until proclaiming insolvency proceedings on the basis of any of the conditions referred to in Section 73, Paragraph one, Clause 4, 5, 6 or 11, or Paragraph three of this Law, this taxable person shall be registered repeatedly with the State Revenue Service Value Added Tax Taxable Persons Register in accordance with the procedures laid down in Section 66 of this Law also if the conditions referred to in Paragraph one of this Section have not been met.

[12 June 2014; 17 December 2015]

Section 71. Repeat Registration of a Fiscal Representative with the State Revenue Service Value Added Tax Taxable Persons Register

(1) A fiscal representative shall be registered repeatedly with the State Revenue Service Value Added Tax Taxable Persons Register, if:

1) a registered taxable person who wishes to register as a fiscal representative conforms to Section 65, Paragraph one, Clauses 2 and 3 of this Law;

2) a fiscal representative who has been excluded from the State Revenue Service Value Added Tax Taxable Persons Register in accordance with Section 73, Paragraph one, Clause 5 or 6 of this Law has fulfilled the commitments referred to in Section 70 of this Law;

3) any of the confirmations provided for in Section 65, Paragraph one, Clause 6 of this Law is provided for activities of a fiscal representative;

4) the relevant person does not have any tax debts for the previous taxation periods on the day when a submission for registration of a fiscal representative with the State Revenue Service Value Added Tax Taxable Persons Register is submitted to the State Revenue Service.

(2) If until the day when a fiscal representative is excluded from the State Revenue Service Value Added Tax Taxable Persons Register he has been excluded from such register twice already in accordance with Section 73, Paragraph one, Clause 10 or Section 83, Paragraph two, the fiscal representative shall be registered repeatedly with the State Revenue Service Value Added Tax Taxable Persons Register not earlier than a year after the last exclusion.

Section 72. Extending of the Term of Registration with the State Revenue Service Value Added Tax Taxable Persons Register

(1) If a taxable person who has been registered for a definite term in accordance with Section 55, Paragraph two of this Law wishes to extend the term of registration with the State Revenue Service Value Added Tax Taxable Persons Register, he shall submit the submission for registration referred to in Section 66, Paragraph one of this Law not later than within 15 working days before expiry of the term of registration.

(2) The Cabinet shall determine the procedures for extending the term of registration referred to in Paragraph one of this Section with the State Revenue Service Value Added Tax Taxable Persons Register.

Chapter IX
Exclusion of a Registered Taxable Person from the State Revenue Service Value Added Tax Taxable Persons Register

Section 73. General Cases for Exclusion of a Registered Taxable Person from the State Revenue Service Value Added Tax Taxable Persons Register

(1) The State Revenue Service shall exclude a registered taxable person from the State Revenue Service Value Added Tax Taxable Persons Register, if at least one of the following conditions sets in:

1) a registered taxable person (except a VAT group) submits a justified submission to the State Revenue Service on his exclusion from the State Revenue Service Value Added Tax Taxable Persons Register;

2) a registered taxable person has been liquidated or ceases to exist as a result of reorganisation;

3) a natural person who is a registered taxable person is deceased;

4) economic activity of a registered taxable person has been suspended in accordance with the law On Taxes and Duties;

5) at least one of the following conditions sets in during the time period of activity of a registered taxable person:

a) tax return has not been submitted within 30 days after the time limit for submission of a tax return laid down in this Law;

b) false information has been provided in the tax return;

c) the requested information has not been submitted within the time limit specified by the State Revenue Service in its written request (documents supporting business revenues and expenditures, accounting records, and also other information describing the activities which affected or could have affected the assessment and payment of tax);

d) a registered taxable person has provided unjustified or false information regarding his or her material, technical and financial possibilities to conduct economic activity;

6) a registered taxable person (except a taxable person of another Member State and a taxable person of a third country or third territory) is not accessible at his legal address or at the address of his declared place of residence or in fact such address does not exist;

7) a registered taxable person, which is a State or local government institution or local government, submits a justified submission to the State Revenue Service on exclusion thereof from the State Revenue Service Value Added Tax Taxable Persons Register in which it notifies that it does not intend to receive any further construction services and carry out taxable transactions due to which it should be registered with the State Revenue Service Value Added Tax Taxable Persons Register in accordance with this Law;

8) a VAT group submits a submission to the State Revenue Service on exclusion thereof from the State Revenue Service Value Added Tax Taxable Persons Register and 12 calendar months have elapsed from the day of registration of the VAT group;

9) a VAT group does not conform to the conditions of Section 64 of this Law;

10) at least one of the following conditions sets in during the time period of activity of a fiscal representative:

a) the fiscal representative fails to conform to the conditions of Paragraph one, Clause 5 or 6 of this Section;

b) on the fifth day of the current month the fiscal representative has tax debt to the State budget which is larger than the amount of accumulation or guarantee referred to in Section 65, Paragraph one, Clause 6 of this Law and the time limit for payment of tax has not been extended (deferred, divided) in accordance with the procedures laid down in the laws and regulations regarding taxes and duties;

c) a natural person or a person entitled to represent a legal person has a criminal record for fraud, falsification of documents, tax evasion and similar non-payment or criminal offences which may affect the determination of the amount of a tax liability;

11) material, technical and financial possibilities of a registered taxable person fail to comply with any of the types of his or her economic activity;

12) activities of a registered taxable person - merchant have been suspended on the basis of his or her decision in accordance with the Commercial Law.

(2) A registered taxable person, which is a State or local government institution or local government and which is planning to receive henceforward only the construction services referred to in Section 142, Paragraph four of this Law and not to carry out taxable transactions because of which it should be registered with the State Revenue Service Value Added Tax Taxable Persons Register in accordance with this Law, is entitled to notify the State Revenue Service that starting from the next taxation period the registration number with the State Revenue Service Value Added Tax Taxable Persons Register will be used only in order to receive the construction services referred to in Section 142, Paragraph four of this Law.

(3) The State Revenue Service has the right to exclude a registered taxable person from the State Revenue Service Value Added Tax Taxable Persons Register; if an official of a legal person - registered taxable person, or a registered taxable person - natural person has been included in the list of persons of risk in accordance with the law On Taxes and Duties.

[6 November 2013; 17 December 2015 / See Paragraph 26 of Transitional Provisions]

Section 74. General Procedure for Exclusion of a Registered Taxable Person from the State Revenue Service Value Added Tax Taxable Persons Register and Time of Exclusion

(1) If a registered taxable person (except a VAT group) submits a justified submission to the State Revenue Service on exclusion thereof from the State Revenue Service Value Added Tax Taxable Persons Register, the State Revenue Service shall examine such submission and within 10 working days after receipt of the submission at the State Revenue Service take a decision to exclude the registered taxable person from the State Revenue Service Value Added Tax Taxable Persons Register or a decision to refuse to exclude the registered taxable person from the State Revenue Service Value Added Tax Taxable Persons Register.

(2) A registered taxable person (except a VAT group) shall be deemed excluded from the State Revenue Service Value Added Tax Taxable Persons Register on the seventh day after a decision to exclude a registered taxable person from the State Revenue Service Value Added Tax Taxable Persons Register has been delivered to the post office, or if the registered taxable person is a user of the Electronic Declaration System of the State Revenue Service - on the second working day after the decision has been posted in the abovementioned system, unless it has been otherwise laid down in this Section. If a decision to exclude a registered taxable person from the State Revenue Service of Value Added Tax Taxable Persons is contested or appealed, it shall not suspend the operation of such decision.

(3) A registered taxable person (except a VAT group), the economic activity of which has been suspended in accordance with the law On Taxes and Duties, shall be deemed as excluded from the State Revenue Service Value Added Tax Taxable Persons Register on the day when a decision to suspend economic activity of the taxable person was taken.

(4) A registered taxable person, which is registered with the State Revenue Service Value Added Tax Taxable Persons Register for a definite term indicated in the submission for registration referred to in Section 66, Paragraph one of this Law, shall be deemed as excluded from the State Revenue Service Value Added Tax Taxable Persons Register starting from the next day after expiry of such time period.

(5) The State Revenue Service shall post the information on exclusion of a registered taxable person from the State Revenue Service Value Added Tax Taxable Persons Register on the website thereof within one working day after:

1) a decision to exclude the taxable person from the State Revenue Service Value Added Tax Taxable Persons Register is delivered to the post office or posted in the Electronic Declaration System of the State Revenue Service;

2) information regarding liquidation or reorganisation of the relevant taxable person has been received from the Enterprise Register, if the registered taxable person has been liquidated or reorganised.

[12 June 2014]

Section 75. Exclusion of a Registered Taxable Person from the State Revenue Service Value Added Tax Taxable Persons Register and Time of Exclusion, if the Registered Taxable Person has been Liquidated or Ceases to Exist as a Result of Reorganisation

(1) If a registered taxable person has been liquidated or ceases to exist as a result of reorganisation, the State Revenue Service shall exclude the relevant registered taxable person from the State Revenue Service Value Added Tax Taxable Persons Register within one working day after receipt of the information on excluding him from the Enterprise Register.

(2) A registered taxable person shall be deemed as excluded from the State Revenue Service Value Added Tax Taxable Persons Register on the day when liquidation thereof has been completed, or on the day when the registered taxable person ceases to exist as a result of reorganisation.

Section 76. Exclusion of a Deceased Natural Person - Registered Taxable Person - from the State Revenue Service Value Added Tax Taxable Persons Register and Time of Exclusion

(1) A natural person who is a registered taxable person and who is deceased shall be excluded from the State Revenue Service Value Added Tax Taxable Persons Register on the basis of a decision of the State Revenue Service not earlier than 60 days after the death of the natural person.

(2) The person referred to in Paragraph one of this Section shall not be excluded from the State Revenue Service Value Added Tax Taxable Persons Register, if an heir or a trustee assigned by the court for the management of estate, whereof the State Revenue Service has been informed within 60 days after the death of the natural person, continues to conduct economic activity instead of the estate-leaver until the time when right of inheritance of lawful heirs enters into effect.

(3) A natural person who is a registered taxable person and who is deceased shall be deemed as excluded from the State Revenue Service Value Added Tax Taxable Persons Register on the basis of a submission of the lawful heir on exclusion of such taxable person from the State Revenue Service Value Added Tax Taxable Persons Register on the day when the right of inheritance of lawful heirs has entered into effect or on the seventh day after a decision to exclude such taxable person from the State Revenue Service Value Added Tax Taxable Persons Register was taken.

(4) If the information is not received from an heir or a trustee assigned by the court for the management of inheritance, who in accordance with the procedures laid down in Paragraph two of this Section has informed the State Revenue Service that he continues conducting of economic activity instead of the estate-leaver, or from a lawful heir within nine months after the day of death of the natural person referred to in Paragraph three of this Section that a lawful heir has been appointed or the estate acceptance process is continued, the deceased person shall be excluded from the State Revenue Service Value Added Tax Taxable Persons Register on the seventh day after a decision to exclude the registered taxable person was taken.

Section 77. Exclusion of a Registered Taxable Person from the State Revenue Service Value Added Tax Taxable Persons Register and Time of Exclusion, if Reorganisation of the Registered Taxable Person has Occurred

If reorganisation of an registered taxable person has occurred and he continues to exist after reorganisation, the State Revenue Service within 10 working days after receipt of the justified submission of such registered taxable person on exclusion from the State Revenue Service Value Added Tax Taxable Persons Register shall assess the expected amount of taxable transactions and take a decision to exclude him from the State Revenue Service Value Added Tax Taxable Persons Register. If the expected amount of taxable transactions does not reach EUR 40 000, then on the basis of the justified submission received from the registered taxable person, he shall be excluded from the State Revenue Service Value Added Tax Taxable Persons Register.

[19 September 2013; 27 July 2017]

Section 78. Exclusion of a Registered Taxable Person from the State Revenue Service Value Added Tax Taxable Persons Register for Receipt of Construction Services and Time of Exclusion

(1) If a registered taxable person is a State or local government institution or local government, which has been registered with the State Revenue Service Value Added Tax Taxable Persons Register in accordance with Section 58 of this Law only to receive the construction services referred to in Section 142, Paragraph four of this Law, submits a justified submission to the State Revenue Service on exclusion thereof from the State Revenue Service Value Added Tax Taxable Persons Register, the State Revenue Service shall examine such submission and take a decision in accordance with Section 74, Paragraph one of this Law.

(2) In the case referred to in Paragraph one of this Section a State or local government institution or local government shall be deemed as excluded from the State Revenue Service Value Added Tax Taxable Persons Register in accordance with Section 74, Paragraph two of this Law.

Section 79. Exclusion from the State Revenue Service Value Added Tax Taxable Persons Register, if a Registered Taxable Person Fails to Submit a Tax Return or the Requested Information, or Provides False Information in a Tax Return or Unjustified or False Information Regarding His or Her Material, Technical and Financial Possibilities to Conduct Economic Activity

(1) If at least one of the conditions referred to in Section 73, Paragraph one, Clause 5, Sub-clauses "a", "c" or "d" of this Law sets in, the State Revenue Service shall send a written warning to a registered taxable person regarding his or her exclusion from the State Revenue Service Value Added Tax Taxable Persons Register.

(2) If within 12 working days after sending of the warning referred to in Paragraph one of this Section a registered taxable person fails to submit a tax return or the requested information, or provides unjustified or false information regarding his or her material, technical and financial possibilities to conduct economic activity, he or she shall be excluded from the State Revenue Service Value Added Tax Taxable Persons Register.

(3) If in tax review performed by the State Revenue Service it is determined that a registered taxable person has provided false information in a tax return, he or she shall be excluded from the State Revenue Service Value Added Tax Taxable Persons Register.

[17 December 2015]

Section 80. Exclusion from the State Revenue Service Value Added Tax Taxable Persons Register, if a Registered Taxable Person is not Accessible at the Indicated Legal address or Declared Place of Residence

(1) If during examination performed by the State Revenue Service it is determined that a registered taxable person is not accessible at the indicated legal address or declared place of residence, the State Revenue Service shall send a written warning to him on exclusion from the State Revenue Service Value Added Tax Taxable Persons Register. The time when accessibility of the registered taxable person at the legal address or declared place of residence will be verified repeatedly shall be indicated in the warning.

(2) If a registered taxable person is not accessible at the legal address or declared place of residence also during repeated examination, he shall be excluded from the State Revenue Service Value Added Tax Taxable Persons Register.

(3) If during examination performed by the State Revenue Service it is determined that the legal address or declared place of residence of a registered taxable person in fact does not exist, the registered taxable person shall be excluded from the State Revenue Service Value Added Tax Taxable Persons Register.

(4) The State Revenue Service has the right to exclude a registered taxable person from the State Revenue Service Value Added Tax Taxable Persons Register in accordance with Section 73, Paragraph one, Clause 6 of this Law:

1) without performing an examination, but sending a written warning on exclusion from the State Revenue Service Value Added Tax Taxable Persons Register, if the State Revenue Service has a written confirmation at the disposal thereof from the owner of the building or premises where the legal address of a taxable person (if the legal address was entered in the Commercial Register before 1 July 2011) or declared place of residence is registered on the fact that the particular taxable person in not located at such address;

2) without performing an examination and without sending a written warning on exclusion from the State Revenue Service Value Added Tax Taxable Persons Register, if a registered postal item sent to the legal address or to the address of declared place of residence of the taxable person is returned to the State Revenue Service with indication that the addressee is not located at such address.

Section 81. Exclusion from the State Revenue Service Value Added Tax Taxable Persons Register if Economic Activity of a Registered Taxable Person has been Suspended

In taking a decision to suspend economic activity of a registered taxable person in accordance with the law On Taxes and Duties, the State Revenue Service shall concurrently take a decision to exclude the registered taxable person from the State Revenue Service Value Added Tax Taxable Persons Register.

Section 82. Exclusion of a VAT Group from the State Revenue Service Value Added Tax Taxable Persons Register

(1) A VAT group shall be excluded from the State Revenue Service Value Added Tax Taxable Persons Register in accordance with the procedures referred to in Section 79 of this Law.

(2) If a participant of a VAT group is liquidated and within two months from the day of liquidating a participant of a VAT group the principal undertaking has not submitted a submission to the State Revenue Service on exclusion of the participant of the VAT group from the VAT group and an accordingly amended agreement on the establishment of a VAT group, the State Revenue Service shall exclude the VAT group from the State Revenue Service Value Added Tax Taxable Persons Register.

(3) If during an examination performed by the State Revenue Service it is determined that a participant of a VAT group is not accessible at the indicated legal address, the State Revenue Service shall send a warning to the principal undertaking and the relevant participant of the VAT group on exclusion of the VAT group from the State Revenue Service Value Added Tax Taxable Persons Register. The time when accessibility of the participant of the VAT group at the legal address will be verified repeatedly shall be indicated in the warning.

(4) If a participant of a VAT group is not accessible at the legal address also during repeated examination, the State Revenue Service shall exclude the VAT group from the State Revenue Service Value Added Tax Taxable Persons Register.

(5) If during examination performed by the State Revenue Service it is determined that the legal address indicated by a participant of a VAT group in fact does not exist, the State Revenue Service shall exclude the VAT group from the State Revenue Service Value Added Tax Taxable Persons Register.

(6) If a participant of a VAT group fails to comply with the conditions of Section 64 of this Law and the principal undertaking fails to fulfil the commitments laid down in Section 68, Paragraph five of this Law, the State Revenue Service shall exclude the VAT group from the State Revenue Service Value Added Tax Taxable Persons Register.

(7) If a participant of a VAT group is excluded from the State Revenue Service Value Added Tax Taxable Persons Register in accordance with Section 73, Paragraph one, Clause 4, the State Revenue Service shall concurrently take a decision to exclude the participant of the VAT group from the VAT group and also inform the principal undertaking thereof. Within two months after the day of excluding the participant of the VAT group from the State Revenue Service Value Added Tax Taxable Persons Register, the principal undertaking or the participant of the VAT group who will be the principal undertaking henceforward, shall submit an amended agreement on the establishment of a VAT group. If the principal undertaking fails to fulfil the commitments laid down in this Paragraph, the State Revenue Service shall take a decision to exclude the VAT group from the State Revenue Service Value Added Tax Taxable Persons Register.

(8) A VAT group shall be deemed as excluded from the State Revenue Service Value Added Tax Taxable Persons Register from the first date of the next taxation period after the State Revenue Service has taken a decision to exclude the VAT group from the State Revenue Service Value Added Tax Taxable Persons Register.

Section 83. Exclusion of a Fiscal Representative from the State Revenue Service Value Added Tax Taxable Persons Register

(1) A fiscal representative shall be excluded from the State Revenue Service Value Added Tax Taxable Persons Register in accordance with the procedures referred to in Sections 79 and 80 of this Law.

(2) The State Revenue Service, when excluding a taxable person which has also been issued a registration number of fiscal representative from the State Revenue Service Value Added Tax Taxable Persons Register, shall also exclude the fiscal representative.

(3) If the State Revenue Service determines that a fiscal representative has the debt referred to in Section 73, Paragraph one, Clause 10, Sub-clause "b" of this Law, the State Revenue Service shall send a written warning to the fiscal representative regarding his exclusion from the State Revenue Service Value Added Tax Taxable Persons Register.

(4) If within 10 working days after sending of the written warning referred to in Paragraph three of this Section a fiscal representative fails to pay the relevant debt, the fiscal representative shall be excluded from the State Revenue Service Value Added Tax Taxable Persons Register.

(5) If a fiscal representative is a legal person and the State Revenue Service determines that in respect of the person having the right of representation of such legal person the circumstance referred to in Section 73, Paragraph one, Clause 10, Sub-clause "c" of this Law sets in, the State Revenue Service shall send a written warning to the fiscal representative regarding his exclusion from the State Revenue Service Value Added Tax Taxable Persons Register.

(6) If within 30 days after sending of the warning referred to in Paragraph five of this Section a fiscal representative fails to rectify the circumstance referred to in Section 73, Paragraph one, Clause 10, Sub-clause "c" of this Law, the fiscal representative shall be excluded from the State Revenue Service Value Added Tax Taxable Persons Register.

(7) If a fiscal representative is a natural person who is the only person having the right of representation, and the State Revenue Service determines that in respect of such person the circumstance referred to in Section 73, Paragraph one, Clause 10, Sub-clause "c" of this Law sets in, the State Revenue Service shall exclude the fiscal representative from the State Revenue Service Value Added Tax Taxable Persons Register.

Section 83.1 Exclusion from the State Revenue Service Value Added Tax Taxable Persons Register, if Material, Technical and Financial Possibilities of a Registered Taxable Person Fail to Comply with Any of the Types of His or Her Economic Activity

If the State Revenue Service establishes during implementation of tax control and administration measures that material, technical and financial possibilities of a registered taxable person fail to comply with any of the types of his or her economic activity, the State Revenue Service shall take a decision to exclude the registered taxable person from the State Revenue Service Value Added Tax Taxable Persons Register.

[17 December 2015]

Section 83.2 Exclusion from the State Revenue Service Value Added Tax Taxable Persons Register, if Activities of a Registered Taxable Person - Merchant Have Been Suspended on the Basis of His or Her Decision in Accordance with the Commercial Law

If a registered taxable person - merchant has taken a decision to suspend merchant activity in accordance with the Commercial Law, the State Revenue Service shall, within five working days after receipt of the information from the Commercial Register regarding suspension of activities of the relevant registered taxable person - merchant, takes a decision to exclude the registered taxable person from the State Revenue Service Value Added Tax Taxable Persons Register.

[17 December 2015]

Section 83.3 Exclusion from the State Revenue Service Value Added Tax Taxable Persons Register; if an Official of a Legal Person - a Registered Taxable Person, or a Registered Taxable Person - a Natural Person Has Been Included in the List of Persons of Risk

(1) If the State Revenue Service establishes that an official of a legal person - a registered taxable person, or a registered taxable person - a natural person has been included in the list of persons of risk in accordance with the law On Taxes and Duties, the State Revenue Service shall assess whether an official of a legal person - a registered taxable person, or a registered taxable person - a natural person has carried out any activities resulting in losing the grounds for inclusion of this person in the list of persons of risk.

(2) On the basis of the conducted assessment referred to in Paragraph one of this Section the State Revenue Service has the right to take a decision to exclude a registered taxable person from the State Revenue Service Value Added Tax Taxable Persons Register.

