Benefits of “In-depth Cooperation Programme” in Latvia

You already read about “In-depth Cooperation Programme” in Latvia.

We want to go deeper and tell you about the benefits of three levels in accordance with activity.These levels are Bronze, Silver and Gold.

All levels get:

Program’s Participant identification mark from State Revenue Service;

A non-excise prize chosen by a Program’s Participant that is awarded to a winner of a check lottery by a Member of the “In-depth Cooperation Programme;

Service department will be eligible to submit system modified version  of a Program’s Participant with a tax risk management system for compliance check no later than six months after receiving the previous compliance check opinion;

After evaluating the technical documentation of the program’s changes and establishing that the program’s changes are significant, the SRS will determine the deadline for submitting the cash system version of the program for inspection.

Silver and Gold levels can get only:

Response to written request - within 10 working days;

Answer to telephone and electronic question in Electronic declaration system - within 7 working days;

The SRS shall refund the overpaid value added tax within 10 working days;

Advantages of the application of the general rate of excise duty;

Gold level brings even more benefits:

SRS provides individual State Revenue Service consultant - contact person;

On the initiative of taxpayers, the State Revenue Service organizes an external seminar with the taxpayer, assessing the availability of resources and the complexity of the issue;

Program’s Participant  may be invited to attend meetings of the Advisory Board of the State Revenue Service;

If employees of company from Gold-level have no identified risks are users of the Electronic Declaration System, submit their annual income tax return to the Electronic Declaration System, then they can receive personal income tax refunds within one month (rather than three months).

Are the benefits seem impressive for you?

When is Registration of VAT payers necessary for a person From Latvia?

VAT is one of the most important aspects of the company and every business needs to track it. There are some obligations When it is necessary to register as VAT payers in Latvia which any business should know.

 

When is it necessary for a person From Latvia?

If the company carries out transactions subject to value-added tax (VAT), the company must be registered in a VAT register.

If the amount of taxable transactions over the previous 12 months has exceeded EUR 40 000, and

the taxable person is required to register for VAT, then

by the 15th of the following month, an application must be submitted to the State Revenue Service (SRS).

Provides services to a person from another Member State of the European Union (EU) who has a VAT number or is carrying out an economic activity. The legislation provides for exemptions for certain types of services (eg educational services, freight transport services, real estate services).

Services are received from a VAT payer or economic operator in another EU Member State (exceptions are provided for certain types of services).

Receives services from a person who is not engaged in economic activities in Latvia (exceptions are also provided for certain services).

Purchases are made within the EU and the sum of the purchases (excluding VAT) per the calendar year is € 10,000 or more. There is also an exception and no obligation to register if, after one such purchase (€ 10,000 or more), goods worth more than € 10,000 are not expected to be purchased in the EU in the following calendar year. In this case, VAT of more than € 10,000 has to be calculated and paid into the state budget.

Exception:

If the taxable person has sold intangible assets or fixed assets once in the previous 12 months and such sales have resulted in more than EUR 40 000 for the relevant period, the taxable person shall be entitled not to be registered in the VAT register.

Also, you have the right not to register in the VAT register if, after one transaction, the registration threshold is exceeded and the taxpayer does not intend to carry out other taxable transactions over the next 12 months.

The form of business to register in Latvia

Before starting a business, you have to decide which form of business would be most suitable for you from a legal and economic point of view. The decision-making process must take into account various factors, such as the size of the start-up capital, how much your company will have customers and employees, the cost of the service offered, or what the monthly turnover, cost and profit will be.

There is a possibility to register different forms of business in Latvia: 

• a legal person can be a joint stock company (AS),
• a limited liability company (SIA),
• a general partnership, a limited partnership, 
• a cooperative company,
• an individual (family) enterprise,
• a farmer or a fisherman's farm. In turn, a natural person can be an individual merchant.

Similarly, a natural person may pursue his economic activity as a self-employed person. 

When starting a business, the most appropriate way to do business could be to become a self-employed, sole proprietor, or start a SIA.

