Reverse charge (apgrieztā PVN maksāšana)

The reverse charge (apgrieztā PVN maksāšana) is the procedure in which the buyer of goods or services, not the seller, calculates the VAT and pays it to the state. The seller issues an invoice without VAT marked “nodokļa apgrieztā maksāšana”, and the buyer usually deducts the same amount as input VAT in its own return.

The domestic reverse charge applies when both seller and buyer are VAT-registered and the supply is of timber and related services, construction services, scrap metal, mobile phones, tablets, laptops, integrated circuit devices and game consoles, cereals and industrial crops, precious metals, or semi-finished ferrous and non-ferrous metal products (VAT Law, Sections 141 to 143.4).

In these transactions the buyer must pay by bank transfer, not cash. It calculates VAT at the applicable rate and, where the purchase serves taxable supplies, deducts the same amount as input VAT. Usually no money moves to the budget, but the transaction appears in both parties’ returns.

The reverse charge is not a 0% rate, even though the invoice shows no VAT amount. The same mechanism applies across borders, for example when buying services from a business in another EU country, and Latvians often call it “reversā maksāšana”.