Latvia has introduced mandatory e-invoicing regulations, requiring businesses to adopt structured electronic invoices for compliance with the State Revenue Service (VID). This change is part of the government’s initiative to promote digital tax reporting and increase efficiency in business transactions. The regulation, set to take effect in 2026, will impact all B2B transactions, with earlier requirements for government-related invoicing. Here are five key questions to help businesses understand and prepare for the transition.
1.What is the timeline for Latvia’s e-invoicing mandate, and who is affected?
Latvia is introducing mandatory e-invoicing in two phases. Starting January 1, 2025, all transactions involving public-sector entities must be processed electronically. This includes government-to-government (G2G), business-to-government (B2G), and government-to-business (G2B) invoices, meaning that any company working with the Latvian government will need to comply. Until January 1, 2026, there is a transition period for B2G contracts signed before December 31, 2024.
The second phase, beginning January 1, 2026, will require all business-to-business (B2B) transactions to be invoiced electronically. Additionally, businesses will need to report e-invoice data to the State Revenue Service (SRS). While B2C transactions are not included in the mandate, nearly all companies operating in Latvia will be affected by 2026.
2.Why is Latvia moving to mandatory e-invoicing?
Latvia is adopting e-invoicing to modernize financial processes, improve tax compliance, and reduce administrative burdens. The government aims to increase transparency, prevent fraud, and minimize errors in financial reporting by transitioning to a fully digital system. This shift is expected to make invoicing faster, more reliable, and cost-efficient for businesses.
Additionally, Latvia’s e-invoicing model is aligned with EU standards, ensuring cross-border interoperability and making it easier for companies to trade internationally. Beyond compliance, the move is part of a broader effort to digitize Latvia’s economy and create a more efficient and transparent business environment.
3.What are the key technical specifications for e-invoicing?
Businesses will be required to issue invoices in the PEPPOL BIS Billing 3.0 format. A structured XML-based standard that ensures compliance with EU regulations (LVS EN 16931-1:2017 and LVS CEN/TS 16931-2:2017). However, further details regarding the exact XML format and additional technical specifications are expected to be clarified by mid-2025. Companies must also be able to transmit e-invoices through the PEPPOL network or manually upload them via the e-address (e-adrese) platform provided by the Latvian government. From January 1, 2026, businesses will also need to report e-invoice data to the State Revenue Service (SRS), and the tax authority will review invoices after they have been sent. Latvia does not require electronic signatures for e-invoices. Businesses must archive invoices for five years for goods and services transactions, and ten years for real estate transactions, ensuring they meet regulatory requirements.
4.What challenges might businesses face when transitioning to mandatory e-invoicing?
The shift to mandatory e-invoicing will require businesses to make some adjustments, such as upgrading or replacing their existing invoicing software to support the required PEPPOL BIS 3.0 format, which could involve additional costs and technical challenges. Employees responsible for invoicing and compliance may need training to understand the new system, which could take time and effort. For small businesses with limited resources, the upfront costs of system updates, software integrations, and external consulting services could be a financial burden. Additionally, businesses must ensure their processes align with the new regulations to avoid penalties or operational disruptions.
5.What should businesses do to prepare for the e-invoicing mandate?
To avoid last-minute disruptions, businesses should begin preparing for e-invoicing. Staying informed about upcoming regulatory updates is crucial, as the government is expected to announce specific B2B e-invoicing rules in May 2025. Companies should also assess whether their current invoicing and ERP systems can generate and send invoices in the required format. If their systems are not yet compatible, they should consider partnering with an e-invoicing solution provider.
The State Revenue Service (VID) has outlined three scenarios for businesses to transition to mandatory e-invoicing based on their current invoicing practices. Businesses that do not use an accounting system and issue a low volume of invoices can either utilize the e-address e-invoice form or opt for service providers. Those using an accounting system and handling a moderate to high volume of invoices may use structured e-invoicing solutions provided by their accounting software or rely on service providers. It is essential for these businesses to ensure that invoices are submitted via e-address or to VID. Companies that are already issuing structured XML invoices must verify that their invoices comply with Peppol BIS Billing 3.0 standards and submit them through e-Address, system API integration, or another official channel.