In order for your business to be legal, it must be registered with the Register of Enterprises (UR) and / or the State Revenue Service (SRS) For example, a self-employed person registers his or her economic activities in the SRS, while the individual merchant and the SIA are registered in the UR and SRS.

The type of economic activity you have chosen and the planned turnover will depend on the form of economic activity registration, as well as the types, amount and procedure of administration of taxes to be paid to the state. We draw attention to the fact that all who do business of any kind are bound by the requirements of the Law on Accounting. Businesses must be accountable to the competent person for accounting matters.

You can make a choice by your own or use service of Baltic Legal.

Biggest Challenges Facing the Accounting

Every business faces a lot of challenges every day and accounting is one of them. It is one of the most important aspects of any company so businesses should avoid any of mistakes by doing accounting and follow their cash flow.

Accounting involves the process of analyzing, summarizing and recording of financial transactions of a business. This can be very difficult by itself, but there are other common financial obstacles that small business owners have to overcome.

What are the accounting obstacles?

Cash Flow

For small business owners, it is difficult to provide funds to cover running costs and keep the business alive. In order to stay on top of cash flow, carefully analyze your invoices and be cautious in following customer payments.

Unforeseen expenses

Even lower expenditures, such as a one-time government tax on all businesses in a certain region or increases in commodity prices, can lead to significant changes in the bottom line. Optimize your existing credit to manage your short-term expenses, but also monitor your long-term profitability to make sure your total liquidity is not jeopardized by changes in costs.

Taxes

Every business has to contend with paying taxes, but with the help of deductions, you can cut your bill and get on Tax Day. If your small business is home-based, home office deductions are important to make a profit.

Managing payroll

It may be difficult for a small business owner to take on the role of HR or payroll expert. If you have no knowledge of HMRC RTI, you do not know what tax code to add to your recruits. How will you pay employees in the long run? All these problems and many more can come your way.

Keeping on top of expenses

Keeping track of your revenue and recurring expenses can be extremely difficult. However, it is very important for small businesses to keep track of expenses in order to process and stay in the market.

Analyzing your finances

The best financial decision can best be made in three stages: interpretation, analysis and consulting. Regardless of the reports you use, the number generation is only the first step. What do these numbers actually mean? More importantly, how do you improve them? You need to interpret and analyze these numbers to arrive at the best tips and decisions.

Avoiding accounting mistakes

An incredibly important task for small businesses is choosing the right accountant. An experienced accountant or CPA can help your business avoid all of the accounting mistakes mentioned above. As a good accountant you will be able to advise you on all of the above issues as well as many other issues on how to grow your business in this busy market.

Hiring an internal accountant can be expensive, but it is important to get a qualified professional at an early stage. If you are a small business owner or a beginner facing these or other accounting problems, outsourcing financial and accounting needs can be a realistic and affordable way to address these issues faster and get back to focusing on what you do best.

Bookkeeping in Latvia

Every business must do bookkeeping and there are no exceptions. The accounts must show all the economic transactions of the company as well as any facts or events leading to a change in the state of the assets of the company. 

The accounting records shall be kept in a double-entry system. In the simple entry system, accounting may be organized in accordance with the procedures specified by the Cabinet of the ministry:

sole proprietorships, sole proprietorships, farmers' and fishermen's farms whose turnover (income) is not economically viable and does not exceed EUR 300 000 in the accounting year, other natural persons performing economic activities;

associations, foundations, trade unions and religious organizations whose turnover (revenue) for the current and the accounting year does not exceed EUR 40 000.

Accounting should enable a third party, who is qualified in accounting, to obtain a true and fair view of the financial position of the enterprise at the balance sheet date, its results, its cash flows for a specified period and to determine and track the start of each economic transaction.

The information provided by the accounting officer shall be true, comparable, timely, relevant, comprehensible and complete. Accounting ensures the separation of income and expenses from the accounting period.

The company manager is responsible for keeping the data and for storing any documents that confirm the business, originals, copies of data.

All about administrative cases

What are Administrative Cases?

