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Support for crop, animal and plant insurance
The Rural Support Service (RSS) invites to submit project applications for the “Crop, Animal and Plant Insurance Premium” sub-measure of the “Risk Management” measure. The acceptance of applications for projects shall take place from 19 April 2021 to 1 July 2021. Total public funding is EUR 6 million.
The purpose of aid is to promote the involvement of farmers in the agricultural sector risk reduction by partially covering the costs of the insurance premium.
Support shall only be granted for the existing insurance policies fully paid until 1 July 2021. The policy may be paid by instalments, but the final payment may not be later than 1 July 2021.
In order to receive the support, the applicant must submit the application, a copy of the insurance policy and copies of documents confirming the payments of insurance premiums. Project applications can be submitted to the RSS Electronic Application System (EAS) or signed with a secure electronic signature.
Acceptance of project applications takes place within the framework of the European Union European Agricultural Fund for Rural Development and the Rural Development Program.
Information source: Rural Support Service
Application for area payments
From April 7 of this year, farmers will be able to apply for area payments by filling the Unified Application in the Electronic Application System (EAS) of the Rural Support Service.
Given the prevalence of Covid-19 and the restrictions for face-to-face work, the Service will also provide all necessary support by phone to customers who are unable to complete the information in EAS themselves – Service staff will be able to complete and submit the Unified Application during the phone conversation. The Service did the same in the spring of 2020, when more than 10,000 clients received assistance.
Already for six months, farmers can fill out the Preliminary area payment applications in EAS. This allows gradually fill the necessary information in the application and calculate whether greening and other requirements will be met. If the farmer fills in the information in the Preliminary application, this application must be submitted to the EAS from 7 April.
Important dates for the 2021 season:
- April 1 – submission of applications for specification of field blocks ends;
- April 7 – application for area payments starts;
- May 24 – deadline for applying for area payments;
- June 15 – final the deadline for applying for area payments with 1% reduction in the amount of support for each delayed working date, counting from May 25.
Information source: Rural Support Service
Latvia attracted EUR 1.25 billion on international finance markets
On Wednesday, 10 March, the State Treasury issued ten-year bonds on financial markets on Latvia’s behalf, raising financing of EUR 1.25 billion.
The issued ten-year bonds have profitability of 0.105% and coupon rate 0.000%, which is historically the lowest level of long-term bond profitability and coupon level achieved for Latvian state bond issue on international financial markets, according to the State Treasury.
Latvia’s Finance Minister Jānis Reirs comments: «The State Treasury’s performed borrowing deal has allowed us to attract long-term resources under very good economic conditions. This deal is the first step towards attracting necessary funding on international markets, because we need to secure resources for both battling Covid-19 and supporting the economy, as well as financing other needs of the budget and state debt.»
The biggest accomplishment with investor demand both numerically and volume-wise is the interest from more than 100 investors. Their general demand volume reached EUR 2.8 billion.
The issued bonds were mostly procured by European asset managers and banks from Germany, France, and Britain.
Information source: Ministry of Finance
The loan limit for the purchase of agricultural land has been increased to 1 million euros
On 11 February the government approved amendments to the procedure for granting state aid for the purchase of agricultural land for agricultural production prepared by the Ministry of Agriculture, in order to promote the processing of agricultural land (AL) and production by increasing the loan limit up to 1 million euros.
The loan available to farmers for the purchase of agricultural land was set at 430 thousand euros in the current regulation, and has not been changed since 2013. Currently there are already farmers whose loan for the purchase of land has reached the 430 thousand euros specified in the regulations and they can no longer receive a loan for this purpose. However, it is important that productive farmers have the opportunity to purchase additional AL. Therefore, the future available loan amount per borrower or one unified company will be set at EUR 1 million.
The limit for the total area of non-agricultural objects that can be purchased together with agricultural land has also been increased from 20 to 30 percent.
Until now, the rules contained a restriction that no aid is granted for the purchase of agricultural land from related natural persons. The amendments provide for an additional restriction – the loan will no longer be granted for the purchase of agricultural land from interrelated legal entities. This provision will apply to loans issued after 26 February 2021. The rules also make a number of clarifications to improve the administration and implementation of the support program.
More information on support for the purchase of agricultural land is available on the website of the state-owned development finance institution “Altum” (www.altum.lv/en).
Information source: Ministry of Agriculture
Cadastral values in Latvia
It is planned to continue to apply the current Latvian cadastral values at least until 31 December 2025. This is stipulated by the amendments to the law conceptually supported in the first reading by the Latvian Parliament on February 4.
The amendments set a task for the Cabinet of Ministers to prepare and submit to the Parliament for consideration draft laws ensuring re-evaluation of the amount of state fees related to cadastral value. Among other things, the amendments envisage drafting the laws necessary for the exemption of housing from real estate tax, determine the amount of real estate tax for compulsory shared property, as well as commercial areas and agricultural land.
