In Latvia, the legal framework for electronic invoicing is based on a combination of EU directives and national legislation. Latvia has integrated the relevant EU directives into its national law and established specific provisions for electronic invoicing. Here are the key legal foundations:
1. EU VAT Directive (2006/112/EC)
The EU VAT Directive (2006/112/EC) provides the fundamental legal basis for the recognition of electronic invoices across all EU member states, including Latvia. Key provisions for electronic invoicing include:
- Article 232 of the VAT Directive allows EU member states to accept electronic invoices if their authenticity and integrity are ensured.
- The requirements for authenticity (proof of origin) and integrity (unchanged content) can be fulfilled through various methods, such as electronic signatures, EDI (Electronic Data Interchange), or other secure technologies.
2. Latvian VAT Act (Pievienotās vērtības nodokļa likums)
The Latvian VAT Act (Pievienotās vērtības nodokļa likums) governs the tax provisions related to electronic invoicing in Latvia. Under this law, electronic invoices are as valid as paper invoices if they meet the requirements for authenticity and integrity:
- Article 6 of the VAT Act states that electronic invoices are legally binding if they comply with the general requirements of the VAT Directive.
- The law requires that invoices be complete and accurate, containing the same tax-relevant information as paper invoices, including invoice amount, VAT, invoice date, issuer and recipient details, and a description of the goods or services.
3. Regulation on Electronic Invoicing (Elektronisko rēķinu izrakstīšanas un uzglabāšanas kārtība)
Latvia’s Regulation on Electronic Invoicing (Elektronisko rēķinu izrakstīšanas un uzglabāšanas kārtība) outlines the specific requirements and procedures for creating and storing electronic invoices. Key provisions include:
- Electronic invoices must meet the same tax requirements as paper invoices.
- They must be issued in a structured, machine-readable format to enable automated exchange and verification.
- The regulation specifies archiving requirements: electronic invoices must be stored securely and made accessible for tax audits if required.
4. Peppol Standard and Electronic Invoicing in the Public Sector
Latvia adopted EU Directive 2014/55/EU on electronic invoicing in the public sector, requiring businesses invoicing the public sector to submit electronic invoices. Since January 2019, it has been mandatory for all businesses dealing with the Latvian public sector to issue electronic invoices using the Peppol Standard.
- The Peppol Standard facilitates secure and structured invoice exchanges between businesses and public institutions.
- Electronic invoices to the public sector must be submitted through a Peppol-compliant platform.
- These rules apply to all suppliers providing goods or services to the Latvian public sector.
5. Electronic Signatures
Electronic signatures are a key method for ensuring the authenticity and integrity of electronic invoices in Latvia. The EU eIDAS Regulation governs the use of electronic signatures in Latvia, ensuring that:
- Qualified Electronic Signatures (QES): These have the same legal status as handwritten signatures.
- Advanced Electronic Signatures (AES): These are also valid, provided they meet specific authentication requirements.
Electronic signatures ensure the sender’s identity is verifiable and that invoice data remains unchanged after issuance.
6. Archiving Electronic Invoices
Latvian law requires businesses to retain electronic invoices for at least 5 years. The storage process must ensure:
- The integrity of the electronic invoice over the entire retention period.
- Invoices remain readable and accessible.
- Compliance with tax audits conducted by Latvian tax authorities.
Invoices must be stored securely and remain unaltered after issuance.
7. Practical Implementation of Electronic Invoicing
For businesses operating in Latvia, electronic invoices have the same legal status as paper invoices if they fulfill requirements for authenticity, integrity, and archiving. Companies must ensure their electronic invoicing systems support the following:
- Electronic signatures for ensuring authenticity.
- The Peppol Standard for invoices issued to the public sector.
- Archiving of electronic invoices for a minimum of 5 years.
- Use of structured formats (e.g., XML, UBL) for creating and exchanging invoices.
Summary of Key Legal Foundations in Latvia:
- EU VAT Directive (2006/112/EC): Provides the basis for recognizing electronic invoices if authenticity and integrity are ensured.
- Latvian VAT Act (Pievienotās vērtības nodokļa likums): Specifies that electronic invoices must meet the same tax requirements as paper invoices.
- Regulation on Electronic Invoicing: Regulates the creation, transmission, and storage of electronic invoices.
- Peppol Standard: Used for electronic invoice exchange with the public sector.
- Electronic Signatures: Ensure authenticity and integrity of invoices.
- Archiving Obligation: Electronic invoices must be retained for at least 5 years.
Conclusion:
In Latvia, electronic invoicing is fully recognized in both the private and public sectors, with the EU VAT Directive and the Latvian VAT Act serving as the primary legal basis. For businesses working with the public sector, the use of the Peppol platform is mandatory. Electronic signatures and compliance with the 5-year archiving requirement are also crucial elements for the proper implementation of electronic invoicing in Latvia.