[17 December 2015]

Chapter X
Tax to be Paid into the State Budget and Persons Paying Tax

Section 84. General Provisions for the Payment of Tax and for the Determining of Persons Paying Tax

(1) Tax shall be paid into the State budget by every taxable person which is registered or which in accordance with this Law must be registered with the State Revenue Service Value Added Tax Taxable Persons Register and which carries out taxable transactions which are taxable inland, unless laid down otherwise in this Law.

(2) Tax for the supply of goods or services, except the cases referred to in Section 43, Paragraphs four and six of this Law, shall be paid into the State budget also in the case when payment for goods or services has been performed before the supply of goods or services.

(3) Tax for the supply of such goods which are assembled or installed shall be paid into the State budget also in the case if the consideration for the transaction has been received before the supply of goods and assembly or installation thereof.

(4) Tax for the services supplied and supplies of goods provided in accordance with the procedures referred to in Sections 141, 142, 143, 143.1, 143.2, 143.3, 143.4 and 143.5 of this Law shall be paid into the State budget by the recipient of services or goods, if he or she is a registered taxable person.

(5) If a taxable person of another Member State or a taxable person of a third country or third territory in accordance with Section 55, Paragraph one of this Law has not been registered with the State Revenue Service Value Added Tax Taxable Persons Register, tax for the received service shall be calculated and paid into the State budget by the recipient of the service, if he is a registered taxable person.

(6) Tax for taxable transactions (advance payments received) carried out inland shall be paid into the State budget also by taxable persons of another Member State and taxable persons of third countries or third territories which are registered or which in accordance with this Law must be registered with the State Revenue Service Value Added Tax Taxable Persons Register, except the cases when the tax for the supply of goods or services is paid into the State budget by the recipient of goods or services.

(7) If a taxable person of another Member State or a taxable person of a third country or third territory supplying goods or services inland, the place of supply of which is determined in accordance with Section 19, Paragraph one of this Law, is a fixed establishment inland participating in the supply of such goods or services, the tax for the supply of such goods or services shall be paid into the State budget by the fixed establishment of the relevant person.

(8) A registered taxable person which is a State or local government institution or a local government, which in accordance with Section 58 of this Law has been registered with the State Revenue Service Value Added Tax Taxable Persons Register for the receipt of the construction services referred to in Section 142, Paragraph four of this Law, has the right not to pay tax into the State Budget for other taxable transactions to which tax is applied inland in accordance with the law, if he exercises the right laid down in Section 59 of this Law.

(9) Tax shall be paid into the State budget in the cases laid down in Sections 85, 87, 88 and 89 of this Law also by non-registered taxable persons.

(10) Tax shall be paid into the State budget by every person who has indicated the tax in the tax invoice issued thereby.

(11) If the total value of taxable supply of goods and services carried out by a non-registered taxable person during the previous 12 months has exceeded EUR 40 000, he shall pay the tax into the State budget which is calculated in accordance with Section 34, Paragraph ten of this Law.

[19 September 2013; 6 November 2013; 30 November 2015; 16 June 2016; 23 November 2016; 27 July 2017]

Section 85. Persons Paying Tax into the State Budget for Importation of Goods

(1) Any person shall pay the tax into the State budget for the importation of goods, unless laid down otherwise in this Law.

(2) If in performing the importation of goods in accordance with the laws and regulations in the field of customs the customs debt is to be ensured by the customs guarantee, a person responsible for payment of the customs debt who, however, has not obtained an authorisation to apply special tax arrangement for transactions of importation of goods, shall submit a guarantee for the tax debt.

(3) In performing importation of goods, special tax arrangement for transactions of importation of goods shall not be applied by:

1) a registered taxable person, if he carries out importation of goods within the framework of his economic activity and has received an authorisation from the State Revenue Service;

2) a fiscal representative, if he carries out importation of goods, representing a registered taxable person of another Member State or a registered taxable person of a third country or third territory, and he has received an authorisation from the State Revenue Service.

(4) The State Revenue Service on the basis of a submission of a registered taxable person shall grant the authorisation referred to in Paragraph three of this Section to the registered taxable person, if he conforms to all the conditions referred to in this Paragraph:

1) he has registered economic activity inland;

2) he is a registered client of the Electronic Declaration System of the State Revenue Service;

3) on the day of submitting the submission he does not have any tax debts for the preceding taxation periods, or he pays tax debts within five working days after submitting of the submission;

4) the employees thereof having the right to sign have no criminal record of offences against the economy;

5) he in the previous 12 months, within the time limits laid down in the laws and regulations regarding this tax provides informative declarations and within the time limit laid down by the State Revenue Service, provides additional information that is necessary for the determination of the tax amount payable into the State budget or the tax overpayment.

(5) A registered taxable person is entitled to apply special tax arrangement for transactions of importation of goods for the importation of fixed assets without the authorisation referred to in Paragraph three of this Section, provided that the conditions referred to in this Paragraph are complied with:

1) a registered taxable person imports a fixed asset which is intended to be used for the provision of taxable transactions fully or partially at least within 12 calendar months from the time when importation of fixed assets is carried out;

2) the value of a fixed asset (without tax) reaches or exceeds EUR 700;

3) a registered taxable person has no tax debts for the preceding taxation periods.

(6) In applying Paragraph five, Clause 1 of this Section, a passenger car shall also be deemed a fixed asset, if it is imported by a registered taxable person the basic activity of which is driver skills training, provision of taxi services, provision of lease services of passenger cars, transactions of supply of passenger cars or hire purchase transactions.

(7) If a registered taxable person when importing goods uses customs services supplied by another person, such person has the right to apply the special tax arrangement for transactions of importation of goods, if the authorisation referred to in Paragraph three of this Section on behalf of the registered taxable person has been received.

(8) The Cabinet shall determine:

1) the conditions under which the authorisations referred to in Paragraph three of this Section are issued, suspended and cancelled, the procedures for issuing, suspending and cancellation of such authorisations, and the procedures for submitting and examination of the submission for the receipt of such authorisation;

2) the types of the tax debt guarantee referred to in Paragraph two of this Section, the procedures for the submitting, accepting, application, determination of the amount, recording and extinguishing, as well as the requirements according to which a person is exempted from submitting the debt guarantee;

3) documents confirming payment of the tax into the State budget in transactions of importation of goods.

[19 September 2013; 6 November 2013; 23 November 2016; 20 April 2017]

Section 86. Persons Paying Tax into the State Budget for Acquisition of Goods in the Territory of the European Union

(1) If a registered taxable person or fiscal representative carries out inland acquisition of goods in the territory of the European Union, he shall calculate and pay the tax into the State budget by applying corresponding tax rate to such transaction in accordance with Section 41, Paragraph one, Clause 1 or 2 of this Law.

(2) If the total value without tax of the acquisition of goods in the territory of the European Union by a non-registered taxable person has exceeded the registration threshold laid down in Section 57, Paragraph one of this Law, he shall calculate and pay the tax into the State budget for the acquisition of goods in the territory of the European Union for the value which exceeds the registration threshold laid down in Section 57, Paragraph one of this Law.

(3) If a taxable person of another Member State or a taxable person of a third country or third territory carries out inland acquisition of goods in the territory of the European Union, he shall calculate the tax and pay it into the State budget, except the transactions referred to in Section 54 of this Law.

(4) If a taxable person of another Member State or a taxable person of a third country or third territory in accordance with Section 55, Paragraph one of this Law has not been registered with the State Revenue Service Value Added Tax Taxable Persons Register, tax for the acquisition of goods shall be calculated and paid into the State budget by the recipient of goods, if he is a registered taxable person.

(5) The conditions of Paragraph one of this Section shall not apply to the acquisition of goods in the territory of the European Union carried out by a taxable person, if the zero per cent tax rate would be applicable inland for such supply of goods in accordance with Sections 43, 47, 48 and 50 of this Law.

(6) If a registered taxable person or fiscal representative carries out inland acquisition of goods in the territory of the European Union from a non-registered taxable person of another Member State, tax for the acquisition of goods in the territory of the European Union need not be calculated and paid into the State budget.

(7) The conditions of Paragraph six of this Section shall not be applicable to the acquisition of a new means of transport.

(8) If the supplier of goods is a registered taxable person of another Member State who is not registered with the State Revenue Service Value Added Tax Taxable Persons Register, has issued a tax invoice and applies tax for transactions in accordance with the conditions of Section 54, Paragraph three of this Law, the registered taxable person shall calculate the tax and pay it into the State budget for the acquisition of goods in the territory of the European Union.

(9) If a taxable person of another Member State, when carrying out inland acquisition of goods in the territory of the European Union, supplies the stocks of production goods or stocks of wholesale goods and in accordance with Section 61, Paragraph four of this Law fails to register with the State Revenue Service Value Added Tax Taxable Persons Register, tax for the acquisition of such goods in the territory of the European Union shall be calculated and paid by the recipient of goods. The recipient of goods shall ensure detailed separate accounting records of the goods received.

[6 November 2013; 19 February 2015]

Section 87. Persons Paying Tax into the State Budget for Acquisition of a New Means of Transport in the Territory of the European Union

Any person including a non-registered taxable person or a non-taxable person, in acquiring a new means of transport from any person of another Member State, shall pay tax into the State budget.

Section 88. Persons Paying Tax into the State Budget for the Services Supplied by a Taxable Person of Another Member State

(1) For the services the place of supply of which is determined in accordance with Section 19, Paragraph one of this Law and which are received from a taxable person of another Member State, tax shall be calculated and paid into the State budget by the recipient of services who is a taxable person.

(2) For the services referred to in Section 20, Paragraph one and Section 25 of this Law the place of supply of which in accordance with this Law is inland and which have been received from a taxable person of another Member State who is not conducting economic activity inland, tax shall be calculated and paid into the State budget by the recipient of services, if he is a registered taxable person.

(3) For the services referred to in Section 20, Paragraph two and Section 25 of this Law, the place of supply of which in accordance with this Law is inland, tax shall be paid by the supplier of services, if the recipient of such services is a non-registered taxable person or a person who is not a taxable person.

Section 89. Persons Paying Tax into the State Budget for the Services Supplied by a Taxable Person of a Third Country or Third Territory

(1) For the services the place of supply of which is determined in accordance with Section 19, Paragraph one of this Law and which are received from a taxable person of a third country or third territory, the tax shall be calculated and paid into the State budget by a recipient of services who is a taxable person.

(2) For the services referred to in Section 20, Paragraph one and Section 25 of this Law the place of supply of which in accordance with this Law is inland and which are received from a taxable person of a third country or third territory who is not conducting economic activity inland, tax shall be calculated and paid into the State budget by a recipient of services, if he is a registered taxable person.

(3) For the services referred to in Section 20, Paragraph two and Section 25 of this Law, the place of supply of which in accordance with this Law is inland, tax shall be paid by the supplier of services, if the recipient of such services is a non-registered taxable person or a person who is not a taxable person.

(4) If a taxable person receives the services indicated in Section 30, Paragraph one of this Law from a taxable person of a third country or third territory, he shall calculate the tax for such services and pay it into the State budget.

(5) Paragraph four of this Section shall not be applicable to the services referred to in Section 30, Paragraph one, Clause 9 of this Law to which exemption from tax is applied in accordance with Section 52, Paragraph one, Clauses 20 and 21 of this Law.

Section 90. Tax Payable into the State Budget upon Adjusting the Taxable Value of Goods for Deposit Packaging not Returned

A registered taxable person who applies a deposit system to reusable packaging in accordance with the laws and regulations in the field of packaging, upon submitting a return for the taxation year, shall adjust the taxable value of the goods supplied for the value of deposit packaging not returned in the previous year and pay the tax amount calculated from such value into the State budget.

Section 91. Persons Paying Tax into the State Budget in Other Cases

(1) If a taxable person of another Member State supplies goods from another Member State to inland and assembles or installs them inland, tax shall be paid into the State budget by:

1) the recipient of goods, if he is a registered taxable person;

2) a taxable person of another Member State, if the recipient of goods is a non-registered taxable person or a non-taxable person.

(2) If a registered taxable person of another Member State or a taxable person of a third country or third territory supplies gas, using the natural gas system which is located in the territory of the European Union, or networks which are connected to such system, as well as supplies electricity, thermal energy or cooling energy which is ensured through thermal energy or cooling energy networks, and in accordance with the conditions of Section 15 of this Law the place of supply of goods is inland, tax shall be paid into the State budget by:

1) the recipient of gas, electricity, thermal energy or cooling energy, if he is a registered taxable person;

2) a taxable person of another Member State or a taxable person of a third country or third territory, if the recipient of gas, electricity, thermal energy or cooling energy is a non-registered taxable person or a non-taxable person.

(3) A registered taxable person, which is a State or local government institution or a local government, which in accordance with Section 58 of this Law is registered with the State Revenue Service Value Added Tax Taxable Persons Register for receipt of the construction services referred to in Section 142, Paragraph four of this Law, for other taxable transactions in respect of which tax is applied in accordance with the Law, shall pay tax into the State budget if he selects not to exercise or is not entitled to exercise the right laid down in Section 59 of this Law upon prior notification thereof to the State Revenue Service.

[6 November 2013]

Chapter XI
Deduction of Input Tax from the Tax Amount Payable into the State Budget and Adjustment of Input Tax

Section 92. General Provisions for Deduction of Input Tax

(1) If the goods are acquired and services are received for ensuring of taxable transactions or for ensuring of such transactions carried out in other countries which should be taxable, if they would be carried out inland, the input tax shall be:

1) the tax amounts indicated in tax invoices received from other registered taxable persons for the goods acquired and services received;

2) the tax amount paid for the importation of goods;

3) the tax amount calculated in accordance with a special tax arrangement for transactions of importation of goods in conformity with a customs declaration;

4) the calculated tax amount which is to be paid by a registered taxable person in the taxation period as a recipient of service;

5) the calculated tax amount from the acquisition of goods in the territory of the European Union;

6) the calculated tax amount for the goods acquired in accordance with Sections 141, 142, 143, 143.1, 143.2, 143.3, 143.4 and 143.5 of this Law;

7) the calculated tax amount for the services received in accordance with Sections 141, 142, 143 and 143.4 of this Law;

8) the calculated or paid tax amounts for the goods acquired which have been issued as small value gifts or samples of goods.

(2) The input tax is also such tax amounts laid down in Paragraph one of this Section for the goods supplied and services received for ensuring of the services referred to:

1) in Section 52, Paragraph one, Clauses 20 and 21 of this Law, if the recipient of services is a person of a third country or third territory;

2) in Section 52, Paragraph one, Clauses 20 and 21 of this Law, if the transactions carried out are directly related to exportation of goods.

(3) A registered taxable person has the right to deduct a compensation disbursed to the farmer as the input tax from the tax amount payable into the State budget in accordance with Section 135 of this Law.

(31) A registered taxable person has the right to deduct as the input tax from the tax amount payable into the State budget the tax amount, which is indicated in such invoice for the supply of water, thermal energy, electricity or gas or for the services of sewerage or household waste removal:

1) which is issued by a person, which ensures the administration of buildings and which is operating as an intermediary between the actual supplier of such goods or services and the recipient of such goods and services, shall receive consideration from the recipient of such goods or services for the goods and services and tax to be transferred in full amount to the actual supplier of goods or services;

2) in which the name of the actual supplier of goods or services, registration number in the State Revenue Service Value Added Tax Taxable Persons Register, the date and number of the invoice, the value of goods or services and the tax amount is indicated separately.

(4) A registered taxable person has the right to deduct the input tax from the tax amount payable into the State budget, unless laid down otherwise in this Law.

(5) The input tax shall be deducted by indicating the amount of input tax in a tax return and reducing the tax amount payable into the State budget for such value.

(6) A registered taxable person, in performing input tax deductions, has an obligation to ascertain whether the registered taxable person has submitted a tax invoice. Such information may be obtained from the State Revenue Service or in the database of taxable persons which is publicly accessible on the Internet.

(7) In order to implement the right of deduction of input tax, a registered taxable person has an obligation to retain the received tax invoice for the transaction carried out and the invoice referred to in Paragraph 3.1 of this Section.

(8) Adjustment of input tax shall be carried out in the cases laid down in this Chapter.

[6 November 2013; 30 November 2015; 16 June 2016; 23 November 2016; 27 July 2017]

Section 93. Right to Deduct the Input Tax for Goods Acquired, Services Received and Goods Imported Prior to Registration with the State Revenue Service Value Added Tax Taxable Persons Register

(1) A taxable person, also a taxable person of another Member State and a taxable person of a third country or third territory after registration with the State Revenue Service Value Added Tax Taxable Persons Register has the right to deduct the input tax calculated in accordance with Section 92 of this Law from the tax amount payable into the State budget for goods and services acquired or received by such person prior to registration with the State Revenue Service Value Added Tax Taxable Persons Register.

(2) Paragraph one of this Section shall not be applicable to the acquisition of passenger cars, except cases when a passenger car is used or it will be used for ensuring of such taxable transactions as driver skills training, provision of taxi services, provision of lease services of passenger cars, transactions of supply of passenger cars or hire purchase transactions.

(3) Paragraph one of this Section shall not be applicable to administrative expenses (including lease of office premises, office maintenance services, electronic communications services, purchase of fuel, lease services of vehicles), which have incurred prior to registration of a person with the State Revenue Service Value Added Tax Taxable Persons Register.

(4) The right referred to in Paragraph one of this Section shall not be applicable to:

1) goods that have been acquired more than 12 months before the day when a taxable person is deemed as registered with the State Revenue Service Value Added Tax Taxable Persons Register;

2) services that have been received more than three months before the day when a taxable person is deemed as registered with the State Revenue Service Value Added Tax Taxable Persons Register.

(5) The deductible input tax referred to in Paragraph one of this Section shall not be applicable to:

1) goods recorded in stocks, also to the goods manufactured by a taxable person himself on the basis of the inventory results on the day when the taxable person is deemed as registered with the State Revenue Service Value Added Tax Taxable Persons Register;

2) fixed assets according to the balance value thereof on the day when a taxable person is deemed as registered with the State Revenue Service Value Added Tax Taxable Persons Register, on the basis of the list approved by an authorised person of the taxable person;

3) goods and services which a taxable person has used for fixed assets manufactured or built by himself, if they are not accepted for service - the amount of deductible input tax is to be formed by expenses directly related to the establishment of fixed assets for the received goods and services on the basis of the list approved by an authorised person of the taxable person;

4) services on the basis of the list approved by an authorised person of the taxable person.

(6) When applying Paragraph five of this Section, a natural person (registered taxable person) who is conducting economic activity and is a personal income taxpayer, who is earning income from his economic activity, in acquiring a fixed asset, shall determine the amount of deductible input tax by drawing up a statement indicating the planned proportion of use of the fixed asset for ensuring of such transactions which give the right to deduct input tax, and for ensuring of such transactions which do not give the right to deduct input tax.

(7) After registration with the State Revenue Service Value Added Tax Taxable Persons Register a taxable person shall submit the first tax return and concurrently also the documents therewith substantiating the deductible input tax in Paragraph five of this Section.

Section 94. Deduction of Input Tax in Transactions of a VAT Group

(1) Goods and services, which the participants of a VAT group acquire or receive for ensuring of the economic activity from the persons who are not participants to a VAT group, shall be deemed as acquired or received for the needs of the VAT group, and the tax, which is indicated in tax invoices received for the abovementioned goods and services for ensuring of taxable transactions, shall be deemed as input tax of the VAT group.

(2) If participants to a VAT group carry out taxable transactions and non-taxable transactions, the VAT group in accordance with the procedures laid down in Section 98, Paragraph one of this Law shall ensure a separate or partially separate record-keeping of those goods and services which are used for the performance of taxable or non-taxable transactions and the input tax shall be deducted in accordance with the procedures for record-keeping and deduction of input tax developed by the VAT group and approved by the participants of the VAT group.

(3) If a VAT group cannot ensure a separate or partially separate record-keeping for the acquired goods and received services in respect of which the VAT group, the participants of which carry out taxable and non-taxable transactions, in accordance with the procedures laid down in Section 98, Paragraph two of this Law, the input tax in a tax return submitted by the principal undertaking shall be deducted in conformity with the proportion of the VAT group or at the level of each participant - in conformity with the actual use proportion of each participant, unless it is otherwise provided for in this Section.

(4) Tax for the acquired goods and received services for ensuring of such transactions which are carried out between participants of a VAT group shall be deductible as input tax in accordance with the procedures laid down in Paragraph two or three of this Section, if transactions mutually carried out by the participants of the VAT group, in which the abovementioned goods and services are used directly or indirectly, are ended by a taxable transaction.

(5) A VAT group shall perform deduction of input tax in accordance with the procedures laid down in this Section by taking into account the transactions carried out by all participants of the VAT group.

(6) A VAT group shall take over the commitments of performance of adjustments from the day of registration thereof or from the day of adding a new participant, if an immovable property registered or to be registered with the State Revenue Service in accordance with the procedures laid down in Section 99 of this Law is in the ownership of its participant, and continue performing adjustments of input tax in conformity with the procedures for record-keeping and deduction of input tax developed by the VAT group and approved by the participants of the VAT group.

(7) A VAT group shall take over the commitments of performance of adjustments from the day of registration thereof or from the day of adding a new participant, if a fixed asset the acquisition or manufacture value (without tax) of which reaches or exceeds EUR 70 000 is in the ownership of its participant, and continue performing adjustments of input tax in conformity with the procedures for record-keeping and deduction of input tax developed by the VAT group and approved by the participants of the VAT group.

[19 September 2013; 23 November 2016]

Section 95. Deduction of Input Tax for a Fiscal Representative

(1) A registered taxable person which has also been issued a registration number of a fiscal representative shall deduct the tax indicated in the received tax invoices for the goods and services for ensuring of activities of the fiscal representative as input tax in a tax return. The abovementioned deductions shall not be performed in the tax return of a fiscal representative.

(2) A fiscal representative shall indicate the following as input tax in his tax declaration:

1) the tax amount calculated for imported goods in accordance with a special tax arrangement for transactions of importation of goods in conformity with a customs declaration;

2) the tax amount calculated, if he carries out inland acquisition of goods in the territory of the European Union, representing a taxable person of another Member State or a taxable person of a third country or third territory.

