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Amendments to the Law on Immigration of Latvia
On January 1, 2018, the amendments to the Law on Immigration came into effect, which provide the elimination of exceptions for certain categories of foreigners who did not have to pay a state fee for the first time by repeatedly requesting a temporary residence permit.
New changes in the Immigration Law of Latvia
On March 2, 2017 the new amendments to the Immigration Law of Latvia (hereinafter referred to as  - the Law) came into effect, according to which several new grounds for obtaining a temporary residence permit in Latvia (hereinafter referred to  as –TRP), as well as the conditions for obtaining a TRP on the basis of registration of a representative of a foreign merchant.
Член Торгово-промышленной палаты Латвии Latvijas Tirdzniecības un Rūpniecības Kameras biedrs Member of the Latvian Chamber of Commerce and Industry

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Since its foundation in 1996 the law office “INLAT PLUS” has been one of the most active and leading companies providing legal service in Latvia. The variety of the qualified legal services provided by the company will meet the most demanding requirements of its clients (legal and physical persons).

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Brivibas 40-15, LV-1050, Riga, Latvia ip@inlatplus.lv
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Analytical review of judicial practice in the decisions of the State Revenue Service for VAT refunds affairs

29.04.2016
Every year more and more companies are arguing with the SRS in respect of the additional VAT charges at the time of the audit. A considerable amount of Tax Service decision is appealed in a higher institution and a court. Law Office INLAT PLUS deals with such cases for over 20 years and has positive results. According to general statistics, in about 20% of cases the court takes favourable decisions for companies. 
When considering similar cases, the Court is guided by quite clear criteria. According to the latest court practice, the proceedings before the Court can be divided into three stages:

1. First, it is checked whether the deal took place at all, i.e. whether the products or services were received in general.

Often during the audit, the employees of the Tax Service are in doubt about the fact of the deal itself. This is done in case the company is unable to prove that the products have been further sold or used in the economic activity of the company. The deals are getting under suspicion, where the partner actually could not make a deal. For example, a foreigner is a member of the board of a partner’s company, who according to the customs service information had never crossed the border of Latvia. Exploring the question of fictitious deals, the court takes into account the testimony of a member of the board of the company. If a member of the board is not aware of the business activities of the company, cannot explain in details how the deal took place, where and under what circumstances an agreement was concluded, who concluded the agreement on behalf of the partner, how the transportation of products was implemented, the court may consider a deal as a fictitious one. In this case, it is appropriate to draw the attention of officials and firms to document in the company. Law Office INLAT PLUS had a case, when a member of the board had objective reasons not to know all the details of the deal as the company is large, and the duties of the member of the board do not include supervision of the particular deal. The orders, labour agreements, and regulations, where the duties of the employee are specified, should be developed in order to divide the responsibility between the officials of the company. If necessary, the employee will be able to give clarification on specific deals.
 
2. Next, it is checked whether the deal was implemented with a particular partner, indicated in the documents.
 
Often when rejecting a deal with a partner, the SRS in its decisions points to errors in the concluded agreements. For example, in one of the SRS decisions on audit it was noted that in the agreement signed between the companies, are not specified penalties, which the company would have to get in the case of non-fulfilment of contractual obligations. In another case, the auditors doubting the deal pointed out that the subject of the agreement was too general; it did not contain any specific actions that need to be performed by the company. In these situations the acceptance-delivery certificate of executed works, additions to the agreement, estimates, and correspondence between the partners before and during the deal can prove the authenticity of the deal, which should be submitted to the court as evidence.
 
The companies often ignore their legal duty to refute the arguments of the SRS, considering that the burden of proof lies on the State Revenue Service. In judicial practice, it has been recognized that the more arguments refutes the SRS on doubting of the deal, the greater company's participation should be in proving the groundlessness of such statements.
 
The main criteria on which the deal with a partner is refuted, is the commercial activity of a business partner or its lack thereof. As a rule, the SRS can contest the deal if:
- the partner is excluded from the VAT register, as well as after the conclusion of the deal;
- the partner did not have any material and technical basis for the deal;
- officials of a partner claim that they were not involved in the deals;
- the partner's partners do not have any material and technical base, etc.
 
Such practice is controversial, especially when to contest the deal the information on the partner is used, and there is no evidence of bad faith of the merchant. This is confirmed by judicial practice. Thus, the Supreme Court in its decision of 21 December 2015, case number SKA-1325, indicated that the rights of the company to deduction of tax cannot be restricted on the grounds that a partner is excluded from the VAT register after the conclusion of the deal, or when the partner has not submitted an annual report or under other circumstances which characterize the partner.
 
Based on the previously stated, it is possible to conclude that in present is not enough to check the VAT number of the taxpayer and its registration in the register of enterprises. An entrepreneur, who does not want that the deal would be recognized as an untrustworthy, should maximally collect information about the partner: to be aware of the location of the partner, to conclude deals directly when signing the agreement rather than remotely, maintain correspondence with the partner, to know to whom and how the products will be delivered. It usually happens in practice that the entrepreneur himself transports small cargoes. In this case, you need to take care of the enclosed documents. One must not forget that according to article 2 of the law "On Accounting", the duty of the enterprise is to keep accounting, so that all of the deals would be recorded. As well as every fact, which changes the property status of the company, so that a qualified third party (auditors) would ascertain the beginning of any transaction and follow it up. Very often, doubting the deal, the SRS indicates that it could not verify the reality of the deal, since it cannot be tracked from the beginning to its end. It is very important at the initial stage to provide as much documentation on the deal. If the documents are not enough, a person who participated in the carrying out of the deals should be involved in order to prove it.
 
3. If it turned out that the products or services are not received from the person referred to in the invoice, the court must determine whether the taxpayer knew that or whether the taxpayer should have known that the deal is fraudulent.
 
The recent court decisions show that the court considers the deals as fraudulent if the case file shows that the entrepreneur is not interested in his partner, and he did not find out who on behalf of the partner signs the documents. If it is seen from the case file that the entrepreneur had all the necessary material and technical basis for the implementation of the products or services, at the same time his partner did not have such a base. Therefore, in one case it was found that the entrepreneur has sent his employees on an unpaid leave, concluding an agreement with the company, which carried out the works, where only one board member was registered. The activities of companies are identical - the execution of construction works.
 
Based on the practice of our law office, it must be emphasized that not in all cases the lack of material and technical basis is an argument to refute the deal. It happens that the company, which is engaged in mediation efforts, holds the deal. In such cases, no material and technical base is not needed. At the same time, the deal must be reliable, not beyond the scope of ordinary business activities of the partners.