VAT in Latvia: Transfer of goods between Member States

When goods are transferred from a business in Latvia to another Member State, to be used in the other Member State in the course or furtherance of the business there, this is deemed to be a (zero rated) intra-Community supply in Latvia followed by an intra-Community acquisition in the other Member State. Such a deemed intra-Community transaction requires the transferor to register and fulfil all other administrative requirements in the Member State of arrival of the goods. An example of this situation is a business transferring a part of its stock from Latvia to a storage facility in Germany.

Excepted from this rule are the following supplies:

-    the transfer of goods to another Member State with a view to supplies which are taxable in that other Member State under the place-of-supply rules:

-    goods to be sold to a taxable person registered in another Member State (Intra-Community supply);

-    goods to be installed or assembled by the supplier;

-    supplies on board ships, aircraft, trains during transport with departure and destination in the European Union;

-    transfers of goods in connection with a subsequent zero-rated supply:

-    the transfer of goods by a person from his business in Latvia to his business in another Member State for the purpose of exporting the goods to a third country;

-    the transfer of goods to another Member State with a view to the supply, modification, repair, maintenance and hiring of certain sea-going vessels or aircraft (and their equipment) operating on international routes; and

-    the transfer to another Member State of gold which will be supplied to the Central Bank;

-    the transfer of goods for the purpose of having a service carried out on them, e.g. goods sent abroad to be repaired or valued. The exception does not apply if the goods are not returned to Latvia;

-    the temporary transfer of goods by a person to another Member State to be used by him for the supply of a service in that Member State. For example, a tradesman who brings his tools to another Member State in order to repair a machine, or an accountant taking his personal computer to audit a client's books, does not constitute a fictitious intra-Community supply; and

-    the temporary use of goods for a period, not exceeding 24 months, in another Member State, in cases where the temporary importation (from a third country) of the same goods into that other Member State would be eligible for full exemption from import duties. An example would be goods temporarily brought into a Member State or from outside the European Union for the purposes of an exhibition.