Tax exemption

22.03.2016. 17:26

Customs duty exemption for motor vehicles imported in Latvia by Missions accredited and residing in Latvia, diplomatic agents and career consular officers, administrative-technical staff who are not nationals of Latvia or permanently resident in Latvia and their spouses, members of international organizations, representations of international organizations and their family members enjoying diplomatic privileges and immunities under international law, is granted under the provisions of the Council Regulation (EEC) No 918/83 of 28 March 1983 setting up a Community system of relief from customs duty. Article No 133 of the Regulation envisages the relief pursuant to the Vienna Convention on Diplomatic Relations of 18 April 1961 and the Vienna Convention on Consular Relations of 24 April 1963, or by virtue of international agreements.

In compliance with the Vienna Convention on Diplomatic Relations (Article 36.1 and 37.2), customs duty relief is applied to motor vehicles imported into Latvia from a third country for the official use of the Diplomatic Mission, as well as for the personal use of members of the Diplomatic Mission.

If an already exempted vehicle is sold to a non-privileged person, the Diplomatic Mission or the privileged person shall pay customs duty according to the actual tax rate on the day when the vehicle is sold. If the vehicle is sold to another privileged person, it may be sold free of taxes.

It should be noted that Latvian legislation does not foresee a time frame after which the customs duty should not be paid.

Reimbursement of VAT for motor vehicles purchased in Latvia follows the same procedure as for other goods and services, as stipulated by the Cabinet of Ministers Regulation No 908 Value added tax refunded under the procedure specified in the Clause 51.3 of the Regulation shall be repaid to the state budget, or this amount shall be deducted from the amount of refundable tax calculated in accordance with future applications, if the Diplomatic Mission or a representation in the Republic of Latvia, within three years following the date of purchase and registration of a vehicle in the Republic of Latvia, shall sell or otherwise transfer this vehicle to another person or institution not indicated in the sub-clause No 1.1 of the Regulation.

Clause 51 of the Regulation denotes that in the event a person associated with a representation in the Republic of Latvia leaves the territory of the Republic of Latvia, and who has been refunded value added tax paid on the purchase of a vehicle as provided in the Regulation, sells or otherwise transfers the vehicle to another person or institution not mentioned in Sub-clause 1.1 of this Regulation, within three years following the purchase and registration of the said vehicle in the Republic of Latvia, 1/36 of the refunded tax for each month remaining until the end of the period of three years is repayable to the state budget.