Electronic services include telecommunications, radio and TV services, music and film downloads, digital products such as software downloads, databases, automatically generated computer services, and other electronically provided services.
The individual’s place of residence determines the taxation of these electronically delivered services to private individuals. As a result, companies providing such services to private individuals in Germany are required to register for VAT in Latvia, regardless of whether the company is based within the EU or in a third country.
VAT registration is only required in one country. Certain simplifications apply for businesses within the EU and third countries, allowing them to register for VAT in just one EU country. Companies from third countries can register for VAT in Latvia through the State Revenue Service. Under the VAT on eServices procedure, revenue from other EU countries can be declared and paid in Germany, but the applicable tax rate will be that of the private individual’s country of residence.
Since 2015, the Mini-One-Stop-Shop (MOSS) procedure has enabled EU-based businesses to register all electronic service sales in a single EU country, such as Latvia. This country then distributes the reported revenue and VAT payments to the appropriate member states.