The administrative case is a case between a person on the one side and state authority from the other. These cases differ comparing to civil procedure and are governed by Administrative procedure.

Depending on the type of national legal system, procedures of administrative cases differ. The majority of Civil law jurisdictions have specialized sections or courts to deal with administrative cases which, always, will apply procedural rules specifically designed for such cases and different from that applied in private-law proceedings, such as a contract or tort claims.


Administrative law

Administrative law is the body of law that governs the operation of government administrative agencies. Government agency action can include the enforcement of a specific regulatory agenda, adjudication, or rulemaking. This law is considered a public law branch.

There , usually, are two stages to the administrative case. Under administrative law, the decision is subject to appeal to a higher authority is the first stage. Only after the final decision has been received can the person bring an action before the Administrative Court is Stage Two.


Department of Administrative Cases

Department of Administrative Cases is the place where specialized people review Additional judgements of the Administrative regional court and Cassation complaints against judgements, Ancillary complaints against decisions of Administrative regional court, Procedure Law, Ancillary complaints on decisions of the Administrative district court and many more.

It may, in departments opinion, to establish a case for review in oral proceedings, If the department considers reviewing the case in a court hearing to be more useful.

The court informs participants of proceedings about the time of review of a case. When reviewing the case in written proceedings, the court informs participants of proceedings in writing about the composition of the court and explains their rights to declare refusal, as well as other procedural rights and duties.

Decisions and judgements of the Department of Administrative Cases of the Supreme Court come into force on the day of announcement or composition and are not reversible.

What is Company establishment?

Maybe you have heard the term "company establishment" or you are wondering what It is. When doing business, you will have to know what this and many more terms mean and how they impact your business, so you know popular business terms and keep up going confident with what are you doing.

Company establishment is simply a process aimed to open a company and run the business under a firm or legal entity. It includes incorporation documents, drafting, opening a bank account, registration with state authorities and the appointment of officials.

Company establishment in Latvia
If during company establishment it is registered with the Registry of Enterprises of the Republic of Latvia, The Latvian Law recognizes the company.

Apart from setting up a company and drafting incorporation documents, it is mandatory to register your business activity. Also, depending on the commercial activity it might be required to apply for VAT status, obtaining licence, registration in other state activities.

The Register of Enterprises of Latvia represents an administrative institution that registers enterprises merchants, their representative offices, and subsidiaries within the territory of the Republic of Latvia, as well as all amendments to the basic documents of ­their activity and takes other actions envisaged by legislative acts. The RE also registers mass media, public organizations, commercial pledges, decisive influences, marriage contracts, public and private partnership agreements, religious organisations, political parties, trade unions, arbitrages and processes of insolvency.





What is Register of Enterprises in Latvia?
The Register of Enterprises is a direct administration institution operating under supervision of the Minister of Justice. The work of the Register of Enterprises is governed by the Law On the Register of Enterprises of the Republic of Latvia, bylaws of the Register of Enterprises approved by the Cabinet of Ministers and other laws and regulations.

The mission of the Register of Enterprises is to register entities referred to in the said Law in order to establish their legal status and ensure the authenticity and reliability of the information referred to in-laws and regulations, as well as to ensure the availability of this information which is done by notaries public of the Register of Enterprises.

Difference between Shell corporation and Shelf Company

 What is Shell corporation?

Shell corporation is a company or company that only exists on paper and has no office and employee, but can have a bank account or be a passive investment or registered asset owners, such as intellectual property or ship. Shell companies may be registered at the address of the company providing the service that establishes the corporate entities and may act as an agent for receiving legal correspondence. An entity can serve as a transaction for transactions without significant assets or activities.

A shell corporation is an enterprise without active business or substantial assets. These types of corporations are not always illegal, but sometimes they are used illegally, for example, to hide corporate ownership of law enforcement or the public. Shell corporation's corporate reasons include things like starting a business with a company to attract, fund, take, or publicize. As long as the owner has paid all required taxes, none of this is illegal.

Offshore shell company

It is not illegal to create a shell company in an offshore tax paradise. Many service providers can be found online by praising the benefits of a letter-box corporation.

