The Latvian Ministry of Finance has announced a significant step towards modernising its economic infrastructure.
By the 31st of December 2025, mandatory electronic invoicing will be fully enforced for business-to-business (B2B) transactions among applicable taxpayers in Latvia. The date has been moved from the 1st of January 2025, effectively extending the deadline by 12 months.
“The main reason for this additional year is the very early stage at which this project currently stands. We still have to implement a significant number of changes in the legal setup, adjust operational procedures for both businesses and government sectors, and undertake technical preparations. Furthermore, the country needs time to effectively communicate the electronic invoicing related practicalities and allow the economy to accept and adapt to change as such.” Edgars Strazds, Unifiedpost Latvia.
This initiative is geared towards streamlining operations, fostering transparency, and tackling the grey economy.
In late January 2024, aligned with the B2B initiative, Latvia introduced an extensive four-year strategy aimed at combating the informal economy effectively. A key component of this strategy involves encouraging non-cash transactions, with a particular emphasis on electronic invoicing (e-invoicing).
The upcoming 2025 e-invoicing rollout will encompass transactions not only between businesses (B2B) but also those involving government agencies (B2G). The structured 'Peppol' invoice is expected to emerge as the default e-invoicing standard, aligning with European standards (EN 16931-1:2017 and CEN/TS16931-2:2017), as outlined in the Finance Ministry’s informational report.
In line with the European Commission proposal VAT in the Digital Age (ViDA), the Latvian Ministry has also foreseen real-time reporting of invoicing data.
The business benefits
The Latvian government has so far outlined two key benefits of electronic invoicing for B2B and B2G transactions.
Time
The transition to electronic invoicing will streamline processes by reducing manual tasks, reducing invoice errors and accelerating the delivery of invoices to accounting and tax departments. Overall, these benefits decrease the time spent on administrative work, although the exact impact depends on the specifics of the e-invoice system to be developed.
Costs
Invoicing costs are expected to decrease due to the shift towards electronic processes, rather than physical, paper invoicing processes. Not only will there be a reduction in paper, but also the costs associated with print and post.
Plus, the reduction of the risk of invoice errors, and faster arrival of invoices to accounting and tax administration, will reduce overall labour costs.
The next steps
Currently, the process of introducing e-invoice circulation within Latvia is in its initial stages of preparatory work, with detailed solutions being deliberated by an inter-institutional working group.
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