Article

E-Invoicing in Latvia – Gearing up for Mandatory eInvoicing

8 March 2023

Latvia is on the road to mandatory B2B and B2G electronic invoicing.

On 12th October 2021, the Latvian cabinet sanctioned the informative report by the Ministry of Finance on developing an electronic invoicing system.

At the report's core was the introduction of mandatory B2G and B2B e-invoicing from 2025 using the Peppol standard.

Unimaze reviews the imminent e-invoicing in Latvia to help businesses and companies prepare for compliance.

E-Invoicing in Latvia: A Quick Overview

E-Invoicing/CTC Model

B2B: Post-Audit

Mandatory Infrastructure

Not Applicable

Mandatory e-Invoice Format

Peppol BIS 3.0

Issuing Mandate

No Clear-cut Requirements

Receiving Mandate

B2G: All Contracting Authorities

B2B: The Buyer Has to Give Consent

Digital Signature

Not Required

Archiving Abroad

Allowed under specific conditions

Archiving Period

Five years for Goods and Services

Six years for Real-estate

Latvia Electronic Invoicing: The Timeline

April 2020

Latvia seeks to comply with Directive 2014/55/EU, which requires all contracting authorities to be able to receive and process e-invoices as per the European Standard on e-invoicing (EN-16931).

2023

Legal entities must use the eAddress, a digital mailbox on the Latvija.lv portal.

2025

B2B and B2G e-invoicing to become mandatory for Latvian companies and businesses.

The e-invoice Exchange Framework Latvia

Electronic invoicing in Latvia will be anchored on the European standard. The country will implement the Peppol e-delivery network as the universal standard for sending and receiving electronic invoices.

Current e-invoicing Status in Latvia

Currently, Latvian B2B companies scan, send and receive invoices as well as other documents in multiple formats since the sector adopts the post-audit system.

As for B2G transactions, all contracting parties must receive and process e-invoices per Directive 2014/55/EU.

There isn’t a single mandatory framework for electronic invoices in Latvia. Still, suppliers to the government can use the following options.

· e-address, a tool used for communications with Latvian public administrations

· e-services offered by the city of Riga Municipality

· Connect with the central government via the ePakalpojumi platform

· Agree to use other methods with their trading partners

e-Invoicing in Latvia: The Legislation

The following laws govern electronic invoicing in Latvia:

· Public Procurement Law

· Law on the Procurement of Public Service Providers

· Defense and Security Procurement Law

· Law on Public-Private Partnership

· Cabinet Regulation No.154

Other laws including the Law on Official Electronic Address outlines the mandatory use of e-address for government institutions, reserve soldiers and registered legal entities.

According to the law, entities of direct administration shall receive electronic invoices from 18th April 2019, while other contracting public service providers and authorities shall do so starting 18th April 2020.

Further, the Amendments on Cabinet Registration No 585 state that suppliers to public administration must issue EN-compliant e-invoices following the OASIS UBL 2.1 syntax.

What Mandatory e-Invoicing in Latvia Means for B2B and B2G Transactions

The introduction of mandatory e-invoicing for B2B and B2C transactions in Latvia brings many benefits for trading partners. These include:

1. Increased Efficiency: Electronic invoicing streamlines the invoicing process, reducing manual data entry and the time it takes to process invoices. This results in faster payments and reduced administrative costs.

2. Improved Accuracy: E-invoicing reduces the risk of errors with paper invoicing, leading to incorrect invoicing, disputes, and delayed payments.

3. Better Cash Flow Management: The ability to receive and send e-invoices improves cash flow management by accelerating invoice processing and reducing the time between invoicing and payment.

4. Reduced Operational Costs: E-invoicing eliminates the need for paper invoices, printing, postage, and storage, reducing operational costs.

5. Increased Transparency: E-invoicing in Latvia will provide greater visibility into financial transactions, making it easier to track invoices and payments and improving transparency for buyers and sellers.

6. Enhanced Security: E-invoicing systems typically have advanced security features to protect data and prevent fraud, which makes the invoicing process more secure than paper-based invoicing.

7. Improved Relationships: E-invoicing helps to build better relationships between buyers and sellers by providing faster, more accurate, and more reliable invoicing and payment processes.

8. Greater Compliance: The introduction of e-invoicing in Latvia will help businesses comply with legal requirements and regulations by providing a secure and reliable way to manage financial transactions.

9. Increased Productivity: E-invoicing eliminates manual data entry, freeing up time and resources for businesses to focus on other tasks.

10. Environmental Benefits: Electronic invoicing reduces the use of paper and other resources, contributing to more sustainable business practices and reducing the ecological impact of invoicing.