Shelf Company

The names are almost the same, but the meaning is a little different.

A shelf company is a company that is already registered but has never traded or established business and has no assets or liabilities. Essentially, the company is registered to sit on the "shelf", waiting for someone to buy it. Purchasing a shelf company was previously the best way to quickly get business without using a time-consuming new registration procedure. However, company registration is now much faster and more cost-effective than making purchases and shelf changes. As a result, shelf companies are becoming a thing of the past.

Business support you can hope for in Latvia

Setting up business in foreign country or even in your home country is a huge challenge in your usual life. Especially, if you don’t have impressive experience before. Yes, it’s possible to get support and consultancy in Latvia.

Entrepreneurs can get support from agencies subordinated to Ministers.

The Central Finance and Contracting Agency (CFLA) is a direct management institution subordinated to the Minister of Finance. Agency can inform about possible funds supported by projects of EU.

Subordinated to the Minister for Economics of Latvia, Investment and Development Agency of Latvia (LIAA) aims at increasing export and competitiveness of Latvian companies, facilitating foreign investment and implementing tourism development and innovation policies.

In Latvia you can find financial support through programmes and from banks that provide loans and credit guarantees, offers insurance for business export deals and investment to venture capital funds.

Find support and ask for consultancy from company that is specialized in this issue and is located in Latvia. Professionals know what they are talking about based on experience. Baltic Legal is one of this company.

• It will help you solve complex issues and provide you with swift high-quality legal, accounting and business management services;
• It will provide an efficient service thus taking a large share of the workload off your shoulders;
• It will ensure high-quality professional company registration services and an individual approach to your needs, as well as loyalty, privacy and fast servicing;
• clients will need only one partner to incorporate and maintain a company in the Baltic region that will significantly facilitate communication, teamwork and optimize total costs.

When you know about possible support, it is more easier to raise capital for your business and make your dreams come true and realize plans.

E-services in Latvia

E-services make our life rested and give freedom of mobility. The variety and number of e-services is increasing every year. Latvia doesn't stay behind.

Latvia provides portal www.latvija.lv for quick and easy access to services provided by state and municipal institutions. It’s not only for entrepreneurs but also for individuals. In the section "E-services", all the e-services available on the portal are summarized. User also can register for entrepreneurship.

The most popular e-services in Latvia:

Submission of the declaration of the place of residence

Electronic application for studies within the framework of basic study programmes

“My data” in the Population Register

Registration with registers maintained by the Register of Enterprises

Register for place in preschool

Tax payments and other services that connected with finance.

Latvia has unified electronic information system for the health sector. Users can open, extend and close e-disability pages, get medical e-prescriptions. Many clinics administer e-registration for consultancy or visits to specialist through the electronic system.

Banks that located in Latvia also provides e-service from the basic e-services as online payments, automatic payments, to more advanced. Banks bring video consulting as a new banking service that allows a customer to get the same advice as a branch without leaving their computer.

If you want to use e-service you can log in through bank account, username and password for specific portal, e-signature or portal www.latvija.lv.

The Office of Citizenship and Migration Affairs offers the possibility to check or receive information from the Population Register using electronic services.

We mentioned only some possible e-services in Latvia. Such services will pamper you and make your life in Latvia relieved.  

About income from cryptocurrency in Latvia

Virtual currency is also known as cryptocurrency, and each of it has its own name such as Bitcoin, Ethereum, Litecoin, Zcash). Cryptocurrency is visible money on your device but It’s not possible to touch it.

The State Revenue Service (SRS) of Latvia has published a new informative material on personal income tax (PIT) on the income from the sale of virtual currency.

If a person gets a virtual currency within the framework of an economic activity or generates a virtual currency, such income is classified as income from economic activities and it’s necessary to pay personal income tax.

If the revenue from the sale of virtual currency would be classified as income from capital gains, the tax will be 20%. The value of the virtual currency is equal to the value for which the person purchased the virtual currency.

The price of a virtual currency is the same as the price person paid in cash or a natural value.

