Latvia - Plan to Mandate E-Invoicing for B2B and B2G

In January, the Latvian Ministry of Finance published a four-year plan to reduce the shadow economy by implementing modern measures, to which, to some extent, more and more countries are adhering.

A relevant part of the published plan is introducing an e-invoicing system as an effective tax technology tool for establishing a more effective VAT compliance framework. Following this plan, on May 27, 2024, MoF submitted the draft law "Amendments to the Accounting Law" for public consultation, presenting the legal foundations on which the new system should be based. 

The Proposed Framework and Related Impact

According to the proposed amendments, starting from January 1, 2026, all taxable persons whose place of business is in Latvia should issue a structured invoice based on the national template for their B2B supplies. 

However, to facilitate a smooth transition from paper-based to e-invoicing, the first phase, starting on January 1, 2025, will cover B2G transactions. 

To ensure mandatory domestic (B2B) e-invoicing circulation, the new framework should include a solution for decentralized e-invoice circulation based on three electronic sending methods:

1. PEPPOL (Pan-European Public Procurement On-Line) service providers or operators (paid service); 

2. the free national delivery solution (e-mail address);

3. method agreed upon between the taxpayers (e.g., via email or direct software integration interfaces).

For mandatory B2G e-invoicing, businesses will have to transfer invoice data to the State Revenue Service through one of three accessible data transmission channels:

1. via e-address;

2. EDS API (Electronic Declaration System) or 

3. manually uploading the e-invoice to EDS.

Conclusion

Although the Government has yet to announce the technical documentation on e-invoice exchange, delivery, and receipt, the MoF's timeline provides a clear roadmap for businesses and budget institutions to adapt to the new regulations. 

Source: Shadow Economy Curtailment Plan, Ministry of Finance, Amendments to the Accounting Law