Approach for Receiving and Processing E-invoices in Latvia

B2B business and B2G suppliers can receive and send electronic invoices through a developed central platform like e-address.

However, businesses and suppliers looking for more interoperability and connectivity can choose a service provider like Unimaze.

Here’s why Unimaze is the best service provider for businesses and companies in Latvia,

Peppol Connectivity

Unimaze is an authorized access point provider in Latvia.

The Peppol network links businesses across Europe and beyond, making connecting with buyers and suppliers easier. Using a Peppol-certified e-invoice provider can help your company expand its customer base and reach new markets.

As a certified Peppol Access point provider, Unimaze makes it easier for businesses to engage in cross-border trade without invoicing or payment processing problems.

World Class Integration Capabilities

Unimaze’s e-invoicing solutions integrate with your existing accounting or enterprise resource planning (ERP) system easily. As a result, we ensure the invoicing process is streamlined and automated, reducing the need for manual data entry.

And you don’t have to buy a new ERP system or get new accounting software.

Better Security and Data Privacy

Unimaze e-invoicing software boasts a strong security framework to protect your data from unauthorized access or breaches. We follow industry-standard encryption protocols and have an excellent track record for data privacy.

Intuitive User Interface

Our e-invoicing solution has a user-friendly dashboard that is easy to navigate and use. This will help ensure all users can easily access and manage the invoicing process.

Compliance with Legal Requirements

Unimaze complies with relevant legal requirements and regulations, such as Latvia's tax regulations and data privacy laws. That way, your business meets all the electronic invoicing compliance regulations in the country and beyond.

Stellar Customer Support

Unimaze offers excellent customer support. Our customer support desk is responsive, knowledgeable and able to assist if you encounter any issues with the invoicing process.

Scalable e-Invoicing Solutions

Unimaze’s e-invoicing solutions can accommodate the needs of your business as it grows, including handling a larger volume of invoices and users.

Customised Pricing

Unimaze e-invoicing service includes setup, implementation fees, and ongoing subscription costs. We offer a transparent pricing structure to help you make an informed decision.

Get In Touch with Unimaze Today

To get started with Unimaze as your Access Point Provider in Latvia, here’s what you need to do:

· Book a meeting with one of our e-invoice experts in Latvia to discuss your e-invoicing needs.

· Contact our help desk

E-Invoicing in Latvia - FAQs

Does Latvia Have VAT?

Yes, Latvia does have a Value Added Tax (VAT), which is known as "Pievienotās vērtības nodoklis" (PVN) in Latvian.

The standard VAT rate in Latvia is 21%, but 12% and 5% reduced rates apply to certain goods and services, such as food, medicine, books, and transportation.

Some goods and services, such as healthcare, education, and financial services, are exempt from VAT.

Businesses registered for VAT in Latvia must charge and collect the appropriate VAT on their sales and can claim back the VAT that they have paid on their business expenses.

VAT returns must be filed with the Latvian tax authorities regularly, and businesses must ensure they comply with all VAT regulations in Latvia.

Is Latvia in the EU For VAT Purposes?

Latvia is a member of the European Union (EU) and is subject to EU VAT regulations.

As a result, businesses in Latvia must comply with EU VAT rules and regulations when supplying goods or services to other EU member states or when receiving supplies from other EU member states.

The EU VAT system uses the destination principle, which means that the VAT rate applied to a transaction is based on the country where goods or services are supplied.

So, if a Latvian business supplies goods or services to another EU member state, it will be subject to the VAT rules of that country and vice versa.

Depending on the individual country's rules, Latvian businesses that sell goods or services to customers in other EU member states may be required to register for VAT in those countries.

Similarly, businesses in other EU member states that supply goods or services to customers in Latvia may need to register for VAT in Latvia.

What Is Reverse Charge VAT Latvia?

Reverse Charge VAT is a mechanism for the payment of Value Added Tax (VAT) in which the responsibility for paying VAT is shifted from the supplier to the buyer of goods or services.

In Latvia, Reverse Charge VAT is known as "atmaksāšanas mehānisms" (AM).

The Reverse Charge VAT mechanism is used in Latvia for certain types of transactions, including;

· Purchases of goods or services from suppliers outside the European Union (EU).

· Purchases of certain goods or services within Latvia, such as scrap metal, construction services, and electronic devices.

Under the Reverse Charge VAT mechanism, the buyer is responsible for accounting for and paying the VAT to the Latvian tax authorities instead of the supplier.

This means that the supplier does not charge VAT on the transaction, and the buyer must self-assess the VAT due on the purchase and include it in their VAT return.

The Reverse Charge VAT mechanism prevents tax fraud and evasion, particularly in cross-border transactions.

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