VAT looks simple: multiply by 21%. But mixed rates, rounding, the reverse charge and foreign currency complicate the picture fast. Here is how Fakts gets it right.

Per line, not per invoice

Fakts calculates VAT for each invoice line separately, then groups lines by rate. The reason: a single invoice can mix 21%, 12%, 5% and 0%, and the summary has to show each rate on its own.

The rates

  • 21%, standard: most goods and services.
  • 12%, reduced: e.g. medicines and medical devices, district heating for residents, public transport, accommodation. The fresh fruit, berries and vegetables listed in Annex 1 of the VAT Law are also 12% (since 1 January 2024).
  • 5%, reduced: books, press and media.
  • 0%, zero-rated: exports, intra-EU supplies, international transport.

The reverse charge is not a “rate”

The reverse charge is a separate mechanism, not a zero rate: the seller issues the invoice without VAT and the buyer accounts for the tax themselves. Domestically it applies to specific categories: timber, construction, scrap metal, certain IT devices and cereals.

The VAT on the line is zero for a reverse charge and for an export alike, so Fakts asks every 0% line for its reason: reverse charge, export outside the EU, goods supplied within the EU, or exempt from VAT. The reason is printed on the invoice, and the Peppol XML files the line under its own VAT category. If you are not registered for VAT, your lines are 0% and say that the supplier is not registered. A sample invoice and the return rows for each case are in VAT invoices by situation.

Rounding

Fakts recalculates every figure on the server before saving and rounds to the cent (NUMERIC 15,2). So the total is always consistent and matches what your return expects, no mismatch between what you see and what gets stored.

Foreign currency

If you invoice in another currency, Latvian law requires you to also show the euro equivalent at the European Central Bank (ECB) reference rate at the start of the transaction day. Fakts applies that daily ECB rate automatically, so the euro value on the invoice is correct and defensible.