A resident of Latvia shall submit to the SRS a declaration of income from capital gains on the disposal of virtual currency.

A non-resident is not obliged to submit a SRS declaration of income from capital gains or annual income statements if the payer of the income was withheld tax during act of payment.

Government of Latvia try to keep finger on a pulse, because of fast changes in the digital world. Cryptocurrency isn't something undefined anymore.

Benefits Of Shelf Company

There are a lot of business types, but one of them is Shelf company. Some of the businessmen like to make their own company, but some like ready-made company better. What are the benefits of a Shelf Company and why you should consider to check It out?




What is a Shelf Company?
A shelf company is a company that is already registered but has never traded or established business and has no assets or liabilities. Essentially, the company is registered to sit on the "shelf", waiting for someone to buy it. Purchasing a shelf company was previously the best way to quickly get business without using a time-consuming new registration procedure. However, company registration is now much faster and more cost-effective than making purchases and shelf changes. As a result, shelf companies are becoming a thing of the past.

Benefits Of Shelf Company

Some of the company types need a lot of waiting until it's application form is fully accepted. If you need a company now, Shelf Company is the best choice for you! It can be a good time-saving.
The existence of a company image and business history may be important to you - the longer a company has been, the better experience it has.
Easier access to bank relationships and credit lines.

The age of your business can affect the business you want to do. The number of years a company has been in can affect the trust of potential business, such as a buyer, creditor, or supplier.

White list of Advanced Cooperation Program

Have you heard about “In-depth Cooperation Programme” in Latvia? It isn’t about classifying enterprises but about collaboration between State Revenue Service (SRS) and taxpayers.

SRS informed that selection criterias had changed and program was developed by including small and medium enterprises from January 1st, 2019. The benefits could be used by a wider range of merchants.

According to “In-depth Cooperation Programme”, taxpayers will be grouped at three levels in accordance with activity. These levels are Bronze, Silver and Gold. New program participants will be selected once a year (in January 1st) based on available to SRS information automatic selection and evaluation.

The “In-depth Cooperation Programme” has proven to be an important tool for cooperation between taxpayers and public authorities. It currently bringing together 75 taxpayers. Only large companies have been able to become members of the program so far because of given selection criteria for the program. Approximately 2,500 taxpayers are expected to meet the criteria of the new model of the “In-depth Cooperation Programme” now.

Program participants are assessed quarterly and removed from the list if discrepancies are found.If participant want to get to higher level, he must spend at least 1 year on the bronze level, 2 years for silver level.

Participants at each level will get benefit from the SRS, the Central Finance and Contract Agency, the Ministry of Economics and the Ministry of Education and Science.

Would you like to get into this white lists?

Electronic signature for business

E-Signature technology is just two decade old, but it gives us so many benefits. E-signature, devices and internet connection are making possible to manage business from any place.  

Effective July 1st 2016 the EU Regulation 2014/910, also known as eIDA defines Electronic Signature as defined as data in electronic form which are attached to or logically associated with other electronic data and which are used by the signatory to sign.

Documents signed with e-signature have the same legal effect as hard copies of documents signed by hand and  is the only tool that ensures signing documents in digital environment.

Benefits of e-signature:

• Freedom of movement. You don’t need to run to the office for signing important contract or cancel your trip because of necessity to sign document this week.
• Additional security. It’s more secure than traditional signature and also contain information on who signed the document, when and where they signed it.
• If you care about environmental protection or you are adherent of zero-waste lifestyle, e-signature is must-have for you. Tool reduce costs for paper, ink. However, paperwork accrues up costs – in purchasing, printing, copying, scanning, delivering to other person and storing of paper.
• Save your time and allow to do business processes faster.

The signed document is also legally valid – enforceable by legislations passed in various countries. 

How to start using e-signature?

You should contact company in your country that provide such service.

For example, in Latvia it is one of the leading electronic communication service provider LVRTC. In Estonia and Lithuania it is local DocuSign.

It is not free service but it does not pay a lot. You will get much more with e-signature.