[19 February 2015]

Section 96. Deduction of Input Tax for a Natural Person who is a Registered Taxable Person

(1) Input tax for a natural person who is a registered taxable person shall be formed by the tax amount referred to in Section 92, Paragraph one of this Law for the acquired goods and received services only in such amount in which the received goods and services according to their economic nature are related to ensuring of taxable transactions carried out within the framework of economic activity of the abovementioned person, including tax amounts for:

1) the received transport services, vehicle repair, technical maintenance services and purchased fuel - in proportion to ratio of kilometres driven in a taxation period for ensuring of taxable transactions within the framework of economic activity;

2) the electronic communications services received for ensuring of taxable transactions within the framework of economic activity - in conformity with the itemised list of printout of the supplier of electronic communications services for a taxation period or in proportion to the ratio of the services used for ensuring taxable transactions performed within the scope of economic activity in the total amount of services received;

3) the phone subscription fee - in proportion to the ratio of conversations made for ensuring of taxable transactions within the framework of economic activity in the total sum for conversations.

(2) In order to deduct input tax, a natural person who is a registered taxable person shall comply with the conditions of Sections 98 and 100 of this Law.

[6 November 2013]

Section 97. Time of Deducting Input Tax

(1) Input tax for the received goods or services, except the services received from taxable persons of another Member State or taxable persons of third countries or third territories the place of supply of which is determined in accordance with Section 19, Paragraph one of this Law, shall be deducted from the tax amount payable into the State budget in such taxation period when the goods or services were received and tax invoice was received or consideration for the supply of goods or services has been paid prior to the receipt of goods or services, but not later than the next taxation period following this taxation period, unless laid down otherwise in this Law.

(2) It is allowed to deduct the input tax for the acquisition of goods in the territory of the European Union when the tax for the acquisition of goods in the territory of the European Union is included in a tax return in accordance with Section 121, Paragraph one of this Law.

(3) If a registered taxable person receives a tax invoice from another registered taxable person with a notation "cash accounting", the input tax for the received goods or services shall be deducted from the tax amount to be paid into the State budget not earlier than in the taxation period in which such registered taxable person has paid the tax amount indicated in the received tax invoice.

(4) Input tax for the received service, in respect of which a recipient of service pays tax into the State budget in accordance with Sections 141, 142, 143 and 143.4 of this Law shall be deductible from the tax amount to be paid into the State budget in the taxation period when the service is received and tax invoice is received or an advance payment is made for such service in accordance with the invoice.

(5) Input tax for the goods acquired in accordance with Sections 141, 142, 143, 143.1, 143.2, 143.3, 143.4 and 143.5 of this Law shall be deductible from the tax amount to be paid into the State budget in the taxation period when the goods are received and tax invoice is received or an advance payment is made for such goods in accordance with the invoice.

(6) Input tax for the services received from taxable persons of another Member State or taxable persons of third countries or third territories, the place of supply of which is determined in accordance with Section 19, Paragraph one of this Law, shall be deducted from the tax amount to be paid into the State budget after receipt of such services or when it is paid in advance for such service in accordance with the invoice.

(7) Input tax for importation of goods shall be deducted in the taxation period when importation of goods is performed.

(8) If tax for the imported goods is paid in advance, such tax amount paid in advance shall be deducted as input tax in the tax return of such taxation period when the advance payment was made.

(9) The tax paid in accordance with the procedures referred to in Section 124, Paragraph one of this Law shall be deductible from the tax amount to be paid into the State budget in the taxation period in which the tax is paid into the State budget.

(10) The tax paid in accordance with the procedures referred to in Section 124, Paragraph two of this Law shall be deductible from the tax amount to be paid into the State budget in the taxation period in which the goods are dispatched or the supply of a service is commenced.

(11) The right of deducting input tax referred to in Section 93, Paragraph one of this Law shall be implemented in the taxation period in which the first tax return is submitted after registration with the State Revenue Service Value Added Tax Taxable Persons Register.

(12) At an auction organised by a bailiff or administrator of insolvency proceedings the tax amount indicated in the tax invoice for the acquisition of property shall be deducted as an input tax after:

1) the time limit for appeal of the calculation drawn up by the bailiff or administrator of insolvency proceedings has expired and such calculation is not appealed or, if such calculation is appealed, when a court ruling on the drawn up calculation has entered into effect;

2) tax invoice is received from the bailiff or administrator of insolvency proceedings.

[30 November 2015; 16 June 2016; 23 November 2016; 20 April 2017; 27 July 2017]

Section 98. Proportion for the Calculation of Deductible Part of Input Tax

(1) A registered taxable person for the needs of deduction of input tax shall ensure a separate record-keeping of the goods and services which are used only for ensuring of such transactions which give the right to deduct input tax or only for ensuring of such transactions which do not give the right to deduct input tax.

(2) If the goods acquired and services received are used for ensuring of the transactions which give the right to deduct input tax and also for ensuring of the transactions which do not give the right to deduct input tax and it is not possible to ensure a separate record-keeping thereof in accordance with the procedures laid down in Paragraph one of this Section because the use of resources of a registered taxable person would be disproportionate in respect of ensuring further more detailed cost allocation, the registered taxable person shall calculate the amount of input tax to be deducted in a taxation period by using the following proportion:

1) as numerator - the value of such transactions without tax carried out in a taxation period which give the right to deduct input tax;

2) as denominator - the total value of the transactions without tax carried out in a taxation period (the value of transactions included in the numerator which give the right to deduct input tax and the value of such transactions which do not give the right to deduct input tax).

(3) The value of imported goods, the value of the acquisition of goods in the territory of the European Union and the value of such goods and services, in respect of which a registered taxable person pays tax as the recipient of such goods and services, shall not be included in the numerator of the proportion laid down in Paragraph two of this Section.

(4) A registered taxable person has the right not to include the value of financial service or transaction with immovable property in the proportion referred to in Paragraph two of this Section, if atypical financial service has been provided or atypical transaction with immovable property has been carried out, such transaction is of incidental nature and it clearly differs from the type of economic activity conducted by the registered taxable person.

(5) If the value of taxable transactions carried out by a registered taxable person in a pre-taxation year is less than five per cent of the total value of transactions and he applies Section 117, Paragraph three of this Law, he shall deduct the input tax for the goods acquired and services received for the calculation of tax for the performance of taxable transactions in accordance with Paragraph one of this Section.

(6) If a registered taxable person uses the goods acquired and services received for both ensuring of the transactions which give the right to deduct input tax and for ensuring of the transactions which do not give the right to deduct input tax, and it is not possible to ensure a separate record-keeping thereof, as well as the value of the transactions carried out by the registered taxable person which give the right to deduct input tax is more than 95 per cent of the value of total transactions in a taxation period, he has the right to deduct tax for the goods acquired and services received in full amount, not applying the proportion laid down in Paragraph two of this Section.

(7) Prior to submitting an annual return a registered taxable person who uses the procedures laid down in Paragraphs two and six of this Section for the deduction of input tax in a taxation period, shall recalculate the proportion of transactions in general for the year and adjust the amount of deductible input tax and of tax to be paid into the State budget.

(8) Public persons registered with the State Revenue Service Value Added Tax Taxable Persons Register may deduct input tax, if a separate record-keeping of the goods and services used only for ensuring of such transactions which give the right to deduct input tax is ensured.

(9) The ratio referred to in Paragraph two of this Law for the calculation of the part of input tax to be deducted shall be determined each year in form of percentage, rounding it up to the number that does not exceed the next round number.

[6 November 2013]

Section 99. Deduction of Input Tax in Transactions with Immovable Property and Registration of Immovable Property

(1) A registered taxable person has the right to deduct input tax in accordance with the procedures laid down in this Section in respect of the following transactions with immovable property:

1) acquisition of unused immovable property;

2) acquisition of used immovable property, if tax has been applied for the sale of such immovable property in accordance with Section 144 of this Law;

3) construction, rebuilding, renewal or restoration of immovable property.

(2) If it is intended to use immovable property only for ensuring of such transactions which give the right to deduct input tax, a registered taxable person shall deduct the input tax in full amount in respect of the transactions referred to in Paragraph one of this Section.

(3) If it is intended to use the property only for economic activity, including for ensuring of the transactions which give the right to deduct input tax and for ensuring of the transactions which do not give the right to deduct input tax, a registered taxable person shall deduct tax for the transactions referred to in Paragraph one of this Section in conformity with the conditions referred to in Paragraph one or two of Section 98.

(4) If it is intended to use the immovable property for both, the needs of economic activity and other purposes which are not related to economic activity of a taxable person, a registered taxable person shall calculate input tax in accordance with Paragraph three of this Section for that part of immovable property which is intended for the use for the needs of economic activity.

(5) If it is intended to use immovable property only for such purposes which are not related to economic activity of a registered taxable person, tax shall not be deductible as input tax in respect of the transactions referred to in Paragraph one of this Section.

(6) The procedures laid down in this Section for deduction of input tax shall be applied also by the registered taxable person referred to in Section 142, Paragraph three of this Law in respect of construction services referred to in Section 142, Paragraph four of this Law, which he receives in accordance with the procurement procedure laid down in the Public Procurement Law or as a public partner in accordance with the Law on Public-Private Partnership.

(7) A registered taxable person shall register any immovable property referred to Paragraph one of this Section with the State Revenue Service, unless it is laid down otherwise in this Law.

(8) Immovable property shall be registered with the State Revenue Service also if it is initially intended to be used only for non-taxable transactions or for the purposes which are not related to economic activity of the taxable person and input tax is not deducted in respect of it. Such condition shall not be applicable to cases when immovable property is used only to fulfil the State administration functions or tasks.

(81) Immovable property, which is more than 99 per cent used for taxable transactions and which in accordance with laws and regulations should not be alienated and is necessary in order to provide regulated public services, need not be registered with the State Revenue Service in accordance with Paragraph seven of this Section, and a report on the use of immovable property in accordance with Paragraph nine of this Section need not be submitted.

(9) Registration of immovable property shall be carried out by submitting Section A of a report on the use of the immovable property together with a tax return regarding a taxation period in which it was acquired or accepted for service.

(10) In registering immovable property, the total tax amount for the acquisition of goods or receipt of services referred to in Paragraph one of this Section, as well as the deducted amount of input tax shall be indicated, indicating the proportions of the use of the immovable property in conformity with:

1) the needs of economic activity and other purposes which are not related to economic activity of the taxable person;

2) taxable and non-taxable transactions.

(11) The deducted input tax is input tax which has been deducted by a registered taxable person in conformity with the proportions of the use of immovable property referred to in Paragraphs two, three and four of this Section at the time when immovable property is registered with the State Revenue Service.

(12) The total amount of tax is to be formed by the amount of tax:

1) that is indicated in tax invoices received from another registered taxable person regarding the transactions referred to in Paragraph one of this Section;

2) that is calculated in accordance with Sections 141 and 142 of this Law;

3) that in accordance with this Law is calculated by a registered taxable person as recipient of goods or services;

4) that is calculated for importation of goods.

(13) A registered taxable person has the right to deduct input tax for unused immovable property which has been acquired before 1 October 2011, at the time when he sells such immovable property, if at the time of acquisition of immovable property the input tax was not deducted and the immovable property is sold as unused immovable property.

[6 November 2013; 20 April 2017]

Section 100. Restrictions for Deduction of Input Tax

(1) 60 per cent shall not be deductible from the tax as input tax from the tax amount to be paid into the State budget for the goods acquired and services received for the representation needs which are related to organising of public conferences, receptions and meals, as well as manufacture of items representing registered taxable persons.

(11)The following tax amount shall not be completely deducted as input tax from the tax amount to be paid into the State budget:

1) the acquisition, lease and importation of such passenger car, the number of seats in which, excluding the driver's seat, does not exceed eight seats, or the acquisition, lease and importation of such lorry with a weight of up to 3,000 kilograms which has been registered as a van and has more than three seats (including the driver's seat), if the value of the said cars corresponds to the value of representation car specified in the laws and regulations governing enterprise income tax;

2) the costs, which are related to the maintenance of the cars referred to in Clause 1 of this Paragraph (including costs for the repair of such cars and purchase of fuel).

(2) 50 per cent shall not be deductible from the tax as input tax from the tax amount to be paid into the State budget for an acquired, leased or imported passenger car the number of seats of which, not including the driver's seat, does not exceed eight seats and which is not any of the cars referred to in Paragraph 1.1, Clause 1 of this Section, as well as the costs related to the maintenance of such car, including expenses for repair of the car and purchase of fuel.

(3) Paragraphs 1.1 and two of this Section shall not apply to cases when:

1) a registered taxable person acquires, leases or imports a car for the performance of the following taxable transactions:

a) passenger transport operations for consideration, including for the supply of taxi services;

b) provision of lease services of cars;

c) sale of cars or hire purchase transactions;

d) provision of goods transport services;

e) driver skills training;

f) provision of security guard services;

2) a car is an emergency vehicle;

3) a car is used as a demonstration car of an authorised car dealer;

4) a car is used for ensuring taxable transactions.

(4) In order to prove conformity with the condition referred to in Paragraph three, Clause 4 of this Section, a registered taxable person shall keep the record-keeping of journeys related to the performance of economic activity by using a route control system - a device which detects signals emitted by satellites of the global positioning system (GPS) and determines coordinates of a car in real time and place. If the company car tax is to be paid for a car, then a registered taxable person shall keep the record-keeping of journeys related to the performance of economic activity in accordance with the laws and regulations governing company car tax and has also declared such car in the State register on the vehicles and the drivers thereof in accordance with the laws and regulations governing company car tax.

(5) Tax amount indicated in tax invoices shall be deductible as an input tax for the expenses of purchase of fuel for the cars referred to in Paragraph three of this Section on the basis of the number of kilometres actually driven and not exceeding the fuel consumption norm of a city cycle specified by a manufacturing plant by more than 20 per cent.

[6 November 2013; 30 November 2015; 23 November 2016]

Section 101. Adjustment of Input Tax in Transactions with Fixed Assets, Except Transactions with Immovable Property

(1) Conditions of this Section shall apply to fixed assets the acquisition or manufacture value of which without tax reaches or exceeds EUR 70 000, except transactions with immovable property.

(2) A registered taxable person shall make an adjustment of input tax in accordance with the procedures laid down in this Section in respect of the acquired or manufactured fixed asset referred to in Paragraph one of this Section for which input tax has been deducted in conformity with the requirements laid down in Section 98, Paragraph one or two of this Law.

(3) Adjustment period of input tax shall be five years including the year in which a fixed asset is acquired or manufactured.

(4) Adjustment of input tax shall be made by submitting an annual tax return for each taxation year starting from the acquisition or manufacture year of the fixed asset.

(5) Adjustment of input tax shall be carried out by calculating the difference between one fifth from the deducted input tax and input tax deductible in the relevant taxation year in conformity with the requirements laid down in Section 98, Paragraph one or two of this Law.

(6) Adjustment of input tax shall not be carried out, if the proportion of use of the fixed asset for transactions which give the right to deduct input tax and for transactions which do not give the right to deduct input tax has not changed in a taxation year.

(7) A registered taxable person shall ensure separate accounting of the deducted input tax for each fixed asset indicating the adjustment of the deducted input tax carried out in each taxation year.

[19 September 2013; 23 November 2016]

Section 102. Adjustment of Input Tax in Transactions with Immovable Property

(1) A registered taxable person within 10 years starting from the taxation year in which an immovable property is acquired or accepted for service and subsequent nine years until 1 May of the post-taxation year shall inform the State Revenue Service regarding the use of the immovable property in a taxation year in conformity with the proportions referred to in Section 99, Paragraphs two, three and four of this Law and the tax amount to be paid into the budget or to be refunded from the budget by submitting Section B of the report on the use of the immovable property together with an annual tax return.

(2) A registered taxable person shall carry out adjustment of input tax for each taxation year separately for each immovable property, calculating the difference between one tenth from the deducted input tax and input tax to be deducted in the relevant taxation year, in conformity with the use of the immovable property laid down in Section 99, Paragraphs two, three and four of this Law. The registered taxable person shall pay such difference into the State budget or receive it back from the State budget.

(3) Deductible input tax shall be input tax which is calculated by a registered taxable person for each taxation year by multiplying one tenth from the total tax amount by the proportion of the use of the immovable property intended for the needs of economic activity in respect of transactions which give the right to deduct input tax and transactions which do not give the right to deduct input tax in the relevant taxation year.

(4) If a registered taxable person sells unused immovable property, he shall not carry out adjustment of input tax and shall notify the State Revenue Service regarding exclusion of the immovable property from the register.

(5) If immovable property (or part thereof) other than unused immovable property is sold within 10 years, starting from a taxation year in which the immovable property was acquired or accepted for service, a registered taxable person shall:

1) notify the State Revenue Service regarding exclusion of the immovable property (or part thereof) from the register by submitting Section C of the report on the use of immovable property together with a tax return regarding the taxation period in which the immovable property was sold;

2) refund the amount of deducted input tax into the State budget, calculating it by multiplying one tenth from the deducted input tax by full number of years left from the year following the year of selling until the 10 years referred to in Paragraph one of this Section;

3) refund into the State budget the amount of deducted input tax regarding the year when the immovable property (or part thereof) was sold, calculating by multiplying one hundred-twentieth from the deducted input tax by full number of months left from the month following the month of selling until the end of the year;

4) carry out adjustment of input tax for the year of selling until the month in which the immovable property was sold;

5) include the amount of input tax to be refunded in the value of the immovable property, and the purchaser does not have the right to deduct it from the tax amount to be paid into the State budget;

6) if a part of the immovable property is sold, carrying out of adjustment of input tax shall be continued for the remaining part of the immovable property.

(6) If used immovable property or a part thereof is sold in accordance with Section 144 of this Law, a registered taxable person shall:

1) notify the State Revenue Service regarding exclusion of the immovable property (or part thereof) from the register by submitting Section C of the report on the use of immovable property together with a tax return regarding the taxation period in which the immovable property was sold;

2) carry out adjustment of input tax for the time period until the month in which the immovable property was sold;

3) if a part of the immovable property is sold, carrying out of adjustment of input tax shall be continued for the remaining part of the immovable property in conformity with the conditions of this Section;

4) if immovable property which in accordance with Section 99 of this Law is registered with the State Revenue Service and regarding which input tax has not been initially deducted fully or partially is sold within nine years after the taxation year in which it was acquired or accepted for service, and at the time of sale the tax is applied to supply of immovable property, a registered taxable person shall deduct the remaining amount of input tax not deducted from the month following the month of selling until the 10 years referred to in Paragraph one of this Section as it is laid down in Paragraph five, Clause 2 of this Section.

(7) If an immovable property or a part thereof within 10 years after acquisition or acceptance for service thereof has perished or has been destroyed due to a natural disaster or in another forced way and it has been proved by documentary means, a registered taxable person shall:

1) notify the State Revenue Service regarding exclusion of the immovable property or part thereof from the register by submitting Section C of the report on the use of immovable property together with a tax return regarding the taxation period in which the documents attesting the loss were drawn up on the abovementioned immovable property;

2) perform adjustment of input tax regarding a time period until the month in which the immovable property or part thereof was excluded from the register;

3) continue to perform adjustment of input tax regarding the remaining part of the immovable property, if a part of the immovable property has perished or has been destroyed due to a natural disaster or in another forced way.

(8) The adjustment of input tax laid down in this Section need not be carried out and Section B of the report on the use of immovable property or a part thereof need not be submitted together the annual tax return, if changes in the proportion referred to in Section 99, Paragraph ten, Clause 1 or 2 of this Law do not exceed one per cent.

(9) [6 November 2013]

(10) If a registered taxable person carries out new rebuilding, renewal or restoration for rebuilt, renewed or restored immovable property within 10 years, he or she shall submit a tax return for the taxation period in which such part of the immovable property was accepted for service and Section A of the report on the use of immovable property. Adjustment of the deducted input tax shall be performed irrespective of the previously performed input tax adjustment of the registered immovable property.

(11) If a registered taxable person demolishes the immovable property (or a part thereof) within 10 years after acquisition of the immovable property or acceptance for service thereof, he:

1) notify the State Revenue Service regarding exclusion of the immovable property (or part thereof) from the register by submitting Section C of the report on the use of immovable property together with a tax return regarding the taxation period in which the immovable property was demolished;

2) refund the amount of deducted input tax into the State budget, calculating it by multiplying one tenth from the deducted input tax by full number of years left from the year following the year of demolition until the 10 years referred to in Paragraph one of this Section;

3) refund into the State budget the amount of deducted input tax regarding the year of demolition of the immovable property (or part thereof), calculating it by multiplying one hundred-twentieth from the deducted input tax by full number of months left from the month following the month of selling until the end of the year;

4) carry out adjustment of input tax for the year of selling until the month in which the immovable property was demolished;

5) if a part of the immovable property is demolished, carrying out of adjustment of input tax shall be continued for the remaining part of the immovable property.

(12) Adjustment of the input tax in respect of the year of selling the immovable property (or a part thereof) or the year when the immovable property was demolished, perished or destroyed due to a natural disaster or in another forced way, or the documents were drawn up, which attest the transfer of the immovable property to the acquiring company, shall be included in Section C of the report on the use of the immovable property until the month in which the immovable property is excluded from the register.

(13) Adjustment of the input tax specified in this Section need not be performed and Section B of the report on the use of immovable property need not be submitted, if a registered taxable person has acquired a plot of land together with a building or structure for the purpose of demolishing such building or structure in order to build another building or structure in its place for the performance of taxable transactions.

[6 November 2013; 20 April 2017]

Section 103. Adjustment of Input Tax on Investments in Capital of a Commercial Company, as well as in Case of Transfer and Reorganisation of the Undertaking

(1) Adjustment of input tax shall be performed regarding property investments (including fixed asset, immovable property investments) in capital of a commercial company in exchange for certificates of securities and capital shares, unless it is otherwise laid down in this Section.

(2) If a registered taxable person performs property investment (including investing of fixed asset, except immovable property) into equity capital of another person and it is not intended to use the property investment for taxable transactions or the property investment is invested in equity capital of a non-registered taxable person, the part of the deducted input tax shall be refunded to the State budget and calculated as follows:

1) for fixed assets - from the remaining (undepreciated) value of the fixed asset recorded in the financial accounting of the registered taxable person;

2) for other property investment - the part of the deducted input tax for goods which were acquired for ensuring of one's own taxable transactions.

(21) A registered taxable person shall not refund the part of the deducted input tax into the State budget in accordance with the procedures laid down in Paragraph two of this Section, if it performs property investment (including investing of fixed asset, except immovable property) in the capital of the following commercial company:

1) in the capital of a newly founded commercial company, which registers with the State Revenue Service Value Added Tax Taxable Persons Register within 30 days after registration with the Commercial Register Office;

2) in the capital of the acquiring commercial company, which informs the State Revenue Service regarding changes in the composition of the property investment and regarding the relevant entry made in the Commercial Register Office, and it is intended to use the property investment for taxable transactions.

