Latvian Revenue Service Clarifies VAT Application in Main Company-Branch Transactions

• The Latvian State Revenue Service released methodological material on VAT application in transactions between main companies and their branches on December 16
• The material explains that a branch is an independent part of a company conducting commercial activities on behalf of the merchant
• A VAT applicable transaction occurs only when both a service provider and recipient are involved
• If a branch has no equity, the economic risk is borne by the parent company, making them a single taxable entity where VAT is not applied on services exchanged
• If either the main company or the branch is in a VAT group, they are treated as separate taxable entities for VAT purposes
• The document also outlines the procedure for applying VAT in transactions involving the supply of goods

Source: news.bloombergtax.com

Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.

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