Reduced VAT rate (12% and 5%)
In Latvian: Samazinātā PVN likme
A reduced VAT rate (samazinātā PVN likme) is a rate below the 21% standard rate that the VAT Law sets for specific goods and services. Latvia has two reduced rates: 12% and 5%.
The 12% rate covers medicines and medical devices, infant food, scheduled domestic passenger transport, accommodation in tourist establishments, wood fuel and heating supplied to households, and the fresh fruit, berries and vegetables listed in Annex 1 of the VAT Law, such as apples, potatoes and strawberries.
From 1 July 2026 to 30 June 2027 the 12% rate also covers bread, milk, fresh poultry meat and eggs listed in Annex 2 of the law. The 5% rate applies to books and the press, including electronic editions, when published in the languages the law lists.
A reduced rate applies only when the product or service matches the law’s description exactly. Frozen or dried vegetables do not qualify for 12%, for example, and UHT milk is excluded from the reduced rate.
Example
A guest house in Sigulda invoices EUR 120 before VAT for two nights. Accommodation in a tourist establishment is taxed at 12%, so VAT is EUR 14.40 and the total is EUR 134.40. Any dinner on the same invoice is taxed at 21%.
How Fakts handles it
Fakts offers both reduced rates, 12% and 5%, on each invoice line and splits transactions by rate in the VAT summary.
Legal basis
- Value Added Tax Law, Section 42 likumi.lv
- Value Added Tax Law, Transitional Provision 48 likumi.lv
This explanation is for information and does not replace tax or legal advice. The law in its current consolidated text prevails.