(3) If a registered taxable person invests the immovable property (or a part thereof) within 10 years after acquisition of the immovable property or acceptance for service thereof as a property investment in capital of a commercial company or transfers it to the acquiring company after reorganisation or transfer of the undertaking, he shall:

1) notify the State Revenue Service regarding exclusion of the immovable property or a part thereof from the register by submitting Section C of the report on the use of immovable property together with a tax return regarding the taxation period in which the investment was made or the fact of transfer of the immovable property was approved;

2) perform adjustment of the input tax for a time period until the month in which documents attesting the transfer of immovable property were drawn up;

3) terminate the performing of adjustment of input tax regarding the immovable property (or part thereof) starting from the next month following the month in which the documents attesting the transfer of immovable property were drawn up.

(4) Paragraph three of this Section shall be applicable if the immovable property as a property investment is invested in capital of a newly founded or acquiring commercial company and the newly founded commercial company within 30 days after making of the relevant entries in the Commercial Register Office submits a submission to the State Revenue Service for registration with the State Revenue Service Value Added Tax Taxable Persons Register and within 60 days after making of the relevant entries in the Commercial Register Office it is registered as a registered taxable person, but the acquiring commercial company (a registered taxable person) informs the State Revenue Service regarding changes in the composition of property investment. In such case the newly founded or acquiring commercial company shall re-register immovable property in conformity with Section 99, Paragraph seven of this Law and continue adjustment of input tax.

(5) If a newly founded or acquiring commercial company fails to meet the requirements referred to in Paragraph four of this Section, a registered taxable person who invests immovable property or a part thereof as property investment in commercial company capital shall refund into the State budget the amounts of deducted input tax, which are calculated:

1) by multiplying one tenth from the deducted input tax by full number of years left from the year following the year of drawing up of documents attesting the fact of performance of property investment until the 10 years referred to in Section 102, Paragraph one of this Law;

2) by multiplying one hundred-twentieth from the deducted input tax by full number of months left from the months following the months of drawing up of documents attesting the fact of performance of property investment until the end of the year.

(6) Adjustment of the input tax shall not be performed regarding transfer of an undertaking into the ownership or use of another registered taxable person, if within 30 days after the fact of the transfer of the undertaking the acquirer of the undertaking (successor in rights and obligations) who continues to conduct economic activity with the acquired undertaking informs the State Revenue Service thereof.

(7) If as a result of investment in the capital of a commercial company and transfer of an undertaking a newly founded or acquiring commercial company which is a registered taxable person acquires immovable property, it shall re-register such immovable property in the State Revenue Service on his behalf in conformity with Section 99, Paragraph seven of this Law and continue adjustment of input tax.

(8) If as a result of reorganisation a newly founded or acquiring commercial company which is a registered taxable person acquires immovable property, it shall on the basis of the information on the transferred immovable property which has been provided by a registered taxable person who transfers such immovable property and which is co-ordinated with the State Revenue Service, re-register such immovable property in the State Revenue Service on his behalf in conformity with Section 99, Paragraph seven of this Law and continue adjustment of input tax.

[6 November 2013 / See Paragraph 17 of Transitional Provisions]

Section 104. Adjustment of Input Tax by Excluding a Registered Taxable Person from the State Revenue Service Value Added Tax Taxable Persons Register

(1) If a taxable person has been excluded from the State Revenue Service Value Added Tax Taxable Persons Register in accordance with Section 73, Paragraph one, Clause 1, 2 or 12 of this Law, he shall, within 30 days after exclusion, pay into the State budget the tax which is calculated from the value of stocks and advance payments present in the accounting records on the day of exclusion, the balance value of fixed assets, the costs of establishment of fixed assets and unfinished construction objects on the day of exclusion regarding which tax has been deducted as input tax, by submitting a notification regarding payment of tax.

(2) If a taxable person has been excluded from the State Revenue Service Value Added Tax Taxable Persons Register in accordance with Section 73, Paragraph one, Clause 3 of this Law, his heir or trustee assigned by the court for the management of estate shall, within 30 days after exclusion, pay into the State budget the tax which is calculated from the value of stocks and advance payments present in the accounting records on the day of exclusion, the balance value of fixed assets, the costs of establishment of fixed assets and unfinished construction objects on the day of exclusion regarding which tax has been deducted as input tax, by submitting a notification regarding payment of tax.

(3) If a taxable person has been excluded from the State Revenue Service Value Added Tax Taxable Persons Register in accordance with Section 73, Paragraph one, Clause 4, 5, 6 or 11, or Paragraph three of this Law and has not been renewed or re-registered with the State Revenue Service Value Added Tax Taxable Persons Register, he shall within 90 days after his exclusion, by submitting a notification on payment of tax, pay into the State budget the tax calculated from the value of stocks and advance payments present in the accounting records on the day of exclusion, balance sheet value of fixed assets, costs of establishment of fixed assets and unfinished construction objects, regarding which tax has been deducted as input tax.

(4) A fiscal representative whom the State Revenue Service excludes from the State Revenue Service Value Added Tax Taxable Persons Register in accordance with Section 73, Paragraph one, Clause 10 or Section 83, Paragraph two of this Law and who has not been re-registered with such Register, shall calculate the tax for the imported goods and goods received from other Member States present in the accounting records on the day of exclusion and shall pay it into the State budget within 30 days after his exclusion.

[17 December 2015]

Section 105. Adjustment of Input Tax for Bad Debts

(1) If the value of bad debt of a supplier of goods or a service for one recipient of goods or services without tax is less than EUR 430, a registered taxable person has the right to reduce the amount paid into the State budget by the amount of the tax of bad debt, if all the conditions referred to in this Paragraph of Section are met:

1) an invoice or tax invoice has been issued for the goods or services supplied;

2) the debt has arisen during the last three taxation years;

3) tax has been calculated for the transaction performed and it is included in the tax return of the relevant taxation period;

4) the amount of the bad debt has been written off from the amount of special provision for bad doubtful debts or directly as losses (expenses) in the accounting of the registered taxable person in the current taxation period or in any of the previous taxation periods;

5) the recipient of goods or services and the supplier of goods or services are not mutually related persons within the meaning of the law On Taxes and Duties;

6) the supply of goods or services to the relevant recipient of goods or services has been interrupted at least before six months and has not been renewed;

7) a registered taxable person has not transferred (ceded) his right to claim to another person;

8) a registered taxable person can prove that he has taken measures for recovery of bad debt;

9) the supplier of goods or services has sent information to the recipient of goods or services, who is a registered taxable person or who was a registered taxable person at the time of supply of goods or services, by 1 March of the post-taxation year that the relevant debt is considered as bad debt within the meaning of this Law.

(2) The day of arising of a debt shall be the next day after the date when a recipient of goods and services had to pay to the supplier of goods or services, however, the payment was not made.

(21) the condition referred to in Paragraph one, Clause 2 of this Section sets in, if within three years since the emerging of the debt:

1) a statement of claim has been submitted to a court regarding the recovery of debt from the recipient of goods or services - with regard to the case referred to in Paragraph three of this Section;

2) the bankruptcy proceedings of the recipient of goods or services have been commenced - with regard to the case referred to in Paragraph four of this Section;

3) the insolvency proceedings of the recipient of goods or services have been commenced - with regard to the case referred to in Paragraph five of this Section.

(3) If the value of bad debt of the supplier of goods or services for one recipient of goods or services without tax has reached or exceeded EUR 430, a registered taxable person has the right to reduce the amount payable into the State budget by the amount of the tax for bad debt, if the conditions referred to in Paragraph one of this Section have been met and there is a court judgement on recovery of debt from the recipient of goods or services and a statement of a bailiff concerning the impossibility of the recovery.

(4) The supplier of goods or services has the right to reduce the amount of the tax payable into the State budget by half from the amount of the tax for bad debt, if the conditions of Paragraph one, Clauses 1, 2, 3, 4, 5, 7 and 8 of this Section have been met, the supply of goods or services has been discontinued and the bankruptcy procedure of the recipient of goods or services has been commenced. The supplier of goods or services shall reduce the amount of the tax payable into the State budget by the remaining amount of the tax for bad debt after insolvency proceedings due to completion of the bankruptcy procedure in relation to the recipient of goods or services have been terminated.

(5) If the conditions referred to in Paragraph one, Clauses 1, 2, 3, 4, 5, 7 and 8 of this Section have been met, the supply of goods or services has been discontinued, the supplier of goods or services has the right to reduce the amount of the tax payable into the State budget by the amount of the tax for bad debt which has been recognised in accordance with the Register of Creditors' Claims when the court has approved completion of the insolvency proceedings of the recipient of goods or services, or, if the recipient of goods or services is a natural person, - when the court has approved the completion of bankruptcy procedure.

(6) A supplier of goods or services shall, in applying Paragraphs one and three of this Section, include the amount of the tax for bad debt in the tax return for March of post-taxation year or for the first quarter of post-taxation year, additionally indicating the person whose debt is considered as bad debt within the meaning of this Law, and indicate the value of the debt and amount of tax.

(7) [23 November 2016].

(8) A recipient of goods or services who is a registered taxable person shall refund to the State budget the deducted amount of input tax for the unpaid bad debt after receipt of the information referred to in Paragraph one, Clause 9 of this Section, but not later than until 31 July of post-taxation year.

(9) A recipient of goods or services who is a registered taxable person shall pay into the State budget the tax amount referred to in Paragraph eight of this Section, indicating it in the tax return of the relevant taxation period.

(10) [23 November 2016].

(11) A recipient of goods or services who is excluded from the State Revenue Service Value Added Tax Taxable Persons Register shall refund to the State budget the deducted amount of input tax for the unpaid bad debt within the time limit laid down in Paragraph eight of this Section, submitting a notification regarding payment of the tax for bad debts and indicating in such notification the transactions, for which the tax is refunded.

(12) The State Revenue Service shall, within 30 days after receipt of the tax return referred to in Paragraph six of this Section, inform the recipient of goods or services who is a registered taxable person or was a registered taxable person at the time of supply of goods or receipt of services and who has not paid for the supplied goods or received services, regarding increase of the amount of tax to be paid into the State budget.

(13) If a bad debt has been recovered fully or partly after the adjustments provided for in this Section for the tax to be paid into the State budget have been performed, the supplier of goods or services shall calculate the tax for the recovered bad debt or part thereof and pay it into the State budget in that taxation period when the debt was paid.

(14) If the bad debt is paid to the supplier of goods or services, the recipient of goods or services has the right to deduct the input tax for the paid bad debt or part thereof in that taxation period when the payment was made.

[19 September 2013; 6 November 2013; 23 November 2016; 20 April 2017 / See Paragraph 27 of Transitional Provisions]

Section 106. Adjustment of Input Tax in Other Cases

(1) Adjustment of input tax shall be carried out if the amount of the deducted input tax changes (for example, cancelled purchases or discounts received).

(2) If goods are stolen or destroyed due to a natural disaster or in another forced way, adjustment of the input tax shall be carried out by paying the tax into the State budget which has been deducted as input tax.

(3) Adjustment of deducted input tax, if the goods have been stolen or destroyed due to a natural disaster or in another forced way, shall not be carried out, if the fact of destruction or theft has been proved by documentary means.

(4) In case of loss of goods the adjustment of deducted input tax shall be carried out, if the value of losses of goods exceeds the amount of losses planned in accordance with the laws and regulations regarding enterprise income tax and personal income tax.

[6 November 2013]

Section 107. Right of the Cabinet to Determine and Explain the Procedures for Deduction of Input Tax and Adjustment of Input Tax and the Documents or Information to be Submitted

The Cabinet:

1) explain the conditions for deduction of input tax and adjustment of input tax;

2) determine the documents which justify deduction of input tax;

3) lay down the procedures for deduction and adjustment of input tax, if a registered taxable person carries out hire purchase transactions with immovable property;

4) lay down the information to be submitted to the State Revenue Service which is submitted by a registered taxable person who as a result of reorganisation transfers immovable property to a newly founded or acquiring commercial company, concerning such transferred immovable property.

Chapter XII
Refund of Overpaid Tax from the State Budget

Section 108. General Provisions for Refund of Overpaid Tax from the State Budget

The amount of overpaid tax shall be the difference between the tax amount calculated for payment into the State budget and deductible input tax.

Section 109. Procedures for Refund of Overpaid Tax

(1) The State Revenue Service, upon carrying out tax administration measures, shall transfer the approved overpaid tax amount to the subsequent taxation period until the end of the taxation year, covering the tax amount to be paid into the State budget in subsequent taxation periods, within 30 days after:

1) the time limit for submitting the tax return laid down in Section 118 of this Law;

2) the day of submitting the tax return, if the tax return has been submitted after the time limit for submitting the tax return laid down in Section 118 of this Law;

3) the day of submitting the adjusted tax return, if an adjusted tax return has been submitted.

(2) If a registered taxable person has a debt of value added tax or other taxes, fees or a debt of other payments laid down by the State, the State Revenue Service shall direct the overpaid tax amount prior to the transfer thereof to the subsequent taxation period for the performance of the current tax payments and outstanding tax payments in accordance with the procedures laid down in the law On Taxes and Duties.

(3) If a registered taxable person, after directing of the overpaid tax amount referred to in Paragraph two of this Section, still has an overpaid tax amount, it shall be transferred to the subsequent taxation periods in conformity with that laid down in Paragraph one of this Section.

(4) The State Revenue Service shall refund the overpaid amount referred to in Paragraph three of this Section to the bank account indicated by the registered taxable person within 10 days after the State Revenue Service, in conformity with the time limit laid down in Paragraph one of this Section, has approved the overpaid tax amount for the taxation period declared in the last taxation period.

(5) The State Revenue Service shall refund the overpaid amount of tax, which has formed during the taxation period, to the bank account indicated by the registered taxable person, in conformity with the time limit laid down in Paragraph one of this Section, if any of the following conditions is implemented:

1) the amount of transactions of the registered taxable person, which are taxable at the zero per cent rate, and the amount of such transactions, the place of performance of which is not inland, is at least 90 per cent from the total value of taxable transactions;

2) the overpaid tax amount exceeds EUR 1500 and the amount of transactions of the registered taxable person, which are taxable at the zero per cent rate or reduced tax rate, or the amount of such transactions, the place of performance of which is not inland, is at least 20 per cent from the total value of taxable transactions;

3) the overpaid tax amount which has formed as fixed assets exceeds EUR 150, and the registered taxable person has requested refund of such overpaid tax amount;

4) the overpaid tax amount exceeds EUR 1500 and has formed in relation to the goods acquired and services received to ensure the transactions referred to in Sections 141, 142, 143, 143.1, 143.2, 143.3, 143.4 and 143.5 of this Law;

5) the overpaid tax amount exceeds EUR 5000.

(6) After exclusion of a registered taxable person from the State Revenue Service Value Added Tax Taxable Persons Register, the tax administration shall, within one month, direct the overpaid tax amount for covering of tax debts, debts of other taxes, fees or other payments laid down by the State.

(7) The overpaid tax amount shall be refunded to the person who has been excluded from the State Revenue Service Value Added Tax Taxable Persons Register, upon request thereof, but not later than four months after taking of the decision on exclusion thereof from the abovementioned Register, to the account indicated by the person, if there is still an overpaid tax amount after direction of the overpaid tax amount.

(8) If a person who has been excluded from the State Revenue Service Value Added Tax Taxable Persons Register has not submitted a request regarding refund of the overpaid tax amount within four months after taking of the decision on exclusion thereof from the abovementioned Register, the State Revenue Service shall extinguish it.

(9) The State Revenue Service shall refund the overpaid tax amount, which has arisen for the VAT group, to the principal undertaking.

[19 September 2013; 6 November 2013; 30 November 2015; 16 June 2016; 23 November 2016; 20 April 2017; 27 July 2017]

Section 110. Right of the State Revenue Service to Extend the Time Limit for Refund of Overpaid Tax

The State Revenue Service has the right to extend the time limit laid down in Section 109, Paragraph one of this Section, if:

1) a decision has been taken to commence a tax review (audit) in relation to those transactions, for examination of which additional information is necessary - until the date when the State Revenue Service will have evaluated the transaction and taken a decision on validity of the request;

2) a registered taxable person must adjust the input tax deducted for bad debts - until the date when such adjustment is performed;

3) a registered taxable person is unable to provide documentary evidence for the validity of the application of the zero per cent tax rate - until the date when the State Revenue Service will be able to ascertain the validity of the application of such rate;

4) the State Revenue Service has sent a notification on data compliance audit - until the day when the State Revenue Service will have taken a decision on validity of the request;

5) within the time limit laid down in Section 109, Paragraph one of this Law additional information has been requested, which should be submitted within 15 days after receipt of the request and is necessary for confirming the overpaid tax amount - until the day when the State Revenue Service will have taken a decision on validity of the request. The State Revenue Service shall take such decision not later than within 75 days after:

a) the time limit for submitting the tax return laid down in Section 118 of this Law;

b) the day of submitting the tax return, if the tax return has been submitted after the time limit for submitting the tax return laid down in Section 118 of this Law;

c) the day of submitting the adjusted tax return, if an adjusted tax return has been submitted.

[6 November 2013]

Section 111. Refund of the Tax Paid for the Acquisition of New Means of Transport

(1) A non-registered taxable person or a non-taxable person, when supplying a new means of transport to any person of another Member State, has the right to request to refund from the State budget the tax amount which has been paid for the acquisition of the new means of transport, including for the acquisition thereof in the territory of the European Union, or for the importation of a new means of transport.

(2) The Cabinet shall determine the procedures by which in accordance with this Section:

1) a non-registered taxable person or a non-taxable person shall receive the tax amount to be refunded from the State budget;

2) the tax amount to be refunded from the State budget shall be calculated.

Chapter XIII
Refund of Tax to a Registered Taxable Person of a Third Country or Third Territory or a Registered Taxable Person of Another Member State and Submitting of an Application by a Registered Taxable Person for the Receipt of Refund of Tax in Another Member State

Section 112. Refund of Tax to a Registered Taxable Person of a Third Country or Third Territory

(1) Tax, which has been paid for goods acquired or services received inland and for importation of goods for ensuring of economic activity outside the territory of the European Union, shall be refunded to a registered taxable person of a third country or third territory in conformity with the parity principle, if during the time period, for which he requests refund of tax, such taxable person:

1) is registered for economic activity outside the territory of the European Union;

2) conforms to the status of a registered taxable person outside the territory of the European Union;

3) has not been registered with the State Revenue Service Value Added Tax Taxable Persons Register;

4) has not performed taxable transactions inland due to which he has to register with the State Revenue Service Value Added Tax Taxable Persons Register;

5) has not conducted economic activity in the Republic of Latvia to be registered in accordance with laws and regulations.

(11) The State Revenue Service shall examine an application of a registered taxable person of a third country or third territory, take a decision to completely or partially refund the tax amount indicated in the application of the registered taxable person of the third country or third territory or to refuse to refund the tax, and shall refund the tax amount approved for refund within a time limit which may not exceed the time limit laid down in Section 113, Paragraph 1.1 of this Law.

(2) The Cabinet, in conformity with the conditions of Paragraphs one and 1.1 of this Section, shall determine:

1) the time limit for which refund of tax is requested and the minimum amount of tax to be refunded;

2) the procedures for taking a decision by the State Revenue Service to refund completely or partially the tax amount indicated in an application of a registered taxable person of a third country or third territory or to refuse to refund the tax, and the procedures by which the State Revenue Service shall refund the tax to a registered taxable person of a third country or third territory in conformity with the time limit laid down in Paragraph 1.1 of this Section;

3) the documents to be submitted to the State Revenue Service and time limits for submission thereof;

4) the sample form of the application for refunding of tax;

5) the cases when the State Revenue Service shall take a decision to refuse to refund the tax amount indicated in the application of a registered taxable person of a third country or third territory.

[6 November 2013]

Section 113. Refund of Tax to a Registered Taxable Person of Another Member State

(1) Tax, which has been paid for goods acquired or services received inland and for importation of goods for ensuring of taxable transactions, shall be refunded to a registered taxable person of another Member State, if during the time period, for which he requests refund of tax, such taxable person:

1) was registered in the register of taxable persons of another Member State;

2) has not conducted economic activity inland to be registered in accordance with laws and regulations in force;

3) has not been registered with the State Revenue Service Value Added Tax Taxable Persons Register;

4) has not performed taxable transactions inland due to which he should register with the State Revenue Service Value Added Tax Taxable Persons Register.

(11) The State Revenue Service shall examine an application of a registered taxable person of another Member State for refund of tax inland, take a decision on complete or partial refund of the tax amount indicated in the application of a registered taxable person of another Member State for refund of tax inland or to refuse to refund tax, and shall refund the tax amount approved for refund not later than within four months from the day of receipt of the application or not later than within six months, if additional information is requested, but not later than within eight months, if additional information is requested repeatedly.

(2) The Cabinet, in conformity with the conditions of Paragraphs one and 1.1 of this Section, shall determine:

1) the procedures by which the State Revenue Service shall receive and examine an application of a registered taxable person of another Member State for refund of tax inland and by which the State Revenue Service shall take a decision to refund completely or partially the tax amount indicated in the application of a registered taxable person of another Member State for refund of tax inland or to refuse to refund tax;

2) the procedures for refunding tax to a registered taxable person of another Member State by the State Revenue Service in conformity with the time limit specified in Paragraph 1.1 of this Section;

3) the cases when the State Revenue Service shall take a decision to refuse to refund the tax amount indicated in the application of a registered taxable person of another Member State for refund of tax inland.

[6 November 2013]

Section 114. Submitting of an Application by a Registered Taxable Person for the Receipt of Refund of Tax in Another Member State

(1) A registered taxable person shall submit an application for the receipt of refund of tax for goods acquired or services received in another Member State and for importation of goods for ensuring of taxable transactions, if during the time period, for which he requests to refund the tax, such taxable person:

1) was registered with the State Revenue Service Value Added Tax Taxable Persons Register;

2) was not registered with the register of taxable persons of the Member State from which refund of tax is requested;

3) has not performed taxable transactions in the Member State from which refund of tax is requested due to which he should register with the register of taxable persons of such Member State.

(2) The Cabinet, taking into account the conditions of Paragraph one of this Section, shall determine:

1) the procedures by which a registered taxable person shall submit an application to the State Revenue Service for the receipt of refund of tax in another Member State;

2) the procedures by which the State Revenue Service shall examine an application and forward it to the Member State from which the refund of tax is requested;

3) the information to be included in an application;

4) the time period for which refund of tax is requested and the minimum amount of tax to be refunded.

