Place of supply of services
In Latvian: Pakalpojuma sniegšanas vieta
The place of supply of services (pakalpojuma sniegšanas vieta) is the country where a service is treated as supplied for VAT and whose VAT applies. For a business customer it is usually where the customer is established; for a private customer it is usually where the supplier is established.
The general rules are in Section 19 of the VAT Law. So a Latvian designer’s service to a German company is supplied in Germany: no Latvian VAT is charged, the invoice states the reverse charge, and the client accounts for VAT in Germany.
Exceptions set the place differently: services connected with real estate, including construction and accommodation, are supplied where the property is; passenger transport where the journey takes place; restaurant services where they are actually provided; and electronically supplied services to consumers where the consumer is (Sections 20 to 30 of the VAT Law).
Services to a business in another EU country may be supplied only after registering for VAT, whatever the turnover, and they must be reported in the PVN 2 report with code “P”.
Example
A VAT-registered developer in Riga builds an app for a French company for EUR 6,000. The place of supply is France, so the invoice shows EUR 6,000 without VAT, the client’s FR VAT number and the words “nodokļa apgrieztā maksāšana”. Had the same service been supplied to a private individual in France, Latvian VAT at 21% would apply.
Legal basis
- Value Added Tax Law, Section 19 likumi.lv
- Value Added Tax Law, Section 25 likumi.lv
- Value Added Tax Law, Section 55 likumi.lv
This explanation is for information and does not replace tax or legal advice. The law in its current consolidated text prevails.