Construction services refer to factory deliveries and other work related to building construction, repair, maintenance, modification, or demolition. The term “construction” is broadly interpreted and includes structures connected to the ground, such as bridges and roads. These services must have a direct impact on a building’s physical structure.
Examples of construction services include:
- Building construction
- Installation of windows, doors, and similar fixtures
- Groundwork and related services.
The location of the construction service is determined by the location of the construction site (the situs principle). Generally, the recipient of the construction service is responsible for paying VAT under the reverse-charge mechanism, regardless of whether they use the service for their construction project.
Foreign construction companies may need to register for VAT in Latvia if they provide construction services or hire subcontractors—whether Latvian or foreign—for construction services..
The foreign company must report and process reverse-charge services from its subcontractors.
Where the recipient of the construction services is not a VAT payer (e.g. individual), the reverse-charge mechanism cannot be applied, meaning they must be invoiced with Latvian VAT.
For more information or assistance with VAT registration, please contact us at info@taxwise.lv.