“While the majority of the Parliament and the government has not agreed on a comprehensive review of the real estate tax system, which would ensure a fair and tolerable tax burden for population and entrepreneurs, the increase of cadastral values should not be allowed,” previously argued Juris Jurass (New Conservative Party), the Chairman of the Legal Commission which is responsible for the progress of the draft law in the Parliament.
In Latvia, the amount of real estate tax is related to the cadastral value of the property. Until now, cadastral values have been frozen to prevent an increase in Real Estate Tax (RET).
In order for the amendments to the Real Estate State Cadastre Law to enter into force, the Parliament must support such amendments in two more readings.
The currently valid cadastral values are calculated using real estate transactions for 2012 and 2013. The State Land Service (SLS) has been developing a new cadastral valuation methodology for several years. Therefore, since 2017, the cadastral values of properties have been frozen and are used, for example, in the calculation of RET and compulsory rent.
In 2017, the Parliament supported amendments to the law, which provided for the freezing of cadastral values of real estate until 2020. At the end of October 2019, it was decided to “freeze” cadastral values for another two years until 2022.
Information source: Latvian Public Broadcasting
Changes in the taxation sector of Latvia in 2021
Single tax account
As of 1 January 2021, a single account for tax payments is introduced. The account number is LV33TREL1060000300000. Along with the introduction of the common tax account, the date for the payment of almost all taxes is changed – it is set to be on the 23rd date of the month. Existing accounts will be retained for certain taxes – real estate tax, vehicle operation tax, company car tax, as well as customs duties.
Application of the Personal Income Tax
* The maximum non-taxable minimum per year – EUR 3,600 (EUR 300 per month);
* The amount of income up to which the maximum non-taxable minimum applies – EUR 500 per month;
* Threshold of applying the differentiated minimum exempt from the personal income tax – EUR 1,800 per month (previously EUR 1,200).
Every natural person may learn the amount of their estimated non-taxable minimum on the Electronic Declaration System of the State Revenue Service.
As from January 1, 2021, the minimum monthly salary is raised from EUR 430 to EUR 500.
The amount of tax deduction for a dependant is retained at the previous level – EUR 250.
Micro-enterprise Tax
As of 2021, the Micro-enterprise Tax (MET) may be paid only by a sole proprietor, agricultural or fishery farm, individual merchant or a natural person that has been registered as a performer of economic activity. MET payer may not be a Value Added Tax (VAT) payer.
MET rate depends on the turnover:
1) for a turnover of up to EUR 25,000 per year – 25 percent;
2) for the turnover share that exceeds EUR 25,000 per year – 40 percent.
In 2021, the companies will be permitted to change their MET status during the year as well and become either Personal Income Tax (PIT) or Corporate Income Tax (CIT) payers as of the 1st date of the next quarter, by submitting the application to the State Revenue Service by the 15th date of the last month of the current quarter.
The law provides for transitional conditions for the MET payers that have been registered in MET status before 31 December 2020. For instance, a Limited Liability Company (LLC) that has obtained the status of a MET before 31 December 2020, shall be permitted to retain MET status for the entire 2021. The respective LLC will have to become a CIT payer as of 2022.
Regarding the employees of METs, who have been hired by 2021, the requirement to apply regular procedures of tax payments on their salary shall be applied as of 1 July 2021. If an existing payer of MET hires an employee after 1 January 2021, the regular procedure of tax payment calculations shall be binding regarding these employees and transitional procedures will not be in effect regarding such employees.
As of 1 January 2021, the Micro-enterprise Tax Law no longer provides for the limit on the amount of work remuneration.
State social insurance mandatory contributions
From 2021, the rate of mandatory state social insurance contributions is to be reduced by one percentage point – from 35.09 to 34.09 percent. The social tax will be set at 10.5 percent for employees and 23.59 percent for employers.
In order to increase the social protection of self-employed persons, starting from July 2021, the minimum social contributions of self-employed persons will amount to ten percent instead of the current five percent of the income.
As of 1 January 2021, the individually determined deadline for the submission of State social insurance mandatory contributions (SSIMC) reports and payments of SSIMC for each taxpayer will lose effect. In future, the employer’s report shall be due by the 17th date of each month and the
SSIMC payment deadline shall be 23rd date.
Reduced VAT for fruits, berries and vegetables
Amendments to the Value Added Tax (VAT) Law preserve reduced 5% VAT for fresh fruits, berries and vegetables until 31 December 2023 to assist with development of agriculture sectors, reduce grey economy and increase the
competitiveness of legally working businesses.
Information source: State Revenue Service, Ministry of Finance
Reduced VAT for fruits, berries and vegetables
On Tuesday, 24 November, Latvian Parliament approved amendments to the Value Added Tax (VAT) Law that provide for simplifying VAT usage and reducing VAT to 5% for fresh fruits, berries and vegetables in the final reading.
