Published: 17.09.2024.

The permanent establishment of a non-resident (foreign merchant) in Latvia for the application of all tax laws is considered as a separate domestic taxpayer. If a non-resident (foreign merchant) has a permanent establishment in Latvia, he or she shall be registered as a taxpayer in accordance with the procedures laid down in Section 15.1, Paragraph seven of the SRS Law “On Taxes and Duties”.

A non-resident (foreign merchant) shall be deemed to have a permanent establishment in Latvia if all of the following conditions are complied with at the same time:

  • a non-resident (foreign merchant) uses a specific site of operation in Latvia;
  • the site of operation is used permanently or is established for the purpose of permanent use;
  • the site of operation is used for business activity.

Notwithstanding the abovementioned provisions, a non-resident (foreign merchant) shall be deemed to have a permanent establishment in Latvia if a non-resident (foreign merchant) performs at least one of the following activities in Latvia:

  • uses the construction site or carries out construction, assembly or installation work, or performs supervisory or consultative activities relating to the construction site or said works;
  • uses equipment or installations intended for the exploration or exploitation of natural resources, drilling rigs and special craft, or carries out monitoring or consultative activities related thereto;
  • provides services, including advisory, management and technical services, during a period or periods exceeding a total of 30 days in any six-month period, through its own staff or associated personnel;
  • uses the activity of a natural, legal or other person for the purposes of his or her economic activity, if the abovementioned person has been granted and regularly (more than once during the tax period) uses the power to conclude contracts on behalf of a non-resident (foreign merchant).

A taxpayer is considered to be a person who has been granted and regularly (more than once during the tax period) exercises the power to conclude contracts on behalf of a legal, natural or other person who is located, established or founded in one of the following:

  • countries or territories referred to in the laws and regulations on low-tax or tax-free countries and territories;
  • countries with which the Republic of Latvia has not concluded and has not put into effect an international agreement on the prevention of double taxation and the prevention of tax evasion, except for the Member States of the European Union.

The permanent establishment of a non-resident (foreign merchant) in Latvia shall pay taxes in accordance with the laws of the Republic of Latvia on the income obtained in the Republic of Latvia, its territorial waters, exclusive economic zone and airspace, on the income obtained abroad that is applicable to this representative office, as well as other taxes in accordance with the specific tax laws.

In accordance with Section 25.2 of the Commercial Law, a foreign merchant has the right to open its representative offices in Latvia, but the representative office is not a legal person and does not have the right to conduct business activities in Latvia.

Provision of information on true beneficiaries

As of 1 July 2020, permanent establishments of non-residents (foreign merchants) in Latvia, which are already registered, or when registering in the SRS taxpayer register, shall submit information on the true beneficiaries:

  • foreign entities, when registering a permanent representative office of a non-resident (foreign merchant) in Latvia, fill out an application for registration of a permanent representative office of a non-resident (foreign merchant) in Latvia (Cabinet Regulation No. 537 of 22 September 2015) "Regulations Regarding the Registration of Taxpayers' and Taxpayers' Units with the State Revenue Service" Annex 2 "Registration Page of the Taxpayer (Other Entity)" or in the Electronic Declaration System (hereinafter - the SRS EDS) in the section "Documents/From the Form/Taxpayer Registration and Data Change Form/Registration or Exclusion of Beneficial Owner Data").
  • in the event of a change in information:
    • if it is established that the registered permanent establishment of non-residents (foreign merchants) in Latvia must provide information on the true beneficiaries;
    • in the event of a change in the already submitted information on the beneficial owners:

for information on current true beneficiaries, permanent establishments of a non-resident (foreign merchant) fill in an application for changes in information (Annex 5 to Cabinet Regulation No. 537 of 22 September 2015 "Regulations Regarding the Registration of Taxpayers' and Taxpayers' Units with the State Revenue Service" "Report of the Taxpayer (Other Entity) on Changes in the Registration Page" or in the SRS EDS section "Documents/From the Form/Taxpayer Registration and Data Change Forms/Registration or Exclusion of Beneficial Owner Data").

In both cases, the following information shall be provided: name, surname, personal identity number (if any) and date, month, year of birth, number and date of issue of the personal identity document, country and issuing authority, nationality, country of residence, and the manner in which control over the legal person or foreign subject is exercised, including the name, surname, personal identity number (date, month and year of birth if the person does not have a personal identity number) of the member (shareholder), member or owner through whom control is exercised, and for a legal person, – the name, registration number and registered office, as well as a documentary justification of the control exercised.

