When and How Can You Apply the 0% VAT Rate to Exports?
Many business owners know that exporting goods outside the EU can qualify for a 0% VAT rate, but not everyone realizes that poorly prepared documentation can lead to serious consequences.
What should you keep in mind?
To legally apply the 0% VAT rate, you must be able to prove that the goods:
- Have physically left EU territory
- Have been received by the foreign buyer
- The transaction complies with legal requirements (e.g., Article 7 of the VAT Law in Latvia)
Key supporting documents:
- Customs export declaration (IE599, EX1) with confirmation
- CMR or other transport documents (e.g., Air Waybill for air shipments)
- Invoice indicating application of the 0% VAT rate
- Sales contract with the buyer (if applicable)
- Additional proof – payment confirmations, warehouse documents, etc.
If the documentation is incomplete or incorrect, the tax authority (VID) may charge 21% VAT, along with penalties and late payment interest.
Our tip for business owners and finance teams:
It’s not just about knowing the VAT rules — it's crucial to set up an internal documentation system that prevents mistakes.