Chapter XIV
Taxation Period of Tax and Tax Return

Section 115. Taxation Period of Tax

(1) Taxation period of tax is one calendar month, if any of the following conditions is implemented:

1) the value of taxable transactions performed by a registered taxable person in pre-taxation year or taxation year exceeds EUR 40 000;

2) a registered taxable person performs supply of goods in the territory of the European Union, to which zero per cent rate is applied in accordance with Section 43, Paragraph four of this Law;

3) a registered taxable person performs supply of goods in the territory of the European Union, participating in the supply of goods referred to in Section 16, Paragraph four of this Law;

4) a registered taxable person supplies services, the place of supply of which is determined in accordance with Section 19, Paragraph one of this Law and the place of supply of which is another Member State.

(2) The taxation period of tax shall be one calendar month, and such taxation period of tax shall be preserved for six calendar months, if a registered taxable person has been registered with the State Revenue Service Value Added Tax Taxable Persons Register in the taxation year of tax.

(3) The taxation period of tax shall be one quarter for a registered taxable person who does not comply with the conditions referred to in Paragraph one or two of this Section.

(4) If the amount of taxable transactions performed during the pre-taxation year has changed, the taxation period of tax shall be changed at the beginning of the taxation year, except the cases laid down in Paragraph five of this Section.

(5) If a registered taxable person for whom taxation period, in accordance with Paragraph three of this Section, is one quarter performs the transactions referred to in Paragraph one, Clause 2, 3 or 4 of this Section, or the value of taxable transactions performed by this person within the taxation year exceeds EUR 40 000, the taxation period for such registered taxable person shall be one calendar month and it shall be preserved until the end of the taxation year.

(6) A registered taxable person shall inform the State Revenue Service regarding the change of the taxation period, if the period should change:

1) from quarter to month - by submitting a tax return regarding January;

2) from month to quarter - by submitting a notification until 31 January of the taxation year;

3) from quarter to month during the taxation year in the cases referred to in Paragraph five of this Section - by submitting a tax return regarding the month in which the conditions of Paragraph five of this Section are implemented.

(61) The person referred to in Paragraph two of this Section shall change the taxation period to one quarter, if he or she fails to comply with the conditions of Paragraph one of this Section and six calendar months have elapsed from the registration with the State Revenue Service Value Added Tax Taxable Persons Register by submitting a notification by the twentieth date of the seventh calendar month.

(7) The taxation period of a VAT group and fiscal representative shall be one calendar month.

(8) For a State and local government institution or local government, which is a registered taxable person in accordance with Section 58 of this Law only for the purpose of receipt of the construction service referred to in Section 142, Paragraph four of this Law, a taxation period shall be one quarter.

(9) The total of the taxation periods of a calendar year shall constitute the taxation year.

[19 September 2013; 6 November 2013; 21 November 2013; 23 November 2016; 27 July 2017]

Section 116. Tax Return

(1) A tax return shall consist of a tax return for a taxation period and annexes to a tax return.

(2) A tax return shall have the following annexes:

1) a report on the amounts of the input tax and tax included in the tax return for the taxation period;

2) a report on the supplies of goods and the services supplied in the territory of the European Union;

3) a revision report on the supplies of goods and the services supplied in the territory of the European Union;

4) [23 November 2016];

5) a report on the use of immovable property;

6) a return for the taxation year;

7) a report on transactions performed by a fiscal representative.

(3) The Cabinet shall determine:

1) the sample forms of the tax return to be submitted for the taxation period and of annexes thereto, as well as the procedures for filling in and submission thereof;

2) the documents to be submitted to the State Revenue Service together with the tax return and the cases when such documents are to be submitted.

[23 November 2016]

Section 117. Submitting of a Tax Return and a Notification on Payment of Tax

(1) A registered taxable person shall submit a tax return to the State Revenue Service regarding transactions performed in a taxation period, unless it is otherwise provided for in this Section.

(2) A registered taxable person shall also submit a tax return to the State Revenue Service in cases where he has not performed taxable transactions during the taxation period.

(3) If the value of taxable transactions performed by a registered taxable person is less than five per cent from the total value of transactions in a pre-taxation year, he is entitled to record only taxable transactions and include only taxable transactions in a tax return.

(4) A registered taxable person who has not submitted a tax return or has not submitted the tax return within the time limit laid down in Section 118 of this Law, shall not be exempted from payment of tax into the State budget.

(5) A registered taxable person shall submit a return for the taxation year in cases where:

1) the proportion of taxable and non-taxable transactions for the taxation year changes and it is not otherwise laid down in this Law;

2) any adjustment of the tax payable or the deducted input tax has been performed in accordance with the requirements laid down in this Law;

3) if transactions referred to in Section 38, Paragraphs two and three of this Law have been performed;

4) if a deposit system is applied to reusable packaging in accordance with the laws and regulations in the field of packaging.

(6) In the cases referred to in Paragraph five of this Section an annual tax return shall also be submitted, if a registered taxable person has operated an incomplete year.

(7) A registered taxable person shall submit a report on supplies of goods and services in the territory of the European Union only if he has performed supplies of goods in the territory of the European Union or supplies taxable services to a taxable person of another Member State in another Member State, the place of supply of which is determined in accordance with Section 19 of this Law, in another Member State.

(8) A non-registered taxable person, as well as a non-taxable person, shall inform the State Revenue Service regarding payment of tax into the State budget (including regarding acquisition of new means of transport from any person of another Member State, regarding bad debts) by submitting a notification on payment of tax.

(9) The Cabinet shall determine a sample form of the notification referred to in Paragraph eight of this Section on payment of tax and the procedures for filling in such notification.

(10) A bailiff shall inform the State Revenue Service regarding the tax paid into the State budget from the sale of property at an auction organised by the bailiff, by submitting the notification referred to in Paragraph eight of this Section.

(11) A VAT group shall submit the annexes to tax returns referred to in Section 116, Paragraph two of this Law, except a tax return for a taxation year, for each participant of the VAT group separately.

Section 118. Time Limits for Submitting a Tax Return and a Notification on Payment of Tax

(1) If a registered taxable person submits a tax return and annexes thereto to the State Revenue Service by using the Electronic Declaration System of the State Revenue Service, the time limit for the submission of a tax return shall be 20 days after the end of the taxation period.

(2) [12 June 2014]

(3) [12 June 2014]

(4) A fiscal representative shall submit a tax return and annexes thereto to the State Revenue Service within the time limit laid down in Paragraph one of this Section, using the Electronic Declaration System of the State Revenue Service.

(5) A registered taxable person shall submit a return for a taxation year to the State Revenue Service until 1 May of the next taxation year.

(6) A registered taxable person who performs supply of goods in the territory of the European Union or to a taxable person of another Member State in another Member State, supplies taxable services, the place of supply of which is determined in accordance with Section 19, Paragraph one of this Law, shall submit a report on supplies of goods and services in the territory of the European Union to the State Revenue Service for each calendar month within the time limit laid down in Paragraph one or two of this Section.

(7) If a time limit for the submission of a tax return is on a holiday or public holiday, the last day of time limit for submission shall be the next working day.

(8) The State Revenue Service is entitled to request that a registered taxable person submits a tax return also in another time, however, not more than once per calendar month.

(9) A person, which is excluded from the State Revenue Service Value Added Tax Taxable Persons Register, shall submit to the State Revenue Service a tax return and annexes thereto for the taxation period in which such person was excluded from the State Revenue Service Value Added Tax Taxable Persons Register within 20 days after his exclusion.

(10) The time limit for the submission of a notification on payment of tax shall be 20 days after the month in which the transaction occurred regarding which the State Revenue Service is to be informed in accordance with this Law, unless laid down otherwise in this Law.

(11) In cases when a notification on payment of tax is submitted by a bailiff regarding the tax to be paid into the State budget from the sale of the property at an auction organised by the bailiff, the time limit for the submission of a notification on payment of tax shall be 20 days after the day when the time limit for appeal of the calculation drawn up by the bailiff has elapsed, if such calculation has not been appealed, or when such calculation has been appealed - after the day when a court ruling on the calculation drawn up has entered into effect.

[6 November 2013; 12 June 2014; 23 November 2016]

Chapter XV
Time when Tax is Paid into the State Budget and Tax is Included in a Tax Return

Section 119. Time Limit for Payment of Tax into the State Budget

(1) A registered taxable person shall pay the tax, which is calculated for a taxation period, into the State budget within 20 days after the end of the taxation period, unless it is otherwise laid down in this Section.

(2) If the total value of taxable supplies of goods and services supplied by a non-registered taxable person during the preceding 12 months has exceeded EUR 40 000, he shall pay into the State budget the tax calculated in accordance with the procedures laid down in Section 34, Paragraph ten of this Law within 20 days from the end of the calendar month when such sum was exceeded.

(3) A bailiff shall pay the tax, which is calculated for the sale of the property of a registered taxable person at an auction organised by the bailiff, into the State budget within 20 days after the day when the time limit for appeal of the calculation drawn up by the bailiff has elapsed, if such calculation has not been appealed, or when such calculation has been appealed - after the day when the court ruling on the calculation drawn up has entered into effect.

(4) A person, which has been excluded from the State Revenue Service Value Added Tax Taxable Persons Register, shall pay the tax calculated for the taxation period in which such person has been excluded from the State Revenue Service Value Added Tax Taxable Persons Register, into the State budget within 20 days after exclusion from the State Revenue Service Value Added Tax Taxable Persons Register.

(5) In cases when a person has a duty to submit a notification on payment of tax to the State Revenue Service, tax shall be paid into the State budget until the time of submission of such notification to the State Revenue Service, however, not later than until 20th date of the next month following the month when the transaction occurred, unless laid down otherwise in this Law.

(6) A registered taxable person shall pay the tax calculated in the return for the taxation year until 1 May of the next taxation year.

[19 September 2013; 6 November 2013; 27 July 2017]

Section 120. Time when Tax for Supply of Goods and Services is to be Included in a Tax Return

(1) Tax for goods supplied or supplied inland, for which tax is paid by a supplier of goods or services, shall be included in a tax return for the taxation period when the supply of goods or services was performed and a tax invoice was written out, unless it is otherwise laid down in this Section.

(2) If a consideration has been received before the supply of goods or services referred to in Paragraph one of this Section, the tax for the received part of consideration shall be included in a tax return for the taxation period when the consideration was received in accordance with the tax invoice.

(3) Tax for the supply of goods in the territory of the European Union shall be included in a tax return of the taxation period when the supply of goods was performed and a tax invoice was written out, unless laid down otherwise in this Law.

(4) If a tax invoice has not been submitted until the time limit laid down in Section 131, Paragraph one of this Law or it has been issued with delay, tax for the supplies of goods or services supplied inland shall be included in a tax return of the taxation period when the supply of goods was performed or service was supplied and the time limit for issuing of a tax invoice has set in.

(5) If a tax invoice is not issued until the time limit laid down in Section 131, Paragraph two of this Law, the supply of goods in the territory of the European Union shall be included in a tax return of the taxation period which follows the taxation period when the supply of goods in the territory of the European Union was performed.

(6) If the transactions referred to in Paragraph one of this Section are performed permanently over a continuous time period, tax shall be included in the tax return of the taxation period when a consideration for such transaction was received or when the time period to which the tax invoice written out applies to has ended, however, not less than once in six months.

(7) In the case referred to in Section 31, Paragraph three of this Law tax for the supply of goods performed permanently over a continuous period of time in the territory of the European Union shall be included in the tax return of each taxation period until the time when the transaction is completed.

(8) A registered taxable person which supplies electricity inland shall include the tax to be paid into the State budget for the electricity supplied to a consumer, who writes out a payment document for the electricity received by himself, in the tax return of the taxation period when the consideration from the consumer was received.

(9) If supply of goods or services is carried out in accordance with Section 11, Paragraph four of this Law, the recipient of advance payment shall include the tax in the tax return of the taxation period in which a decision of the State Revenue Service to exclude the payer of advance payment from the VAT group entered into effect.

(10) A registered taxable person shall include the services, the place of supply of which in conformity with Chapter III of this Law is another Member State, third country or third territory in the tax return of the taxation period in which the service was supplied to a recipient or consideration for the service was received before the supply of service.

Section 121. Time when Tax for the Acquisition of Goods in the Territory of the European Union is Included in a Tax Return and Time Limit for Payment of Tax into the State Budget

(1) Tax for the acquisition of goods in the territory of the European Union shall be included in a tax return of the taxation period when the acquisition of goods was carried out in the territory of the European Union in accordance with Section 31, Paragraph four of this Law and a tax invoice was issued.

(2) If a tax invoice is not issued until the time limit laid down in Section 131, Paragraph two of this Law, the tax calculated for the acquisition of goods in the territory of the European Union shall be included in a tax return for the next taxation period after acquisition of goods in the territory of the European Union.

(3) If the total value of the acquisition of goods in the territory of the European Union carried out by a non-registered taxable person in the current calendar year has exceeded EUR 10 000, he shall in accordance with Section 86, Paragraph two of this Law calculate and pay the tax into the State budget for the acquisition of goods in the territory of the European Union within 20 days from the end of the calendar month when such sum was exceeded.

[19 September 2013]

Section 122. Time when Tax for the Received Goods and Services is to be Included in a Tax Return and Paid into the State Budget if the Supplier of Goods or Services is not Registered with the State Revenue Service Value Added Tax Taxable Persons Register

(1) Tax for the received services, the place of supply of which in accordance with this Law is inland and which have been received from taxable persons of another Member State or taxable persons of third countries or third territories who are not conducting economic activity inland, shall be included in a tax return of the taxation period in which the service was received or consideration for such service was performed in advance.

(2) In the case referred to in Section 32, Paragraph four of this Law tax for the received services, which are provided permanently over a continuous time period and in respect of which tax invoices have not been received or payments performed, shall be included in a tax return of the last taxation period of the calendar year until the time when the transaction is completed.

(3) If a taxable person of another Member State is not registered with the State Revenue Service Value Added Tax Taxable Persons Register in accordance with Section 61, Paragraph one or four of this Law or a taxable person of a third country or third territory is not registered with the State Revenue Service Value Added Tax Taxable Persons Register in accordance with Section 63, Paragraph one of this Law, tax for the acquisition of goods in the territory of the European Union and for the received services shall be calculated and paid by the recipient of goods or services, provided that he is a registered taxable person, and included in a tax return of the taxation period when goods or service were received.

Section 123. Time when Tax for Importation of Goods is Included in a Tax Return and Tax is Paid into the State Budget

(1) Tax for the importation of goods shall be paid into the State budget when customs duty becomes collectable, unless laid down otherwise in this Law.

(2) If, in importing goods inland, the customs procedure "temporary importation" is applied, in accordance with which the goods to be imported are partially exempted from payment of the import duty, tax shall be paid into the State budget for each month or part of the month in the amount of three per cent of the tax amount, which would have been payable for the said goods if they had been released into free circulation on the day they were transferred for the customs procedure "temporary importation", when the customs duty becomes collectible.

(3) The calculated tax for the importation of goods, to which a special tax arrangement is applied in transactions of importation of goods, shall be paid into the State budget including the tax in a tax return of the taxation period in which the goods were released for free circulation.

(4) If at the time of importation of goods the actual value of the services referred to in Section 36, Paragraph one of this Law is not known or after receipt of a tax invoice from a supplier of services it differs from the service value included in a customs declaration, a registered taxable person (the recipient of imported goods) shall include the tax calculated additionally for the received service (the difference between the service value indicated in the tax invoice of a service supplier and in the customs declaration) in a tax return of the taxation period in which the service and tax invoice referred to in Section 36, Paragraph one of this Law was received.

(5) If goods are in temporary storage or applied customs procedure (except the customs procedure "release for free circulation") in accordance with the laws and regulations in the field of customs, tax shall be calculated and paid into the State budget when the debt of the import duty becomes collectible.

[6 November 2013; 20 April 2017]

Section 124. Time when Tax is Included in a Tax Return in Other Cases

(1) Tax calculated in the case referred to in Section 51, Paragraph three of this Law shall be included in a tax return of the taxation period after the period in which the time limit laid down in Section 45, Paragraphs one and two of this Law has expired.

(2) Tax calculated for the advance payment in accordance with Section 51, Paragraph four of this Law shall be included in a tax return of the taxation period following a six-month period starting from the day of receipt of the advance payment.

(3) Tax, which in accordance with Section 129, Paragraph ten of this Law is included in the price of a gift token, prepaid phone card, ticket (token), monthly ticket and ticket to sports or cultural event, shall be included in a tax return of the taxation period in which the relevant card or ticket was sold to a user by the taxable person who sells the abovementioned cards or tickets on his behalf not using intermediary services.

(4) Tax for the received services in accordance with Sections 141, 142, 143 and 143.4 of this Law shall be included in a tax return of the taxation period in which the service was received and tax invoice was received or payment for the service was performed in accordance with the tax invoice before receipt of the service.

(5) Tax for the received goods in accordance with Sections 141, 142, 143, 143.1, 143.2, 143.3, 143.4 and 143.5 of this Law shall be included in a tax return of the taxation period in which the goods were received and tax invoice was received or payment for the supply of goods was performed in accordance with the tax invoice before receipt of the goods.

[30 November 2015; 16 June 2016; 23 November 2016; 27 July 2017]

Chapter XVI
Tax Invoice and Accounts of Transactions

Section 125. Tax Invoice and Content Thereof

(1) A tax invoice shall be deemed to be a document in printed or electronic form in which the following details and information is indicated, unless laid down otherwise in this Law:

1) the date when the invoice was issued;

2) the sequence number of one or several series of the tax invoice, which provides a unique identification of the tax invoice;

3) the name of a legal person (for a natural person - given name, surname) and legal address (for a natural person - declared place of residence) of the supplier of goods or services;

4) the registration number of the supplier of goods or services with the State Revenue Service Value Added Tax Taxable Persons Register;

5) the name of a legal person (for a natural person - given name, surname) and legal address (for a natural person - declared place of residence) of the recipient of goods or services;

6) the registration number of the recipient of goods or services with the State Revenue Service Value Added Tax Taxable Persons Register or register of taxable persons of another Member State if the registration number has been issued to a taxable person with the State Revenue Service Value Added Tax Taxable Persons Register or register of taxable persons of another Member State;

7) the date of the supply of goods or of the supply of the service if such differs from the date of issuing the invoice, or the date when a consideration was received in advance if such date is known and differs from the date of issuing the invoice;

8) the name, amount and unit of measurement of the goods or service;

9) the price (value of one unit excluding tax) of the goods or service;

10) discounts applied if they are not deducted from the value of one unit;

11) the tax rate applied;

12) the calculated tax amount;

13) the total amount of the transaction excluding tax (amount to which tax or exemption from tax is applied);

14) if a tax invoice in accordance with Section 130 of this Law is issued by the recipient of goods or services himself - an indication "self-billing";

15) if the zero per cent tax rate is applied to the supply of goods or the supplied service, or exemption from tax is applicable thereto - a reference to the Section of this Law in accordance with which the zero per cent tax rate or exemption from tax is applicable or a reference to the relevant Article of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax, or another reference indicating the legal justification for the application of the zero per cent tax rate or exemption from tax;

16) if the recipient of goods or services is responsible for payment of the tax - an indication "reverse charge";

17) if new means of transport are supplied - an indication thereto and information, which proves that the supplied goods are new means of transport in accordance with Section 1, Clause 9 of this Law;

18) if the special procedures for payment of tax and deduction of input tax laid down in Section 137 of this Law are applied - an indication "cash accounting";

19) if the special tax application arrangement laid down in Section 136 of this Law is applied - an indication "Margin scheme - Travel agents";

20) if the special tax application arrangement laid down in Section 138 of this Law is applied - the relevant indication "Margin scheme - Second-hand goods", "Margin scheme - Works of art" or "Margin scheme - Collector's items and antiques";

21) if the special provisions laid down in Sections 135, 139, 140.1, 144 and 145 of this Law are applied to the supply of goods or the service supplied - a reference to the Section of this Law in accordance with which the tax is applied or a reference to the relevant Article of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax;

22) if an authorised person is responsible for payment of the tax - the registration number of the authorised person with the State Revenue Service Value Added Tax Taxable Persons Register, the name of a legal person (for a natural person - given name, surname) and legal address (for a natural person - declared place of residence);

23) if a fiscal representative is responsible for payment of the tax - the registration number of the fiscal representative with the State Revenue Service Value Added Tax Taxable Persons Register or register of taxable persons of another Member State, the name of a legal person (for a natural person - given name, surname) and legal address (for a natural person - declared place of residence).

(2) In transactions with persons from other Member States, a tax invoice shall be deemed to be a document which is received from a person of another Member State and which includes the details and information referred to in Paragraph one of this Section, however, the registration number of a taxable person of another Member State is indicated instead of the detail indicated in Paragraph one, Clause 4 of this Section.

(3) A taxable person has a responsibility to ensure the authenticity of the origin of a tax invoice (certification of the identity of the issuer of the tax invoice), constant content and legibility from the time of issuing the tax invoice throughout the storage period.

(4) The manner, in which the authenticity of the origin of a tax invoice (certification of the identity of the issuer of the tax invoice), constant content and legibility are ensured, shall be determined by a taxable person, guaranteeing the traceability of transactions, when interrelating a tax invoice and the transaction performed.

(5) Any document, which amends the initial tax invoice or especially and clearly indicates to it, shall be regarded as equivalent to the tax invoice provided that it conforms to the requirements laid down in Paragraph one of this Section.

(6) A tax invoice which has been issued and received in any electronic form shall be deemed a tax invoice in electronic form.

[12 June 2014 / Amendment to Clause 21 of Paragraph one in relation to the replacement of number "140" with number "140.1" shall come into force on 1 January 2015. See Paragraph 19 of Transitional Provisions]

Section 126. Simplified Tax Invoice

(1) A simplified tax invoice shall be a tax invoice in which the following details and information are indicated:

1) the date when the invoice was issued;

2) the name of a legal person (for a natural person - given name, surname), legal address (for a natural person - declared place of residence) of the supplier of goods or services, as well as the registration number with the State Revenue Service Value Added Tax Taxable Persons Register;

3) the name of a legal person (for a natural person - given name, surname), legal address (for a natural person - declared place of residence) of the recipient of goods or services, as well as the registration number with the State Revenue Service Value Added Tax Taxable Persons Register or register of taxable persons of another Member State;

4) the name and quantity of goods or the type and quantity of service;

5) the price of goods or service (including tax or excluding tax) and the total amount of the transaction (including tax or excluding tax);

6) the tax rate and the calculated tax amount.

