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Leasing a car to your company is a common practice, but it requires careful preparation and accurate documentation. In the spring of 2026, a court case took place in Latvia, which reminded us how careful we should be when dealing with such transactions. The State Revenue Service (SRS) pays special attention to car leasing between related parties, and mistakes can be costly. In this article, we will look at how to legally lease your car to a company, avoiding the most common m

If your company portfolio includes stocks that you have held for at least 36 months, you have access to an effective tool for optimizing your tax burden. Latvian tax regulations provide a specific opportunity for companies engaged in long-term stock investments. How does the 36-month principle work? This mechanism is based on the condition for long-term investment. If a company disposes of (sells) shares of direct participation where the holding period prior to the sale has b

Many experienced manufacturing company managers respond to the question "Could you please send me an inventory report?" with confusion or mild irritation. "We have everything in process, metals come in, parts go out, invoices are paid - why should I waste time counting every screw?" However, the reality is harsh: without inventory, your accounting profit is just a guess, not a fact. 1. Legal requirement or entrepreneur's safety cushion? Let's start with the formal side. The L

Companies often wonder which employee expenses can be paid freely without additional tax burden. In this article, we will look at the main ordinary types of income that are not subject to personal income tax (PIT) by law. Use of personal vehicle for work purposes: Direct compensation For employees who use their personal car for work purposes, the employer may pay a tax-free compensation. According to Article 9, paragraph 16 of the law, the amount of compensation is 0.08 euros

Today's business increasingly crosses national borders. That's why we are pleased to announce that Confidentum now offers accounting services in Spain. Starting or developing a business in another country always comes with its own challenges. In Spain, these are most often related to different tax systems, local legislation and administrative requirements. This is where a reliable partner who knows the local environment and can ensure correct and timely financial accounting i

Latvian companies that receive management or consulting services from foreign partners must take into account special corporate income tax (CIT) regulations. These services include professional support for the company's operations, such as financial management consulting, business development planning, project management, market analysis or strategic recommendations. In this article, we will look at how CIT is applied to such services, as well as international aspects that af

Crypto assets have become an important financial instrument for both individuals and companies in recent years. More and more legal entities are purchasing, selling or using crypto assets in their business activities. However, with opportunities come responsibilities – especially in the field of accounting and tax accounting. In this article, we will look at the main issues on how companies in Latvia can correctly account for transactions with crypto assets. Should transactio

Cryptocurrencies like Bitcoin and Ethereum are becoming more common in business. Companies may accept crypto as payment, hold it as an investment, or trade it. But one question many business owners ask is simple: how should cryptocurrency appear in company accounts? International accounting standards (IFRS) provide guidance on this. The key point is that cryptocurrencies are not treated like normal money in accounting. Below is a simplified explanation of how businesses u

When companies purchase vehicles, the threshold for the value of a representative car is important - 75,000 euros excluding VAT. If the value of the vehicle exceeds this threshold, the company is not entitled to deduct VAT on the purchase and maintenance of the vehicle, and the costs related to the car cannot be attributed to business expenses. Therefore, in practice, the question often arises as to what expenses should be included in the purchase price of a vehicle in cases

As of 1 January 2026, a new requirement is in force in Latvia: structured e-invoice data must be submitted to the Valsts ieņēmumu dienests when a company issues e-invoices to public sector entities (B2G transactions). In practice, this means that an e-invoice is no longer just a document sent to the customer — its XML data must also be reported to the tax authority. E-invoices must be submitted in XML format, in accordance with the UBL 2.1 or PEPPOL BIS Billing 3.0 specificat

Several significant tax changes came into effect in 2026, affecting both employees and entrepreneurs. The main focus is on labor taxes, dividends, the alternative corporate income tax regime, as well as adjustments to VAT rates for certain sectors. In the field of labor, the minimum income not subject to personal income tax will increase to 550 euros per month, while the minimum wage will also increase from 740 to 780 euros. This means slightly higher net income for workers,

Following amendments to the Corporate Income Tax Law, an alternative dividend taxation regime has been introduced, which provides for a 15% corporate income tax (CIT) and an additional 6% personal income tax (PIT) on dividends. Previously, only a 20% CIT was applied to dividends. Comparing the two regimes, the total tax burden does not actually change. In the normal regime, the effective tax rate is 25% (calculated from the amount of the payout), while in the new regime it is

Foreign construction companies working in Latvia often ask: is it better to register a Latvian company (SIA) or operate through a permanent establishment (PE)? The correct choice depends mainly on project duration, reporting requirements, and transaction volume. VAT Registration for Construction in Latvia If you provide construction services in Latvia, VAT registration is mandatory in both cases: Construction services to a Latvian VAT-registered customer are usually invoiced

One of the most confusing aspects of the new e-invoicing requirements for accountants has been how these changes will affect delivery documents starting January 1, 2025. While structured e-invoice requirements don't directly apply to delivery documents, this doesn't mean you can skip creating a structured invoice when shipping goods. Understanding the Current Situation Many businesses currently use a combined document – a delivery note-invoice that merges multiple documents i

On December 11, 2024, Latvia's parliament approved significant amendments to the Personal Income Tax (PIT) Law that will take effect from January 1, 2025. Here's what you need to know about these important changes. New Tax Rate Structure The current three-tier progressive tax system will be simplified to two main rates: 25.5% for annual income up to €105,300 33% for income exceeding €105,300 An additional 3% tax will apply to total annual income exceeding €200,000 Capital Gai

In a significant move to harmonize VAT requirements for small and medium-sized enterprises (SMEs) across the European Union, Latvia is implementing new VAT registration rules starting January 1, 2025. These changes, stemming from Directive 2020/285, aim to create a more level playing field for businesses operating across the EU while maintaining support for smaller enterprises. Key Changes Coming in 2025 New Dual Threshold System The reform introduces a dual threshold system

Latvia's tax regulations include important provisions about "presumed income" (domājamais ienākums) for board members. Here's what business owners need to know for 2025. When Does Presumed Income Apply? Your company must handle presumed income taxation when two conditions are met: Your company has no employees or board members receiving at least the minimum monthly salary The company's monthly turnover exceeds threshold 5x the minimum monthly salary €3,700 (5x the minimum mon

Streamlining Your Accounting with Automatic Bank Feeds Managing your business finances can be time-consuming, but it doesn’t have to be. At our accounting services firm, we’re committed to making this process more efficient and accurate for our clients. One way we're doing this is by offering automatic bank feeds —a powerful feature that automatically imports your bank transactions into your accounting software. This is a significant step toward helping businesses stay on top

Starting in 2026, Latvia will introduce mandatory electronic invoicing (e-invoicing) for businesses, aiming to streamline financial processes and enhance transparency. As an accounting firm, we understand that changes like these can feel overwhelming for businesses of all sizes. However, we’re here to ensure that this transition is not only smooth but also beneficial to your business. What Does the New E-Invoicing Mandate Mean for Your Business? Mandatory e-invoicing means th

When it comes to business travel, understanding the nuances of per diems and work travel regulations is crucial for both employers and employees. In Latvia, these distinctions are governed by Cabinet Regulation No. 969, which outlines the specific requirements and allowances for different types of travel. Let’s delve into the key differences between business trip per diems and work travel, including the taxation of per diems. Business Trips Definition and Scope: A business t