Tax&Legal Highlights in Latvia

Summary of tax and legal related highlights in Latvia on April, 2018

The Constitutional Court has declared the Article 12.3 and the Article 12.5 of the Law On Value Added Tax insofar as they do not ensure the return of VAT overpayment to the taxpayer within a reasonable time, as not complying with the Article 105 of the Constitution of the Republic of Latvia.

According to the contested norms, the period during which VAT overpayments are returned to the taxpayer may range from approximately one month to one year and even longer. 

This means that, according to the contested norms, VAT overpayment may also be returned to the taxpayer after a deadline that cannot be considered as reasonable. Such a transfer of VAT overpayment return period could be considered as complying with the principle of the neutrality of VAT, if the law would provide for the taxpayer compensation of the taxpayer’s financial loss, resulting from such delay, with late payment interest. 


The Cabinet of Ministers approved amendments to the Law on Taxes and Duties with a view to improving the legal framework for transfer pricing documentation.

The transfer pricing documentation requirements contained in the draft law will be more specific compared to the current general requirements. As a result, taxpayers will have a clearer regulatory framework and, when preparing transfer-pricing documentation, the taxpayer will be able to rely on law regulation more than on OECD transfer pricing guidelines, as it mostly takes place at the moment. 


The Committee of the Cabinet of Ministers has conceptually supported the draft of the Residential Tenancy law.

The Committee of the Cabinet of Ministers on April 23, 2018 conceptually has approved the draft of the Residential Tenancy Law, which will be a new regulation in the residential real estate market and will promote the creation of qualitative and affordable rental apartments, will offer a new solution to the ongoing long litigation processes, as well as promote investments in the rental real estate sector.

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