(2) A registered taxable person has the right to issue a simplified tax invoice in the following cases:

1) for an inland transaction the value of which excluding tax is less than EUR 150;

2) in the case referred to in Section 125, Paragraph five of this Law, indicating the date of issue of the initial tax invoice and identification number, as well as the particular data to be amended, in the additional simplified tax invoice.

(3) A cashier's check or another document may also be used as a simplified tax invoice, where the details and information referred to in Paragraph one of this Section are not indicated, if it is accompanied by a source document in which the date and number of the cashier's check or another document and the information referred to in Paragraph one of this Section is indicated, unless it is laid down otherwise in this Section.

(4) A cashier's check or another document, which does not contain the information referred to in Paragraph one, Clause 3 of this Section, may be used as a simplified tax invoice, if it has been issued for a transaction the value of which excluding tax is less than EUR 30.

[24 January 2013; 19 September 2013; 23 November 2016]

Section 127. Duty to Issue Tax Invoice

(1) Unless laid down otherwise in this Law, a registered taxable person shall issue a tax invoice or ensure that a third person on his behalf or a recipient of goods or services issues a tax invoice regarding:

1) any supplies of goods performed and services supplied;

2) advance payment which he has received before the supply of goods or services, with the exception of advance payment for the supply of goods in the territory of the European Union.

(2) A registered taxable person does not have a duty to issue a tax invoice regarding the following transactions:

1) the services referred to in Section 52, Paragraph one, Clauses 20, 21 and 22 of this Law;

2) non-taxable supplies of goods and services supplied, other than those referred to in Clause 1 of this Paragraph, performed inland.

(3) A registered taxable person shall issue a tax invoice regarding the supply of goods or services to non-taxable persons or non-registered taxable persons in conformity to Section 125, Paragraph one or Section 126, Paragraph one of this Law upon request of such persons.

(4) A non-registered taxable person and a non-taxable person have a duty to issue a tax invoice regarding the supply of a new means of transport to any person of another Member State.

Section 128. Issuing of a Tax Invoice Depending on the Place of Transaction

(1) An inland taxable person shall issue a tax invoice in accordance with the conditions of this Law, if the place of supply of goods or services is inland in conformity to Chapter III of this Law and unless it is laid down otherwise in this Section.

(2) A tax invoice shall be issued in accordance with the conditions of this Law, if the place of establishment of a business or fixed establishment of a supplier of goods or services, from where the supply of goods or service is performed, or if the place of establishment of a business or fixed establishment does not exist - the declared place of residence, but, in the absence of such - the place of permanent residence, is inland in the following cases:

1) the supplier of goods or services does not conduct economic activity or his fixed establishment does not participate in the supply of goods or services in the Member State, where the place of performance of the transaction is located, and the recipient of goods or services is responsible for payment of tax;

2) the place of supply of goods or services is a third country or third territory.

(3) If a recipient of goods or services issues a tax invoice by himself for himself in accordance with Section 130 of this Law, the tax invoice shall be issued in accordance with the regulations of the Member State where the place of supply of goods or services is located.

Section 129. Conditions of Issuing a Tax Invoice

(1) A registered taxable person may issue a summary tax invoice for several separate supplies of goods or services supplied within the framework of a calendar month, in which the information referred to in Section 125, Paragraph one or Section 126, Paragraph one of this Law is indicated.

(2) In case referred to in Section 128, Paragraph two, Clause 1 of this Law the information referred to in Section 125, Paragraph one, Clauses 9, 10, 11 and 12 of this Law need not be indicated.

(3) If any of the special tax application arrangements referred to in Section 141, 142, 143, 143.1, 143.2, 143.3, 143.4 or 143.5 of this Law is applied to the supply of goods or services, the information referred to in Section 125, Paragraph one, Clauses 11 and 12 of this Law shall not be indicated.

(4) If both transactions taxable by different tax rates and non-taxable transactions are included in a tax invoice, the values of such transactions shall be indicated separately.

(5) The sums indicated in a tax invoice may be expressed in any currency provided that the tax amount to be paid or adjusted is expressed in euros in conformity with the relevant currency exchange rate to be used in accounting, which was in effect at the beginning of the transaction day or at the beginning of the day when the advance payment was received accordingly.

(6) If a tax invoice is cancelled, a registered taxable person shall keep the cancelled tax invoice in the accounting thereof to justify the non-observance of sequence numbers of the issued tax invoices.

(7) If the property of a registered taxable person is sold by a liquidator, administrator or bailiff, he shall issue a tax invoice on behalf of the registered taxable person.

(8) If a natural person - registered taxable person - is deceased, but an heir or trustee assigned by the court continues the economic activity instead of the estate leaver, he shall issue a tax invoice on his behalf and use the estate leaver's registration number of the registered taxable person until the time when the right of inheritance of lawful heirs enters into effect.

(9) If a transaction is carried out on an ongoing basis over a continuous period of time in accordance with Section 31, Paragraph two or three, Section 32, Paragraph three or four of this Law, a tax invoice shall be issued for a certain period of time which is not longer than one month, six months or one calendar year respectively.

(10) A registered taxable person who performs supplies of goods or services for a fixed price [for example, gift tokens, pre-payment cards, tickets (tokens), monthly tickets and tickets to sports or cultural events], a separate tax invoice shall not be issued.

(11) The procedures for issuing of a tax invoice shall be laid down by the Cabinet.

[19 September 2013; 30 November 2015; 16 June 2016; 23 November 2016; 27 July 2017]

Section 130. Cases when a Purchaser or Recipient of Service Issues a Tax Invoice by Himself for Himself

A recipient of goods or services is entitled to issue a tax invoice for himself on behalf and interests of the supplier of goods or services for the goods or services supplied to him by a registered taxable person or a taxable person of another Member State, if there is a prior agreement between the parties and if the supplier of goods or services applies the mutual recognition procedure of invoices to each invoice.

Section 131. Time Limits for Issuing a Tax Invoice

(1) A registered taxable person shall issue a tax invoice for a transaction performed not later than on the fifteenth date from the time of transaction or receipt of advance payment, unless it is laid otherwise in this Section.

(2) A registered taxable person shall issue a tax invoice not later than on the fifteenth day of the month following the month when the following transaction has occurred:

1) the supply of goods in the territory of the European Union;

2) the supply of such service the place of supply of which is determined in conformity with Section 19, Paragraph one of this Law and the recipient of service is liable for payment of tax, as well as for the advance payments received for the supply of such service.

(3) The bailiff or administrator of insolvency proceedings shall issue a tax invoice on behalf of a registered taxable person regarding the sale of property at an auction within 15 days from the day when the time period for appealing the invoice drawn up by the bailiff or administrator of insolvency proceedings has elapsed and such calculation has not been appealed, or if such calculation has been appealed - from the day when a court ruling on the drawn-up calculation has entered into effect.

(4) A registered taxable person may issue a tax invoice regarding the goods transport service which is directly related to exportation of goods to third countries or third territories later than within 15 days after supply of the service, but not later than within 90 days.

(5) A non-registered taxable person or non-taxable person shall issue a tax invoice regarding the supply of a new means of transport to any person of another Member State not later than on the fifteenth day of the month following the month in which the transaction occurred.

[6 November 2013]

Section 132. Sending of a Tax Invoice by Electronic Means

(1) A registered taxable person is entitled to issue (draw up) and deliver a tax invoice by electronic means only in case when a recipient of such tax invoice recognises such form of the tax invoice.

(2) The authenticity of the electronic form (certification of the identity of the issuer of the tax invoice) and constant content of a tax invoice may be ensured, if the tax invoice has a secure electronic signature within the meaning of the Electronic Documents Law or if the tax invoice is sent using electronic data exchange or another form selected by a taxable person himself in conformity with the conditions of Section 125, Paragraph four of this Law.

(3) When several tax invoices are sent or made available together to the same addressee by electronic means, the details common to the individual invoices may be mentioned only once if, for each tax invoice, all the information is accessible.

Section 133. Storage of Tax Invoices

(1) A taxable person shall ensure that tax invoices are stored which he himself or a third person on his behalf, or the recipient of goods or services has issued, as well as tax invoices that are received by a taxable person shall be kept.

(2) Storage of tax invoices received in electronic form shall be the storage of data that is carried out using electronic equipment for processing (including digital compression) and storage, as well as employing wire, radio, optical or other electromagnetic means.

(3) A taxable person has a duty to store all the issued and received tax invoices inland, except the cases when storage of tax invoices is performed by electronic means and full online access to the relevant data is ensured.

(4) Time limit for storage of tax invoices shall be five years from the day of issue of the invoice, unless it is laid down otherwise in this Section.

(5) In cases when a taxable person has a duty to make adjustment of input tax in accordance with Section 102 of this Law, a tax invoice shall be kept until the end of the time period of adjustment of the input tax, unless it exceeds the time limit of storage laid down in Paragraph four of this Section.

Section 134. Other Duties of a Taxable Person in Respect of Tax Invoices and Accounts of Transactions

(1) If a taxable person keeps tax invoices in electronic form, ensuring online access thereto for the competent authorities, then in cases when the tax is to be paid in another Member State a taxable person has a responsibility to ensure the right to access to such tax invoices, to download and use them for the control purposes also for the competent authorities of such another Member State.

(2) A taxable person has a duty to conduct sufficiently accurate accounts of transactions in order for the State Revenue Service to be able to examine tax application.

(3) A taxable person has a duty:

1) to maintain a register of goods that he has dispatched or transported or that have been dispatched or transported on his behalf from inland to a destination in the territory of another Member State for the purpose of performing such transactions that include assessment, treatment, processing, repair of goods or temporary use thereof in conformity with Section 8, Paragraph two, Clauses 7, 8 and 9 of this Law;

2) to conduct accurate accounts according to which it is possible to identify the goods that have been dispatched to him from another Member State by a registered taxable person or other person on his behalf and which are used for the supply of such services that include assessment or treatment of such goods.

(4) A registered taxable person who is a personal income taxpayer and conducts his accounting in a single entry system, shall conduct the accounts of tax in accordance with the procedures laid down by the Cabinet. The Cabinet shall lay down the procedures for conducting the accounts of tax, and a sample of tax record register and the procedures for filling-in thereof.

(5) A fiscal representative when representing a registered taxable person of another Member State or a taxable person of a third country or third territory shall ensure detailed accounts of goods to be dispatched or received in order for a tax administration to be able to track down each movement of goods.

Chapter XVII
Special Tax Application Arrangements and Procedures

Section 135. Special Tax Application Arrangement for a Farmer

(1) For the purpose of this Section:

1) a farmer shall be a natural or legal person who is engaged in the production of agricultural crops, stock farming and fishery products (hereinafter - the agricultural produce), who is not a registered taxable person and to whom the tax application arrangement laid down in this Section applies;

2) a processor of agricultural produce shall be a registered taxable person who carries out or ensures pre-treatment of agricultural produce or processes procured unprocessed agricultural produce.

(2) A farmer, when handing over unprocessed self-produced agricultural produce to the processor of agricultural produce, shall receive a compensation from him.

(3) The compensation referred to in Paragraph two of this Section for the tax that the farmer has paid upon acquiring goods and receiving services to ensure the production of agricultural produce intended for handing over to the processor of agricultural produce shall be 14 per cent from the value of the supplied agricultural produce.

(4) Compensation may also be disbursed by the following registered taxable persons, if they conform to the conditions laid down for the processor of agricultural produce in Paragraphs seven, nine and ten of this Section:

1) conforming agricultural services co-operative societies;

2) the Rural Support Service that purchases unprocessed self-produced agricultural produce from the farmer for the creation of intervention reserves.

(5) An agricultural services co-operative society shall also receive a compensation, if it:

1) is not a registered taxable person;

2) the received compensation is disbursed in full to a farmer.

(6) For a farmer to be able to receive a compensation, he shall submit a certification to the specific processor of agricultural produce that the farmer is a non-registered taxable person and that he has the right to receive a compensation in accordance with this Section.

(7) [23 November 2016].

(8) [23 November 2016].

(9) The processor of agricultural produce, in his tax return regarding a taxation period, shall reduce the amount of tax to be paid into the State budget by the amount of the compensation disbursed to a farmer.

(10) If the processor of agricultural produce purchases agricultural produce from a farmer for the value (excluding compensation) that is higher or lower than the value of supply for which analogue produce are purchased from a registered taxable person, he shall forfeit the rights referred to in Paragraph nine of this Section.

(11) Conditions of this Section shall not be applicable if:

1) purchased or processed products, or plant products gathered in the wild, or mushrooms, or caught fishery products or hunted products of animal origin, which are not acquired as a result of the production of agricultural produce, are handed over to the processor of agricultural produce;

2) the processor of agricultural produce does not carry out or does not ensure the processing of the agricultural produce received from a farmer, but uses them for trade.

[23 November 2016]

Section 136. Special Tax Application Arrangement to Services Supplied by a Tour Operator

(1) Tax shall be applied to the services supplied by a tour operator, if the tour operator acts on its own behalf and in favour of a person who receives tourism service (hereinafter in this Section - the traveller), and makes use of the supply of goods and services of other persons for ensuring tourism services provided to the traveller.

(2) All activities performed by a tour operator to ensure the supply of tourism service (journey) shall be treated as a single service supplied by the tour operator to the traveller. Such service shall be taxable.

(3) The taxable amount of the service provided by a tour operator shall be the difference between the total amount (excluding tax) paid by the recipient of the service (the traveller), and the actual charges for the supply of goods and services which are provided to the tour operators by other persons, if such transactions provide direct benefit to the traveller.

(4) Tax calculated by a tour operator for the services it has provided itself (including development of a travel package and publication of advertising brochures) shall be included in the total value of a travel package and collected from the traveller. In calculating the amount of the tax payable into the State budget, the tax estimated for the goods acquired and services received inland for ensuring the service supplied by the tour operator itself (including lease of premises, electronic communications services, electricity) shall be deducted as the input tax.

(5) Tax for other tourism-related services (including services of accommodation facilities, transportation, public catering services) which are actually provided inland by other registered taxable persons shall be included in the total value of the tourism service and collected from the traveller. The amount of tax collected for such services shall be fully transferred by the tour operator to the actual provider of the services. The tour operator may not deduct such amount as input tax.

(6) A tour operator shall calculate the value of taxable tourism service referred to in Paragraph three of this Section and include it in the tax return for the taxation period in which the service was supplied to the traveller and invoices were received from other persons regarding the actual value of the services supplied, but not later than the next taxation period after the supply of the service to the traveller.

(7) The value of the tourism service supplied by a tour operator shall be taxable at the standard tax rate. If the tourism service is supplied both in and outside the territory of the European Union, the zero per cent tax rate shall be applied only to that part of the service, which is supplied outside the territory of the European Union.

(8) The special tax application arrangement laid down in this Section shall not be applied to services which are provided by a tourism agent which on behalf of the tour operator on the basis of an authorisation or other contract governed by civil law sells tourism services prepared by the tour operator to a traveller. The tax in respect of the intermediary service supplied by the tourism agent shall be applied in accordance with the general procedure laid down in this Law.

Section 137. Special Procedures for Payment of Tax and Deduction of Input Tax

(1) A registered taxable person who conforms to at least one of the following criteria has the right to apply the procedures laid down in this Section for payment of tax and deduction of input tax:

1) the total value of taxable transactions in the previous taxation year has not exceeded EUR 100 000;

2) upon registering with the State Revenue Service Value Added Tax Taxable Persons Register, it is not planned that the amount of transactions in the taxation year will exceed EUR 100 000.

(2) A registered taxable person, for whom the total value of taxable transactions in the previous taxation year has reached EUR 100 000, however, not exceeded EUR 500 000, has the right to apply the procedures laid down in this Section for payment of tax and deduction of input tax, and who is:

1) a registered taxable person who is operating in the fisheries sector - in respect of the supplies of fresh, frozen or chilled fish and crustaceans;

2) the producer of agricultural produce or an agricultural services co-operative society - in respect of the supply of the following agricultural produce:

a) live animals;

b) milk and dairy products;

c) birds' eggs;

d) natural honey;

e) vegetables, roots, tubers;

f) cereals;

g) oil seeds and fruits, different grains, seeds and fruits.

(21) A registered taxable person, for whom the total value of taxable transactions in the previous taxation year has reached EUR 100 000, however, not exceeded EUR 2 000 000, and who supplies services of the administration of a residential house, has the right to apply the procedures laid down in this Section for payment of tax and deduction of input tax with regard to the supply of services of the administration of a residential house.

(3) The total value of fixed assets and intangible investments supplied by a taxable person shall not be included in the sum of the value of transactions referred to in Paragraphs one, two and 2.1 of this Section, if the taxable person carries out such supply once within a 12-month period.

(4) The registered taxable persons referred to in Paragraphs one, two and 2.1 of this Section shall pay the tax into the State budget for the taxation period, during which payment for the goods supplied or services supplied was received, unless it is laid down otherwise in this Section.

(5) The registered taxable persons referred to in Paragraphs one, two and 2.1 of this Section have the right to deduct the input tax for the goods and services received for the provision of such transactions in the taxation period, during which they have paid the tax amounts indicated in tax invoices received from other registered taxable person.

(6) The registered taxable persons referred to in Paragraphs two and 2.1 of this Section shall pay the tax into the State budget for the taxation period, during which payment for the goods supplied or services supplied was received, but not later than six months following the issue of the tax invoice.

(7) A registered taxable person who wishes to apply the procedures laid down in this Section for payment of tax and deduction of input tax shall inform the State Revenue Service thereof until 31 January of the taxation year or upon submitting a submission for registration with the State Revenue Service Value Added Tax Taxable Persons Register.

(8) A registered taxable person who applies the procedures laid down in this Section for payment of tax and deduction of input tax does not have the right to change these procedures until the subsequent taxation year.

(9) A registered taxable person who has applied the procedures laid in this Section for payment of tax and deduction of input tax during the taxation year, but does not wish to apply them in post-taxation year, shall inform the State Revenue Service thereof until 31 December of the taxation year.

(10) A registered taxable person who in a taxation year has applied the procedures for payment of tax and deduction of input tax laid down in this Section, but he does not wish to apply it in a post-taxation year, the tax for transactions performed in the taxation year shall be declared and paid into the State budget not later than by submitting a tax return for June or the second quarter of the post-taxation year concurrently indicating in such tax return the input tax to be deducted for the tax amounts indicated in tax invoices received in the taxation year.

(11) A person who has been excluded from the State Revenue Service Value Added Tax Taxable Persons Register and until exclusion he has applied the special procedures for payment of tax and deduction of input tax laid down in this Section, shall include the transactions performed in previous taxation periods in a tax return, which were not included in tax returns, using the procedures laid down in this Section and pay the tax into the State budget within 20 days after exclusion thereof from the State Revenue Service Value Added Tax Taxable Persons Register. Concurrently input tax to be deducted for the tax amounts not paid and included in tax invoices received in previous taxation periods shall be included in such tax return.

(12) The special procedures for payment of tax and deduction of input tax laid down in this Section shall not be applicable for the services supplied and supply of goods, the place of supply of which is not inland, as well as for the supply of goods in the territory of the European Union and exportation of goods.

[19 September 2013; 30 November 2015; 23 November 2016]

Section 138. Special Tax Application Arrangement in Transactions with Second-hand Goods, Works of Art, Collectors' Items and Antiques

(1) A dealer of second-hand goods, works of art, collectors' items and antiques (hereinafter - the dealer) is entitled to choose to apply the special tax application arrangement laid down in this Section or the general tax application procedure in transactions with the goods laid down by the Cabinet which are deemed to be second-hand goods, works of art, collectors' items and antiques.

(2) A dealer shall be a registered taxable person the economic activity of which is the acquisition or importation of second-hand goods, works of art, collectors' items and antiques in order for them to be sold, regardless of whether that person is acting in his interests or in the interests of another person according to a contract under which negotiation consideration is payable on purchase or sale.

(3) Within the meaning of this Section also a pledgee (except credit institutions) which is operating in accordance with the norms of the Civil Law and sells the pledged property for the satisfaction of his claim shall be deemed a dealer.

(4) A seller of second-hand goods, works of art, collectors' items and antiques (hereinafter - the seller) shall be a person who supplies or transfers second-hand goods, works of art, collectors' items and antiques to a dealer for sale and who conforms to at least one of the following conditions:

1) is not a taxable person;

2) performs only such transactions that are not taxable in accordance with Section 52, Paragraph one of this Law or the relevant legal acts of another Member State;

3) supplies or transfers used fixed assets for sale to a dealer and is a non-registered taxable person or also a non-registered taxable person of another Member State in accordance with legal acts of another Member State;

4) is a dealer who applies the special tax application arrangement for the supply of goods in accordance with this Section or the relevant legal acts of another Member State.

(5) The requirements laid down in this Section for a seller shall be applicable also to a pledger, if the pledger sells pledged property for the satisfaction of his claim and conforms to at least one of the conditions of Paragraph four, Clause 1, 2 or 3 of this Section.

(6) A purchaser of second-hand goods, works of art, collectors' items and antiques (hereinafter - the purchaser) is a person to whom goods are supplied by the dealer.

(7) A dealer has the right to choose to apply the special tax application arrangement laid down in this Section for the supply of such goods by submitting a written submission to the State Revenue Service not later than a month before the supply of goods:

1) the supply of such works of art, collectors' items or antiques which have been released for free circulation by the dealer himself;

2) the supply of such works of art which have been supplied to the dealer by the creator of the works of art or the successor in title.

(8) A dealer is entitled to commence the special tax application arrangement laid down in this Section for the supply of goods referred to in Paragraph seven of this Section or change to the general tax application procedure starting form the first day of a new taxation period, indicating the specific date in the submission addressed to the State Revenue Service.

(9) A dealer is entitled to change the special tax application arrangement laid down in this Section for the supply of goods referred to in Paragraph seven of this Section to the general tax application procedure not earlier than after 24 months.

(10) In applying the special tax application arrangement laid down in this Section the difference between the sales value (amount of money), which a dealer has received for the second-hand goods, works of art, collectors' items or antiques supplied to a purchaser, and the procurement value shall be taxable, reducing such difference for the calculated tax value.

(11) In applying the special tax application arrangement laid down in this Section, if the pledged property is sold, the negotiation consideration that is reduced for the calculated tax value shall be taxable. If the negotiation consideration is not laid down in the loan agreement or it is laid down less than 10 per cent from the sales value referred to in Paragraph ten of this Section, the difference between the sales value and amount of loan issued by a pledger shall be taxable, reducing such difference for the calculated tax value.

