#WallessTaxCookies | VAT risk in business transfers: the buyer entity matters more than you think

Latvian SRS has clarified that a transfer of a business can fall outside the scope of VAT only if the contractual buyer continues the economic activity using the transferred assets.

If the buyer named in the agreement does not operate the business and another group company steps in instead, the transaction may be treated as a taxable supply – even if the business continues.

Practical takeaway: make sure that the entity signing the purchase agreement is the entity that will actually operate the business and that it will continue the economic activity in Latvia. Otherwise, the transfer may be treated as a taxable supply and Latvian VAT may apply.

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