Latvia backs cross-border VAT and SAFE bill

Distance-selling and OSS changes proposed

The Cabinet-approved bill would implement Latvia’s first 2027 tranche of the EU VAT in the Digital Age changes. For the EUR 10,000 distance-selling threshold, a Latvian supplier would count only goods dispatched from Latvia to another Member State, excluding sales from stock held elsewhere. A supplier registered for the Union One Stop Shop would apply the destination-place rules rather than the domestic optional rule. The bill would also widen the non-Union OSS to services supplied to any non-taxable person and make website details conditional on a website existing when registering for non-Union OSS or IOSS.^[1][2][3][4]

Energy and call-off-stock transition

From 1 January 2027 to 30 June 2028, qualifying gas, electricity, heating and cooling supplies could be reported through Union OSS. New movements under the call-off-stock simplification would stop after 30 June 2028, and the regime would cease after 30 June 2029. The package would also align Latvian refund routes for costs supporting non-Union OSS, Union OSS and IOSS transactions. It would exclude transactions reported through OSS from Latvia’s cash-accounting scheme and exclude IOSS where a supplier uses the small-business right not to register.^[3][4]

SAFE procurement treatment

A separate part would put the SAFE procurement VAT treatment into Latvian law. Imports, domestic supplies, intra-EU acquisitions and services would qualify for a zero rate only when made under procurement supported by the EU SAFE instrument and documented by an approved SAFE certificate. Named recipients include the Defence Ministry, National Armed Forces, Defence Logistics and Procurement Centre and State Border Guard, with the permitted recipient depending on the transaction. If enacted as drafted, the treatment would apply to qualifying transactions from 29 May 2025, including eligible existing contracts reclassified under Latvia’s approved SAFE plan.^[1][3][4]

Proposal status and practical checks

The measure is not yet law: Cabinet approval must be followed by Saeima enactment and promulgation. It creates no new general VAT-return deadline. Its filing impact is instead on transaction classification, OSS and IOSS registrations, refund claims and the data used to determine place of supply. Businesses should not change VAT treatment solely because they operate in Latvia: applicability depends on establishment and stock location, scheme registration, customer status, supply type, or a qualifying SAFE contract and certificate.^[2][3][4]