(12) The sales value referred to in Paragraph ten of this Section shall be the whole consideration that is or will be received by a dealer for the supply of goods from a purchaser or a third person, including the subsidies, taxes, duties and other payments directly related to the transaction, as well as supplementary payments (for example, the negotiation consideration, costs for wrapping, transport and insurance).

(13) Within the meaning of this Section the sales value shall also be an amount of money that the pledgee has received from the purchaser for the pledged property sold.

(14) The procurement value referred to in Paragraph ten of this Section shall be the whole consideration which has been or will be paid by a dealer to a seller or to the creator of the works of art or successor in title for the supply of goods, including the subsidies, taxes, duties and other payments directly related to the transaction, as well as supplementary payments (for example, negotiation consideration, costs for wrapping, transport and insurance).

(15) The procurement value for the works of art, collectors' items or antiques which the dealer has imported and which are referred to in Paragraph ten of this Section shall be the taxable value of goods in transaction of importation laid down in Section 36, Paragraph one of this Law to which the tax due or paid for the importation of such goods is added.

(16) If the value of the difference referred to in Paragraph ten or eleven of this Section is negative, tax shall not be calculated from it.

(17) If goods are not sold, but returned to the seller or creator of the work of art, or to the successor in title, tax shall be imposed on the whole consideration received by the dealer from the seller or the creator, or the successor in title (including payment for the service, repair or restoration, transportation).

(18) A dealer shall not indicate the tax value in a tax invoice issued to the purchaser for supplies of goods subject to tax in accordance with the special tax application arrangement.

(19) If the special tax application arrangement laid down in this Section is applied to the supply of goods, a purchaser shall not deduct the tax for the acquired goods as input tax.

(20) If the special tax application arrangement laid down in this Section is applied for the supply of goods referred to in Paragraph seven of this Section, a dealer shall not deduct the tax paid or due for such supply of goods as input tax.

(21) If the special tax application arrangement laid down in this Section is applied for a transaction and the value of input tax is larger than the calculated tax value, the dealer has the right to deduct the part of input tax of the tax amount to be paid into the State budget which does not exceed the calculated tax value.

(22) The special tax application arrangement shall not be applied to supplies of such means of transport which in conformity with Section 1, Clause 9 of this Law are deemed new means of transport.

(23) The Cabinet shall determine:

1) goods that are deemed to be second-hand goods, as well as works of art, collectors' items and antiques in conformity with the Combined Nomenclature codes laid down in Annex 1 to Council Regulation (EEC) No 2658/87 of 23 July 1987 on the tariff and statistical nomenclature and on the Common Customs Tariff and amendments thereto;

2) the procedures for the accounts of second-hand goods, works of art, collectors' items and antiques and the documents necessary for the provision of accounts and content thereof.

Section 139. Special Tax Application Arrangement in Transactions with Investment Gold

(1) Within the meaning of this Law investment gold shall mean:

1) gold, in the form of a bar or a wafer of weights accepted by the bullion markets, of a purity equal to or greater than 995 thousandths, whether or not represented by securities;

2) gold coins of a purity equal to or greater than 900 thousandths and minted after 1800, which are or have been legal tender in the country of origin, and are normally sold at a price which does not exceed the open market value of the gold contained in the coins by more than 80 per cent.

(2) The following shall not be taxable:

1) the supply of investment gold inland and in the territory of the European Union;

2) the acquisition of investment gold in the territory of the European Union;

3) the importation of investment gold;

4) the intermediary services supplied in transactions with investment gold.

(3) A registered taxable person in accordance with Paragraph four of this Section has the right to apply tax for the supply of investment gold and intermediary service, if he has informed the State Revenue Service regarding such a choice before the performance of a transaction.

(4) A registered taxable person who normally supplies gold for industrial purposes may choose whether to apply the tax to the supply of investment gold referred to in Paragraph one, Clause 1 of this Section.

(5) A registered taxable person who produces investment gold or transforms any gold into investment gold is entitled to choose whether to apply the tax to the supply of investment gold referred to in Paragraph one, Clause 1 of this Section.

(6) A registered taxable person who supplies intermediary services, participating in the supplies of investment gold referred to Paragraphs four and five of this Section, is entitled to choose whether to apply tax to the intermediary service.

(7) A registered taxable person who performs the supply of investment gold released from taxes has the right, in applying the procedures laid down in Section 92 of this Law, in the tax return to deduct tax from the amount of tax to be paid into the State budget as input tax, which is calculated for:

1) the acquisition of investment gold from other taxable persons or registered taxable persons of another Member State who have decided to apply tax for the supply of investment gold;

2) the acquisition of gold from other registered taxable persons or registered taxable persons of another Member State or importation of gold if such gold is to be transformed into investment gold by the taxable person or an intermediary agent in the name of a taxable person;

3) services, which are received in order to change the form, weight or purity of the gold or investment gold.

(8) A registered taxable person who produces investment gold or transforms gold into investment gold, regardless of whether such taxable person in accordance with Paragraph five or six of this Section has decided to apply tax to the supply of investment gold or not, has the right in applying the procedures laid down in Section 92 of this Law, in the tax return to deduct tax from the amount of tax to be paid into the State budget as input tax for goods, which are acquired from other registered taxable persons or registered taxable persons of another Member State, or imported goods and received services, which are related to the production of investment gold.

(9) For a registered taxable person who performs transactions with investment gold, the documents, which are related to such transactions, shall be preserved for five years after the end of the calendar year in which the transaction ended.

Section 140. Special Tax Calculation and Payment Arrangement for Electronically Supplied Services by a Taxable Person of a Third Country or Third Territory in the Territory of the European Union

[12 June 2014 / See Paragraph 18 of Transitional Provisions]

Section 140.1 Special Tax Calculation and Payment Arrangement for Electronic Communications, Broadcasting and Electronically Supplied Services to a Non-taxable Person

(1) For the purpose of this Section:

1) non-Union scheme is the scheme referred to in Article 57.a(1) of Council Implementing Regulation (EU) No 282/2011 of 15 March 2011 laying down implementing measures for Directive 2006/112/EC on the common system of value added tax (recast) (in the wording of Council Regulation (EU) No 967/2012 of 9 October 2012 amending Implementing Regulation (EU) No 282/2011 as regards the special schemes for non-established taxable persons supplying telecommunications services, broadcasting services or electronic services to non-taxable persons);

2) Member State of identification is one of the following Member States:

a) for a taxable person who does not conduct economic activity in the European Union - such Member State, which is notified by the relevant taxable person when he commences the operation in the territory of the European Union as a taxable person, using non-Union scheme;

b) for a taxable person who conducts economic activity in the European Union, but does not conduct it in the Member State of consumption - such Member State, which is the place of establishment of a business or, if the place of establishment of a business is outside the European Union - such Member State, in which his fixed establishment is located. If the place of establishment of a business of the taxable person is outside the European Union, but he has several establishments in the European Union, the Member State of identification is the Member State, in which the fixed establishment is located and which has been indicated by the taxable person as the Member State, in which he applies the Union scheme (hereinafter in this Section - the Union scheme). The choice of the taxable person in relation to the Member State of identification is binding to such taxable person in the relevant calendar year and in at least two following calendar years;

3) special scheme is the scheme referred to in Clauses 1 and 7 of this Paragraph;

4) a taxable person who does not perform economic activity in the European Union is a taxable person who does not have a place of establishment of a business and a fixed establishment in the European Union and who does not have another duty to be established in the European Union for the needs of tax payment;

5) a taxable person who does not perform economic activity in the Member State of consumption is a taxable person who has a place of establishment of a business or a fixed establishment in the European Union, but who does not have a place of establishment of a business and a fixed establishment in the Member State of consumption;

6) the Member State of consumption is such Member State, in relation to which it is considered that telecommunications, broadcasting and electronically supplied services in accordance with Section 27 of this Law and Articles 24.a and 24.b of Council Implementing Regulation (EU) No 282/2011 of 15 March 2011 laying down implementing measures for Directive 2006/112/EC on the common system of value added tax (recast) (in the wording of Council Implementing Regulation (EU) No 1042/2013 of 7 October 2013 amending Implementing Regulation (EU) No 282/2011 as regards the place of supply of services) are supplied;

7) the Union scheme is the scheme referred to in Article 57.a(2) of Council Implementing Regulation (EU) No 282/2011 of 15 March 2011 laying down implementing measures for Directive 2006/112/EC on the common system of value added tax (recast) (in the wording of Council Regulation (EU) No 967/2012 of 9 October 2012 amending Implementing Regulation (EU) No 282/2011 as regards the special schemes for non-established taxable persons supplying telecommunications services, broadcasting services or electronic services to non-taxable persons).

(2) The taxable person referred to in Paragraph one, Clause 4 or 5 of this Section, who supplies electronic communications, broadcasting and electronically supplied services in the territory of the European Union to a person who is not a taxable person and who performs economic activity in a Member State of consumption or who has a declared place of residence or place of permanent residence therein, has the right to register inland for the application of non-Union scheme or Union scheme. The abovementioned scheme shall be applied to all electronic communications, broadcasting and electronically supplied services supplied in the European Union.

(3) If the taxable person referred to in Paragraph one, Clause 4 or 5 of this Section chooses to register inland for the application of non-Union scheme or Union scheme, it shall submit an application to the State Revenue Service, using the Electronic Declaration System of the State Revenue Service.

(4) In accordance with Paragraph three of this Section the State Revenue Service shall assign a registration number to a taxable person for the application of non-Union scheme or Union scheme in the State Revenue Service Value Added Tax Taxable Persons Register or in relation to a registered taxable person shall use the registration number in the State Revenue Service Value Added Tax Taxable Persons Register already assigned thereto for activities, in relation to which such taxable person is registered inland for the purpose of tax application.

(5) The State Revenue Service shall notify the decision to assign a registration number in the State Revenue Service Value Added Tax Taxable Persons Register for the application of non-Union scheme or Union scheme to the taxable person electronically.

(6) A taxable person who wishes to apply any of special schemes shall register in the relevant Member State of identification for the needs of tax payment.

(7) The taxable person referred to in Paragraph one, Clause 4 or 5 of this Section who has been assigned a registration number in the State Revenue Service Value Added Tax Taxable Persons Register for the application of non-Union scheme or Union scheme inland, shall, within 20 days after the end of the taxation period, submit electronically to the State Revenue Service a tax return for each quarter regarding electronic communications, broadcasting and electronically supplied services. The abovementioned tax return shall also be submitted if the taxable person has not provided the relevant services.

(8) The taxable person referred to in Paragraph one, Clause 4 or 5 of this Section who has been assigned a registration number in the State Revenue Service Value Added Tax Taxable Persons Register for the application of non-Union scheme or Union scheme inland shall pay the tax, which has been calculated for the taxation period, into the State budget within 20 days after the end of the taxation period, submitting the return referred to in Paragraph seven of this Section.

(9) The taxable person referred to in Paragraph one, Clause 4 or 5 of this Section who has been excluded from the State Revenue Service Value Added Tax Taxable Persons Register shall, within 20 days after exclusion, submit a tax return to the State Revenue Service regarding electronic communications, broadcasting and electronically supplied services and pay the tax into the State budget for the taxation period, in which he was excluded from the State Revenue Service Value Added Tax Taxable Persons Register.

(10) The taxable person referred to in Paragraph one, Clause 4 of this Section who applies non-Union scheme shall be refunded the tax amount for the goods purchased and services received inland for ensuring his telecommunications, broadcasting and electronically supplied services from the State budget, applying the procedures laid down in Section 112 of this Law.

(11) The taxable person referred to in Paragraph one, Clause 5 of this Section who applies the Union scheme shall be refunded the tax amount for the goods purchased and services received inland for ensuring his electronic communications, broadcasting and electronically supplied services from the State budget, applying the procedures laid down in Section 113 of this Law, except cases when the relevant taxable person also performs activities inland, to which the abovementioned special scheme does not apply and in relation to which the taxable person has been registered with the Revenue Service Value Added Tax Taxable Persons Register for the purpose of tax application.

(12) If the taxable person referred to in Paragraph one, Clause 5 of this Section who applies the Union scheme performs activities inland, to which the Union scheme does not apply and in relation to which he must be registered with the Revenue Service Value Added Tax Taxable Persons Register for the purpose of tax application, he shall deduct the tax amount for the goods and services for ensuring his electronic communications, broadcasting and electronically supplied services in the tax return to be submitted in accordance with Section 117 of this Law.

(13) A taxable person who has been registered inland for the application of special schemes has a duty:

1) to notify electronically the State Revenue Service regarding the changes in his operation, due to which the relevant conditions are not implemented anymore so that he could apply any of special schemes, as well as to notify when he stops applying any of special schemes, and regarding other changes in the registration data;

2) to ensure accounting of the services supplied;

3) in order to prove the correctness of tax calculations, to keep source documents and accounting register data for 10 years after 31 December of the year in which the services were supplied;

4) upon request of the State Revenue Service, to submit source documents and accounting register data electronically to be used for tax calculation, regarding each individual type of the service supplied.

(14) The Cabinet shall determine:

1) the procedures, by which the taxable person referred to in Paragraph one, Clauses 4 and 5 of this Section for the application of special schemes shall submit an application regarding registration with the register of providers of electronic communications, broadcasting and electronically supplied services of the State Revenue Service, and the information to be indicated in the application;

2) the procedures, by which the State Revenue Service shall register the taxable person referred to in Paragraph one, Clauses 4 and 5 of this Section as the provider of electronic communications, broadcasting and electronically supplied services in the territory of the European Union, and the time limits for registration;

3) the procedures, by which the taxable person referred to in Paragraph one, Clauses 4 and 5 of this Section shall be excluded from the register of providers of electronic communications, broadcasting and electronically supplied services of the State Revenue Service, and the time limit for exclusion;

4) the procedures, by which the taxable person referred to in Paragraph one, Clauses 4 and 5 of this Section who has been registered inland for the provision of electronic communications, broadcasting and electronically supplied services in the territory of the European Union, shall prepare and fill the tax return regarding electronic communications, broadcasting and electronically supplied services, and the information to be indicated in the return.

[12 June 2014 / The special tax calculation and payment arrangement for electronic communications, broadcasting and electronically supplied services to a non-taxable person referred to in the Section shall be applied from 1 January 2015. See Paragraph 20 of Transitional Provisions]

Section 141. Special Tax Application Arrangement for the Supply of Timber and Services Related Thereto

(1) Tax for the supply of timber referred to in Paragraph three of this Section carried out inland shall be paid by a recipient of timber into the State budget, if the supplier of timber and recipient of timber are registered taxable persons.

(2) Tax for the services referred to in Paragraph four of this Section which are provided inland in transactions related to the supply of timber referred to in Paragraph three of this Section shall be paid into the State budget by a recipient of services, if the supplier of services and recipient of services are registered taxable persons.

(3) The procedures referred to in Paragraph one of this Section are applicable to the supply of the following kinds of timber:

1) cut and trimmed, cross-cut and not cross-cut, barked and unbarked, lengthways split and unsplit round timber consisting of one element without artificial joints, the length of which exceeds one metre, but the thin-end diameter of which is at least three centimetres;

2) sawn timber of any length, sawn, planed or unplaned, consisting of one element without artificial joints and which is thicker than six millimetres;

3) wood in the form of round timber, logs, branches, bundles of branches or similar;

4) wood chips and shavings, sawdust and wood residues;

5) sawdust and wood residues in the form of agglomerated or non-agglomerated briquettes, granules or similar intended to be used as firewood.

(4) The procedures referred to in Paragraph two of this Section shall be applicable to the following services:

1) services related to the preparation of timber (including granting of felling rights, cutting of firebreak areas in forest land and arrangement of sample felling areas, measuring, evaluation, cutting, trimming and stacking of standing trees and roundwood);

2) timber treatment and processing services (including sawing, cutting into length, barking, milling, planing, turning, grinding, drying, gluing, lacquering and chipping);

3) labelling, rejection of spoilage, sorting, packaging of timber;

4) services of chemical treatment of timber (including impregnation of timber);

5) transport, loading, unloading, transhipment and storage of timber;

6) marketing and intermediary services related to the supply of timber.

(5) A supplier of timber shall issue a tax invoice to the recipient of timber in which the value of timber shall be indicated excluding tax.

(6) The recipient of timber shall pay the value of timber indicated in the tax invoice to the supplier of timber.

(7) A supplier of service related to the supply of timber shall issue a tax invoice to the recipient of service in which the value of the supplied service is indicated excluding tax.

(8) A recipient of service related to the supply of timber shall pay the value of the services indicated in the tax invoice to the supplier of service.

[30 November 2015]

Section 142. Special Tax Application Arrangement for the Construction Services and Supply of Construction Products

(1) Within the meaning of this Section the construction services shall be any performance of construction works, as well as designing of all types included in the contract for construction services.

(2) Tax for the construction services supplied inland shall be paid into the State budget by the recipient of construction services, if the supplier of construction services and recipient of construction services are registered taxable persons.

(3) The procedures laid down in Paragraph two of this Section shall also be applied by a State or local government institution or a local government which is registered with the State Revenue Service Value Added Tax Taxable Persons Register in accordance with Section 55, Paragraph one or Section 58, Paragraph one of this Law and receives the construction services referred to in Paragraph four of this Section in accordance with the procurement procedures laid down in the Public Procurement Law or as a public partner in accordance with the Law on Public-Private Partnership.

(4) The procedures laid down in Paragraph two of this Section shall be applicable to the construction services.

(5) Expenses directly related to the provision of a particular service (including the acquisition and installation value of construction products, constructions or devices, which are an integral part of the structure, or of other devices provided for in the laws and regulations in the field of construction, the value of construction instruments, mechanisms or technological equipment) shall be included in the value of the supplied construction service.

(6) A supplier of a construction service shall issue a tax invoice to a recipient of the construction service in which the value of the supplied construction service excluding tax shall be indicated.

(7) A recipient of the construction service shall pay the value of the construction service indicated in the tax invoice to the supplier of the construction service.

(8) Within the meaning of this Section the supply of construction products shall be supply of any product and industrially prepared construction intended for incorporation into a structure.

(9) Tax for the supply of construction products referred to in Paragraph eight of this Section carried out inland shall be paid by a recipient of construction products into the State budget, if the supplier of construction products and the recipient of construction products are registered taxable persons.

(10) The supplier of construction products shall issue a tax invoice to the recipient of construction products in which the value of the supplied construction products shall be indicated excluding tax.

(11) The recipient of construction products shall pay the value of construction products indicated in the tax invoice to the supplier of construction products.

(12) The recipient of the construction service shall pay for the received service, and the recipient of construction products shall pay for the received goods using non-cash payments.

[27 July 2017]

Section 143. Special Tax Application Arrangement for the Supply of Scrap and Services Related Thereto

(1) Tax for the supply of scrap referred to in Paragraph three of this Section performed inland shall be paid by a recipient of scrap into the State budget if the following conditions are met:

1) the supplier of scrap and the recipient of scrap are registered taxable persons;

2) the recipient of scrap has a licence for the purchase of metal cuttings and scrap in the Republic of Latvia or, in the absence of such licence, a permit for the performance of Category A or B polluting activity or waste collection, reloading, sorting and storage.

(2) Tax related to the scrap supply services referred to in Paragraph four of this Section performed inland shall be paid by the recipient of services into the State budget if the following conditions are met:

1) the supplier of services and the recipient of services are registered taxable persons;

2) the recipient of scrap has a licence for the purchase of metal cuttings and scrap in the Republic of Latvia or, in the absence of such licence, a permit for the performance of Category A or B polluting activity or waste collection, reloading, sorting and storage.

(3) The procedures laid down in Paragraph one of this Section are applicable to supply of the following scrap:

1) cuttings and scrap of ferrous and non-ferrous metals and their alloys which have arisen as a result of economic activity in industry, construction, agriculture or in other fields, as well as in domestic activities;

2) metal articles or parts thereof which are not usable for the intended purposes due to breakings, curvatures, wear or other reasons;

3) different types of used and non-reusable means of transport or parts thereof, including car wrecks;

4) electric and electronic equipment waste;

5) batteries and accumulators.

(4) The procedures laid down in Paragraph two of this Section shall be applied to the supply of the following services related to the supply of scrap:

1) grading of scrap of ferrous and non-ferrous metals and their alloys from the flows of industrial and municipal waste;

2) sorting, separation, cutting, compressing, pressing, casting in bars of cuttings and scrap of ferrous and non-ferrous metals and their alloys;

3) breaking, separation, cutting, compressing, pressing of used products of ferrous or non-ferrous metals and their alloys and other non-reusable materials;

4) breaking, separation and sorting of metal constructions of non-reusable buildings, engineering structures or other infrastructure objects or parts thereof.

(5) A supplier of scrap shall issue a tax invoice to the recipient of scrap in which the value of scrap shall be indicated excluding tax.

(6) A recipient of scrap shall pay the value of scrap indicated in a tax invoice to the supplier of scrap.

(7) A supplier of service related to the supply of scrap shall issue a tax invoice to the recipient of service in which the value of the provided service is indicated excluding tax.

(8) A recipient of service related to the supply of scrap shall pay the value of the services indicated in a tax invoice to the supplier of service.

Section 143.1 Special Tax Application Arrangements for the Supplies of Mobile Phones, Tablet Computers, Laptop Computers, Integrated Circuit Devices and Video Game Consoles

(1) Tax for the supply of goods referred to in Paragraph two of this Section carried out inland shall be paid by a recipient of goods into the State budget, if the supplier of goods and the recipient of goods are registered taxable persons.

(2) The procedures referred to in Paragraph one of this Section shall be applicable to the supply of the following goods:

1) mobile phones;

2) tablet computers and laptop computers;

3) integrated circuit devices (including microprocessors and central processing units);

4) video game consoles.

(3) The supplier of goods referred to in Paragraph two of this Section shall issue a tax invoice to the recipient of goods in which the value of the supplied goods shall be indicated excluding tax.

(4) The recipient of goods referred to in Paragraph two of this Section shall pay the value of goods indicated in the tax invoice to the supplier of goods.

(5) The recipient of goods referred to in Paragraph two of this Section shall pay for the received goods using non-cash payments.

[30 November 2015; 27 July 2017]

Section 143.2 Special Tax Application Arrangements for the Supplies of Cereals and Technical Crops

(1) Tax for the supply of goods referred to in Paragraph two of this Section carried out inland shall be paid by a recipient of goods into the State budget, if the supplier of goods and the recipient of goods are registered taxable persons.