Finance Ministry previously explained that the goal of amendments is clarifying VAT regulations to:
- simplify application of VAT;
- reduce administrative burden and costs;
- prevent possible interpretations;
- coordinate VAT regulations with other legislative tasks;
- promote the operation of VAT system by returning overpaid VAT back to taxpayers.
Amendments to the law preserve reduced 5% VAT for fresh fruits, berries and vegetables until 31 December 2023 to assist with development of agriculture sectors, reduce grey economy, increase the competitiveness of legally working businesses, as well as assist with consumption of fresh fruits, berries and vegetables in the country.
To reduce the administrative burden for taxpayers and make costs more efficient for the State Revenue Service (SRS), a single method is to be established for VAT taxpayers to be reported the decision on their registration in SRS VAT payers register. Law amendments are part of the legislative drafts accompanying the 2021 budget law.
Information source: Cabinet of Ministers, Baltic News Network
Rural Development Program funding for rural development
Within the planning period for the years 2014 – 2020 of Latvian Rural Development Program (RDP), Latvia introduced 16 support activities. In general, since the commencement of RDP implementation, 82 project tender application rounds were announced until late 2019, as well as area payments were paid every year.
The activity of applicants for support were high. In general, during the project tender application rounds, 48,485 project applications with the total public funding of EUR 1,432.4 million were submitted since the beginning of the planning period, including 34,418 confirmed projects with the total public funding of EUR 898.5 million confirmed by the end of 2019, or 94.0% of the public funding available within the framework of the implementation of project activity.
The total confirmed public funding in all RDP activities (projects and area payments) by the end of 2019 reached EUR 1,414.4 million, or 92.3%, but the funding paid out was EUR 1,064.4 million, or 69.5% of the funding available during the period.
The highest amount of public funding, as well as the highest number of approved projects fall within the sub-activity “Support for Investment in Rural Farms”, of the support activity “Investment in Material Assets”. The next largest amount of approved public funding falls within the sub-activity “Basic Services and Renewal of Villages in Rural Areas”. Then the sub-activity “Support of Investments in the Development of Agriculture and Forestry Infrastructure” follows. A high activity is observed in the sub-activity “Support for the Implementation of Actions in Accordance with Community-Driven Local Development Strategy”.
It is important to mention that in 2019 the area of insured cultivated sown and planted areas of the farms that applied for the partial remuneration of the costs of purchases of insurance policies within the activity “Crop, Animal and Plant Insurance Premium” has increased (more than 1.7 times).
The payments of support in the area payment dependent activities for the maintenance and improvement of environmental, climate and rural landscape, and the areas applied for support in some activities have slightly exceeded the planned target indicators of the Rural Development Program.
Information source: Ministry of Agriculture
In 2020, 31 new foreign investors have been attracted with a total investment of over 100 million euros
On Friday, 11 September, the 24th high-level meeting of the government of Latvia and Foreign Investors Council in Latvia (FICIL) took place, at which this year special emphasis was laid on such matters as strengthening justice, stability of the tax policy, the improvement and digitisation of the health care system. Also, the general economic situation was discussed along with preconditions for attracting new investments. “Our aim is to attract foreign direct investments in the amount of at least 400 million euro until 2023, therefore we wish to take all the necessary steps to provide a favourable environment for business development and to ensure that enterprises with foreign capital that already operate in Latvia would continue their development. Experience shows that investment environment largely depends on how good and comfortable in Latvia feel enterprises that already operate here,” indicates the Director of Investment and Development Agency of Latvia (IDAL) Kaspars Rozkalns. Throughout the eight months of 2020 IDAL has attracted 31 investment projects to Latvia, which will create the total of 1700 workplaces, but the total amount of investments will exceed 100 million euro. With regard to Covid-19 and the Belarusian crisis IDAL has consulted over 5000 customers. Reacting to the economic situation state aid instruments administered by IDAL have been reviewed and adjusted to present needs, for example, opportunities in the field of digitisation of enterprises and acquiring new export markets have been broadened.
To achieve the set goals and restore growth in the near future, investments in human capital, innovations and the infrastructure necessary for entrepreneurship must continue. In addition to the aforementioned, to stimulate development of the national economy investments must be made in public infrastructure, for which additional funds will be available from EU stabilisation programmes. State and EU investments will definitely be followed also by private investments.
“Meeting representatives of FICIL we wish to coordinate further steps to provide entrepreneurship environment that would attract enterprises. At the same time we invite enterprises to participate more actively in industries’ ecosystems, in which currently entrepreneurs, organisations of entrepreneurs, public authorities and universities are coming together to decide on things required to further faster growth of industries,” tells K. Rozkalns.