Procedure for registering a permanent establishment of a foreign merchant (non-resident) with the SRS

A foreign merchant (non-resident) shall register a permanent establishment (hereinafter referred to as the PE) for business in Latvia within ten days from the commencement of activity.

Registration of the PE can also be carried out by a person who is authorized to represent in activities related to the registration of the PE.

Documents for registration of the PE can be submitted via various communication channels with the SRS:

  1. in person:
  2. by connecting to the SRS Electronic Declaration System;
    • by using one of the authentication options offered by www.latvija.lv – Internet banking, electronic identification card (eID) or secure electronic signature (eSignature);
    • with an identifier and password assigned by the SRS;
  3. electronically, by signing with a secure electronic signature, and sending them to vid@vid.gov.lv.

The SRS shall register the PE no later than within three working days after receipt of the documents submitted for registration. Information on registration is included in the SRS public database.

Documents to be submitted for registration:

The application shall contain the following information:

  • basic data (name, registration code, phone number, location address);
  • data of the authorized person (information about the person who is authorized to register the PE - name, surname, personal identity number or date of birth of a foreign person, identification number (if any), phone number, address);
  • information on settlement accounts (with credit institutions of the Republic of Latvia and foreign countries);
  • information about founders:
  • information about officials with signatory rights;
  • information on the beneficial owners (if it is established that this information should be provided);
  •  information on the main type of activity according to the statistical classification of economic activities as per NACE Rev.2 code classifier (if already known at the time of registration, then indicated in the section "Attached documents");*
    • a document confirming the authorization of the person to represent the foreign merchant in all activities related to the PE, and the scope of this authorization;
    • consent from the owner or legal possessor of the immovable property (building or apartment property) to the registration of the entity in the relevant building or apartment property. The consent shall indicate the cadastral designation of the building or group of premises, the name, surname and personal identification number of the owner, co-owners or legal possessors, or the name (business name) and registration number.
    • a copy of the document certifying the registration of a foreign merchant in the relevant country;
    • when submitting documents in person, an identity document – passport or identification card – must be presented for identification.

* information on the type of main activity must be submitted within a month after registration of the economic activity to the SRS using the SRS EDS (in the section "Documents/From the Form/Taxpayer Registration and Data Change Forms/Notification on the Main Activity of the Taxpayer"), but it is recommended to indicate it right at the time of registration. NACE Rev.2 code classifier can be found on the external website of the Central Statistical Bureau https://www.csp.gov.lv/en/classifier/nace-2-red

Registration of a subdivision

Conditions for the registration of a subdivision:

  • business entity outside the registered office where the business activity is carried out;
  • website (online interface) where you can order or pay for a product or service;
  • mobile application (online interface) where you can order or pay for a product or service.

Documents required for the registration of a subdivision:

 Annex 3 to Cabinet Regulation No. 537 of 22 September 2015, “Regulations Regarding Registration of Taxpayers' and Taxpayers' Units with the State Revenue Service”, "Registration Page of Subdivisions" or in the EDS section Documents/Prepare a Document/From the Form/Registers/Application for the Registration of a Subdivision;

  • copies of documents certifying the right of use of the premises by the subdivision, if the premises of the subdivision are not owned by the registrant;
  • consent issued by the owner of the immovable property or its legal possessor for the registration of the subdivision in the immovable property owned by him or her, except if the premises of the subdivision are owned by the registrant. The consent shall indicate the cadastral designation of the building or group of premises, the name, surname and personal identification number of the owner, co-owners or legal possessors, or the name (business name) and registration number.

If the PE decides not to conduct further business in Latvia, then within ten days after taking the decision it shall terminate its economic activity:

Annex 8 to Cabinet Regulation No. 537 of 22 September 2015, “Regulations Regarding Registration of Taxpayers' and Taxpayers' Units with the State Revenue Service”, "Report on Exclusion of a Taxpayer from the Register of Taxpayers" or in the SRS EDS section Correspondence with the SRS/Write a New Letter/Application in Free Form.

  • settle the taxpayer's obligations, i.e., submit tax returns and reports provided for in the tax legislation, pay taxes, submit information on termination of employment relationships of employees, close current accounts, close subdivisions (SRS EDS section Registers – Subdivisions – Delete)

If the PE of a foreign merchant in Latvia engages in the delivery of goods or services carried out by this foreign merchant domestically, then the PE must be registered in the SRS VAT register before making transactions. For detailed information on registration in the SRS VAT register, see Value Added Tax | Valsts ieņēmumu dienests (vid.gov.lv)