(2) The procedures referred to in Paragraph one of this Section shall be applicable to the supply of the following cereals and technical crops (including oil seeds), including the supply of mixtures of these goods (which are not normally used in the unaltered state for final consumption):

1) wheat;

2) rye;

3) barley;

4) oat;

5) corn;

6) buckwheat;

7) triticale;

8) soy bean, also split;

9) linseed, also split;

10) rape or colza seeds, also split.

(3) The supplier of goods referred to in Paragraph two of this Section shall issue a tax invoice to the recipient of goods in which the value of the supplied goods shall be indicated excluding tax.

(4) The recipient of goods referred to in Paragraph two of this Section shall pay the value of goods indicated in the tax invoice to the supplier of goods.

(5) The recipient of goods referred to in Paragraph two of this Section shall pay for the received goods using non-cash payments.

[16 June 2016]

Section 143.3 Special Tax Application Arrangements for the Supplies of Untreated Precious Metals, Precious Metal Alloys and Metals Clad with Precious Metals

(1) Tax for the supply of goods referred to in Paragraph two of this Section carried out inland shall be paid by a recipient of goods into the State budget, if the supplier of goods and the recipient of goods are registered taxable persons.

(2) The procedures referred to in Paragraph one of this Section shall be applicable to the supply of the following goods:

1) untreated precious metals and semi-finished products thereof, if the special tax application arrangements referred to in Section 139 of this Law do not apply to them in transactions with investment gold;

2) untreated precious metal alloys and semi-finished products thereof;

3) untreated metals clad with precious metals and semi-finished products thereof;

4) waste and scrap of precious metals or metals clad with precious metals.

(3) The supplier of goods referred to in Paragraph two of this Section shall issue a tax invoice to the recipient of goods in which the value of the supplied goods shall be indicated excluding tax.

(4) The recipient of goods referred to in Paragraph two of this Section shall pay the value of goods indicated in the tax invoice to the supplier of goods.

(5) The recipient of goods referred to in Paragraph two of this Section shall pay for the received goods using non-cash payments.

[23 November 2016]

Section 143.4 Special Tax Application Arrangement for the Supply of Metal Products and Services Related Thereto

(1) Tax for the supply of metal products determined by the Cabinet which is carried out inland shall be paid by a recipient of metal products into the State budget, if the supplier of metal products and the recipient of metal products are registered taxable persons.

(2) Tax for the services related to the supply of metal products determined by the Cabinet which are supplied inland shall be paid into the State budget by the recipient of services, if the supplier of services and recipient of services are registered taxable persons.

(3) The supplier of metal products shall issue a tax invoice to the recipient of metal products in which the value of metal products shall be indicated excluding tax.

(4) The recipient of metal products shall pay the value of metal products indicated in the tax invoice to the supplier of metal products.

(5) The supplier of service related to the supply of metal products shall issue a tax invoice to the recipient of service in which the value of the provided service is indicated excluding tax.

(6) The recipient of service related to the supply of metal products shall pay the value of the services indicated in the tax invoice to the supplier of service.

(7) The recipient of metal products shall pay for the received goods, and the recipient of services related to the supply of metal products shall par for the received services using non-cash payments.

(8) The Cabinet shall determine:

1) the supply of such goods which are considered metal products in conformity with the Combined Nomenclature Codes laid down in Annex I to Council Regulation (EEC) No 2658/87 of 23 July 1987 on the tariff and statistical nomenclature and on the Common Customs Tariff, and amendments thereto;

2) the services related to the supply of metal products.

[27 July 2017]

Section 143.5 Special Tax Application Arrangements for the Supply of Household Electronic Devices and Household Electrical Equipment

(1) Tax for the supply of household electronic devices and household electrical equipment determined by the Cabinet which is carried out inland shall be paid by a recipient of goods into the State budget, if the supplier of goods and the recipient of goods are registered taxable persons.

(2) The supplier of goods referred to in Paragraph one of this Section shall issue a tax invoice to the recipient of goods in which the value of the supplied goods shall be indicated excluding tax.

(3) The recipient of goods referred to in Paragraph one of this Section shall pay the value of goods indicated in the tax invoice to the supplier of goods.

(4) The recipient of goods referred to in Paragraph one of this Section shall pay for the received goods using non-cash payments.

(5) The Cabinet shall determine the goods which are considered household electronic devices and household electrical equipment in conformity with the Combined Nomenclature Codes laid down in Annex I to Council Regulation (EEC) No 2658/87 of 23 July 1987 on the tariff and statistical nomenclature and on the Common Customs Tariff, and amendments thereto.

[27 July 2017]

Section 144. Special Tax Application Procedures in Transactions of Supply of Used Immovable Property

(1) If an immovable property is not an unused immovable property (hereinafter - the used immovable property), only a registered taxable person has the right to apply tax on the supply thereof.

(2) A registered taxable person shall exercise the right referred to in Paragraph one of this Section if the used immovable property which is registered with the State Revenue Service is supplied to the registered taxable person.

(3) A registered taxable person after performance of a transaction in the relevant taxation period shall inform the State Revenue Service regarding supply of the used immovable property by submitting Section C of the report on the use of the immovable property.

(4) When selling immovable property, the sales value of such immovable property shall be taxable.

(5) The Cabinet shall determine the procedures by which a registered taxable person shall perform the input tax adjustment, if the used immovable property, for the supply of which the registered taxable person has chosen to apply the tax in accordance with the conditions of this Section, previously has not been partially or wholly used for ensuring taxable transactions.

[6 November 2013]

Section 145. Application of Tax in Cases of Change of Participants of a Merchant (Undertaking), Reorganisation of Liquidation

(1) If a State or a local government capital company is privatised, and its new owner takes over all rights and liabilities of the capital company in order to continue economic activity, the transaction shall not be taxable.

(2) If a commercial company (undertaking), which during its period of operation was not a registered taxable person is liquidated, then in selling or transferring the property of such person tax need not be paid.

(3) If a commercial company (undertaking), which has been a registered taxable person or which should have been a registered taxable person during the period of its operation is liquidated, then tax for the goods supplied shall be calculated and paid in accordance with this Law. In such cases, the person who performs the functions of a liquidator shall submit a tax return to the State Revenue Service.

(4) If a property of a registered taxable person is sold by a bailiff, administrator of insolvency proceedings or liquidator, tax shall be imposed on the market value (price) or the auction price of the property (full price bid at the auction, the highest price bid at the auction or the initial auction price in cases when the auction is announced as not having taken place).

(5) If a commercial company, which is a registered taxable person, as a result of reorganisation is divided and a new commercial company (undertaking) is established and registered with the State Revenue Service Value Added Tax Taxable Persons Register within 30 days after registration in the commercial register, tax for the separated property and the liabilities transferred thereby shall not be calculated.

(6) If a commercial company (undertaking), which is a registered taxable person, as a result of reorganisation is merged, tax for the transferred property and the liabilities transferred thereby shall not be calculated.

(7) If a commercial company (undertaking), which is a registered taxable person, as a result of reorganisation is restructured into a commercial company of another type, tax for the transferred property and the liabilities transferred thereby shall not be calculated.

(8) If an individual merchant, which is a registered taxable person, is transformed into a commercial company, tax for the transferred property shall not be calculated.

[6 November 2013]

Chapter XVIII
Liability for Violations of this Law

Section 146. Liability for Violations of this Law

(1) Liability for violations of this Law shall be determined by this Law and other laws and regulations of the Republic of Latvia.

(2) If a person issues a tax invoice illegally, receives tax that he does not have the right to receive, the State Revenue Service has the right to recover the illegally received amounts of tax in the State budget on an uncontested basis and to collect a fine in the amount of 100 per cent from the illegally received amount of tax.

(3) If a registered taxable person, when importing goods that are intended for ensuring taxable transactions, applies special tax arrangements for transactions of importation of goods, but in releasing the goods for free circulation has not included the tax amount in the tax return of the relevant taxation period, he shall pay a fine in the amount of 10 per cent from the amount of tax not included in the tax return.

(4) If a person has not calculated and has not paid tax into the State budget in accordance with Section 84, Paragraph seven, Section 86, Section 88 and Section 89 of this Law, he shall pay a fine in the amount of 10 per cent from the unpaid amount of tax. Payment of the fine shall not release the person from paying of the tax into the State budget in accordance with the procedures and in the amount laid down by this Law.

(5) Participants of a VAT group shall be held jointly liable for the violations of this Law.

(6) Participants of a VAT group shall be held jointly liable for the tax commitments arisen during the activities of the VAT group and the time limit for the fulfilment of which has set in within three years after exclusion of the VAT group or a participant thereof from the State Revenue Service Value Added Tax Taxable Persons Register.

(7) A fiscal representative shall be held liable for tax commitments arising from the transactions represented by him, as well as for the presentation of supporting documents in relation to represented transactions.

(8) A registered taxable person the property of which is sold at an auction by a bailiff shall be held liable for inclusion of such transaction in a tax return and for reduction of the amount of tax to be paid into the State budget or unjustified increase of the amount of tax to be refunded from the State budget, if he has not provided the information to the bailiff regarding application of tax for such transaction or has provided false information regarding the taxable value of the property to be sold at an auction.

(9) The administrator of insolvency proceedings shall be responsible that within 45 days after the day when an entry regarding the proclamation of insolvency proceedings was made in the Insolvency Register such tax returns of a registered taxable person - legal person - are submitted, which had to be submitted for taxation periods until proclamation of insolvency proceedings. Returns shall be submitted according to the information that is at the disposal of the administrator of insolvency proceedings.

(10) The fulfilment of the obligation referred to in Paragraph nine of this Section shall not exempt the registered taxable person - legal person - from the liability for non-compliance with the time limit for submitting the tax return specified in Section 118 of this Law.

[12 June 2014 / See Paragraph 22 of Transitional Provisions]

Transitional Provisions

1. With the coming into force of this Law, the Law On Value Added Tax (Latvijas Republikas Saeimas un Ministru Kabineta Ziņotājs, 1995, No. 9, 24; 1996, No. 11; 1997, No. 24; 1999, No. 10, 24; 2001, No. 1, 7, 24; 2002, No. 21; 2003, No. 2, 15, 24; 2004, No. 2, 6, 8, 10, 23; 2005, No. 2, 14, 24; 2006, No. 14; 2007, No. 3; 2008, No. 5, 24; 2009, No. 2, 15; Latvijas Vēstnesis, 2009, No. 178, 200; 2010, No. 59, 199, 206; 2011, No. 65, 117, 202; 2012, No. 88) is repealed.

2. Tax return and annexes thereto for the last taxation period of 2012 shall be completed and submitted in accordance with the Cabinet Regulation No. 1640 of 22 December 2009, Regulations Regarding Value Added Tax Return.

3. If the hire purchase contract, in which a hire purchase object conforms to the supplies of goods referred to in Section 52, Paragraph one of this Law, is entered into until 1 January 2001, tax shall not be calculated for payments which are to be made in accordance with such contract after 1 January 2001. If conditions of such hire purchase contract are not fulfilled and the hire purchase object remains in the ownership of the lessor, tax shall be applicable as for lease transactions.

4. If the hire purchase contract, which provides for the supply of taxable goods, is entered into until 1 January 2001 and interest for credit not taxable until 31 December 2000 is indicated separately in the contract, then such interest shall not be taxable also after 1 January 2001 until the end of operation of the particular contract.

5. If the hire purchase contract is entered into until 30 April 2004, tax for such transaction shall be payable together with payments to be made in the time limits indicated in the contract, applying such a tax rate as was applicable to the hire purchase object on the day of entering into the contract.

6. The crediting of hire purchase, which is performed in accordance with a contract entered into until 30 April 2004, shall be deemed to be a financial transaction and tax shall not be applicable thereto.

7. A registered taxable person has the right to perform adjustment of input tax in accordance with Section 105 of this Law regarding bad debts which have arisen from 1 January 2009.

8. Section 105, Paragraph four of this Law shall be applicable to the amounts of bad debts, if a court ruling on the completion of bankruptcy procedure has been rendered in accordance with the regulation of insolvency proceedings which was in force until 31 October 2010.

9. In accordance with Section 56, Paragraph three of this Law a taxable person of a third country or third territory, who performs taxable transactions inland and has been registered with the State Revenue Service Value Added Tax Taxable Persons Register until 31 December 2011, shall register an authorised person with the State Revenue Service Value Added Tax Taxable Persons Register until 1 July 2013.

10. Section 57, Paragraph four and Section 59, Paragraph eight of this Law shall not be applicable to an authorised person who represents a taxable person of another Member State or a taxable person of a third country or third territory and who performed taxable transactions inland as an authorised person until 31 December 2012. Such person has an obligation to register with the State Revenue Service Value Added Tax Taxable Persons Register until 1 April 2013, if he continues to perform inland taxable transactions as an authorised person after 1 January 2013.

11. Registered taxable persons who in accordance with Section 10, Paragraphs 7.3 and 7.4 of the law On Value Added Tax did not deduct input tax for the acquired, leased or imported passenger car the number of seats of which, excluding the driver's seat, does not exceed eight seats, and input tax for costs related to the maintenance of such car, until 30 June 2013 has the right to deduct such input tax, indicating it in a tax return of the current taxation period.

12. Section 52, Paragraph one, Clause 21, Sub-clause "e" of this Law in respect of the tax application to an investment made in capital and management and supervision of securities shall be applicable starting from 1 January 2014.

13. Until 31 December 2016 a registered taxable person has the right to apply tax in transactions with immovable property which has been purchased until 27 July 2011 and to which amendments to Section 1, Clause 16, Section 2, Paragraph 17.1 and Section 6, Paragraph one, Clause 23 of the law On Value Added Tax coming into force on 1 October 2011 apply, in accordance with such procedures as laid down until 31 December 2012.

[30 November 2015]

14. Section 3, Paragraph seven, Section 58, Section 73, Paragraph one, Clause 7 and Paragraph two, Section 84, Paragraph eight, Section 91, Paragraph three, Section 115, Paragraph eight and Section 142 of this Law shall be applied to the construction services referred to in Section 142, Paragraph four of this Law which are supplied to State and local government institutions and local governments which have been registered or should be registered with the State Revenue Service Value Added Tax Taxable Persons Register in accordance with Section 55, Paragraph one or Section 58, Paragraph one of this Law and which receive the construction services referred to in Section 142, Paragraph four of this Law in accordance with the procurement procedure laid down in the Public Procurement Law or as a public partner in accordance with the Private-public Partnership Law, if the contracts for receipt of such services have been entered into starting from 1 January 2013. Tax shall be imposed on the construction services which are supplied to the persons referred to in this Paragraph in accordance with the contracts entered into until 31 December 2012 in accordance with the general procedure laid down in this Law.

[24 January 2013]

15. Section 100, Paragraph 1.1 of this Law shall apply to such passenger car and costs related to the maintenance thereof (including costs for the repair of such car and purchase of fuel), which has been acquired, leased or imported, starting from 1 January 2014. If the passenger car referred to in Section 100, Paragraph 1.1 of this Law has been purchased by 31 December 2013, then the norms of this Law, which were in force until 31 December 2013, shall be applicable to the costs related to the maintenance thereof.

[6 November 2013]

16. A registered taxable person who did not deduct the input tax in 2011, 2012 and 2013 in accordance with Section 10, Paragraph 7.1 of the law On Value Added Tax and Section 100, Paragraph two of this Law in full amount, has the right to deduct such not deducted part of input tax for 2011 in 2014, for 2012 - in 2015, for 2013 - in 2016 by indicating it in the current tax return of the taxation period, if the passenger car was used for ensuring taxable transactions in 2011, 2012 or 2013 accordingly. A registered taxable person shall prove the fact that the abovementioned car was used for ensuring taxable transactions in the relevant time period by:

1) the fact that record-keeping of the journeys related to the performance of economic activity was kept in accordance with the laws and regulations governing company car tax;

2) the fact that the car was declared in the State register on the vehicles and the drivers thereof in accordance with the laws and regulations governing company car tax.

[6 November 2013]

17. A registered taxable person who made a property investment in 2013 (including investing of fixed asset, except immovable property) in any of the commercial companies referred to in Section 103, Paragraph 2.1 and refunded the part of deducted input tax into the State budget for such investment in 2013 has the right to adjust accordingly the tax return of the particular taxation period in 2014.

[6 November 2013]

18. Section 140 of this Law shall be repealed on 1 January 2015.

[12 June 2014]

19. Amendments in relation to the rewording of Section 27 of this Law, amendments to Section 30, as well as amendments to Section 125, Paragraph one, Clause 21 in relation to substitution of the number "140" with the number "140.1" shall come into force on 1 January 2015.

[12 June 2014]

20. The special schemes of tax calculation and payment referred to in Section 140.1 of this Law for electronic communications, broadcasting and electronically supplied services to a person who is not a taxable person, as well as amendments in relation to supplementation of Section 1 of this Law with Clauses 4.1, 24.1 and 30 shall be applicable from 1 January 2015.

[12 June 2014]

21. By 1 October 2014 the Cabinet shall issue the regulations referred to in Section 140.1, Paragraph fourteen of this Law.

[12 June 2014]

22. Section 146, Paragraph nine of this Law shall be applicable in relation to insolvency proceedings, for which an entry in the Insolvency Register regarding proclamation of insolvency proceedings was made starting from 1 October 2014.

[12 June 2014]

23. Amendments in relation to the deletion of Section 52, Paragraph one, Clause 8, Sub-clause "b" and Clause 25, Sub-clause "b" of this Law, amendments to Section 52, Paragraph four, Clause 8, amendments in relation to the supplementation of Section 137 of this Law with Paragraph 2.1, and amendments to Paragraphs three, four, five and six of this Law shall come into force on 1 July 2016.

[30 November 2015]

24. A registered taxable person who is a supplier of service of the administration of a residential house and wishes to apply Section 137, Paragraph one or 2.1 of this Law after 1 July 2016 until the end of this taxation year shall inform the State Revenue Service thereof by 30 June 2016 or upon submitting an application for registration with the State Revenue Service Value Added Tax Taxable Persons Register.

[30 November 2015]

25. Section 143.1 of this Law shall come into force on 1 April 2016.

[30 November 2015]

26. Section 73, Paragraph one, Clause 12 of this Law shall be applicable in cases when activities of a registered taxable person - merchant have been suspended starting from 1 January 2016.

[17 December 2015]

27. Amendments to Section 105, Paragraphs one and three of this Law in relation to the rounding up of said amounts of money shall be applicable to the bad debts that have been incurred from 1 January 2017.

[23 November 2016]

28. The processor of agricultural produce shall, by 1 February 2017, submit a report on the amount and value of the agricultural produce received from the specific farmer in the year 2016 to the State Revenue Service by providing the following information therein:

1) the name, registration number with the State Revenue Service Value Added Tax Taxable Persons Register and legal address of the processor of agricultural produce;

2) the name, registration code (for a natural person - given name, surname, personal identity number) and legal address (for a natural person - declared place of residence) of a farmer;

3) the type of received agricultural produce and price of one unit;

4) the total amount and total value of the agricultural produce received from each specific farmer in the taxation year.

[23 November 2016]

29. Amendments to Section 50 of this Law in relation to the supplementation of the Section with Paragraph 7.1 and the supplementation of Paragraph eight with Clause 4, as well as amendments to Section 61 in relation to the supplementation of the Section with Paragraph eight and to Section 63 in relation to the supplementation of the Section with Paragraph six shall come into force on 1 January 2018.

[20 April 2017]

Informative Reference to European Union Directives

[12 June 2014; 20 April 2017]

This Law contains legal norms arising from:

1) Thirteenth Council Directive 86/560/EEC of 17 November 1986 on the harmonization of the laws of the Member States relating to turnover taxes - Arrangements for the refund of value added tax to taxable persons not established in Community territory;

2) Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax;

3) Council Directive 2006/138/EC of 19 December 2006 amending Directive 2006/112/EC on the common system of value added tax as regards the period of application of the value added tax arrangements applicable to radio and television broadcasting services and certain electronically supplied service;

4) Council Directive 2007/74/EC of 20 December 2007 on the exemption from value added tax and excise duty of goods imported by persons travelling from third countries;

5) Council Directive 2008/8/EC of 12 February 2008 amending Directive 2006/112/EC on as regards the place of supply of services;

6) Council Directive 2008/9/EC of 12 February 2008 laying down detailed rules for the refund of value added tax, provided for in Directive 2006/112/EC, to taxable persons not established in the Member State of refund but established in another Member State;

7) Council Directive 2008/117/EC of 16 December 2008 amending Directive 2006/112/EC on the common system of value added tax to combat tax evasion connected with intra-Community transactions;

8) Council Directive 2009/47/EC of 5 May 2009 amending Directive 2006/112/EC as regards reduced rates of value added tax;

9) Council Directive 2009/132/EC of 19 October 2009 determining the scope of Article 143 (b) and (c) of Directive 2006/112/EC as regards exemption from value added tax on the final importation of certain goods (codified version);

10) Council Directive 2009/69/EC of 25 June 2009 amending Directive 2006/112/EC on the common system of value added tax as regards tax evasion linked to imports;

11) Council Directive 2009/162/EU of 22 December 2009 amending various provisions of Directive 2006/112/EC on the common system of value added tax;

12) Council Directive 2010/88/EU of 7 December 2010 amending Directive 2006/112/EC on the common system of value added tax, with regard to the duration of the obligation to respect a minimum standard rate;

13) Council Directive 2010/45/EU of 13 July 2010 amending Directive 2006/112/EC on the common system of value added tax as regards the rules on invoicing;

14) Council Directive 2013/61/EU of 17 December 2013 amending Directives 2006/112/EC and 2008/118/EC as regards the French outermost regions and Mayotte in particular; and

15) Council Directive (EU) 2016/856 of 25 May 2016 amending Directive 2006/112/EC on the common system of value added tax, as regards the duration of the obligation to respect a minimum standard rate.

This Law shall come into force on 1 January 2013.

This Law has been adopted by the Saeima on 29 November 2012.

President A. Bērziņš

Riga, 14 December 2012

 


1 The Parliament of the Republic of Latvia

Translation © 2017 Valsts valodas centrs (State Language Centre)

 
Document information
Status:
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in force
Issuer: Saeima Type: law Adoption: 29.11.2012.Entry into force: 01.01.2013.Theme:  Taxes and dutiesPublication: "Latvijas Vēstnesis", 197 (4800), 14.12.2012. OP number: 2012/197.2
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