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Allègement fiscal pour les organisations religieuses

Latvia has a type of indirect financing, e.g. tax-exemption. According to the tax legislation of the Republic of Latvia, religious organisations registered in Latvia in conformity with the applicable legislation have tax allowances when paying real property, value added and company’s income taxes. This can be defined as indirect financing, e.g. tax-exemption model without preference to any specific religious organisation. The main condition is the registration of religious organisations to the Board of Religious Affairs of the Ministry of Justice of the Republic of Latvia.

Real property tax

The real estate of religious organisations (land plots, buildings, and structures) is real property tax-exempt provided it is not used by religious organisation for economic activities (item 4, section 2, chapter 1 of the law On real estate property tax). The use of the real property for charity purposes and for social care is not considered an economic activity ; the same refers to the functioning of registered educational institutions preparing theological staff. According to the Regulation No. 131, item 7 of the Cabinet of Ministers, dated April 4, 2000 : "Application instructions of norms specified in the Law On the real property tax", the tax relief is applied only to the estates of religious organisations that are registered in accordance with the Law on Religious Organisations.

Company’s income tax

Religious organisations are not the company’s income tax payers. It is specified in the Law On company’s income tax, chapter 2, section 2, item 7.

Value added tax

In accordance with the Law On value added tax the charitable contribution payments and gratis goods and services (donated) are exempted from the value added tax. When receiving goods or services that have been paid up from foreign financial aid funds, religious organisations are entitled to the preference of the value added tax in accordance with the regulations No.651 of the Cabinet of Ministers, dated August 30, 2005 : "The Procedure of application of the value added tax to the import of goods, delivery of goods and procurement of goods in the territory of the European Union and to the services paid from the foreign financial aid funds".
Religious organisations shall account its taxable transactions and the relief from the value added tax is not applicable when religious organisations are performing any kind of economic activity, for example, leasing out premises and receiving charge, providing public catering services for charge, executing commercial trade or performing other taxable transactions. If the total value of taxable goods and services delivered or provided within the last 12 months reaches or exceeds 10,000 lats, the religious organisations, at the latest within 30 days after reaching or exceeding this amount, shall register with the State Revenue Service Registry of the value added tax payers in accordance with Section five of Chapter 3 of the Law. Starting from the registration date, the value added tax related to the economic activities of the religious organisations shall be applied, collected and deposited in the state budget according to the applied legislation. At the same time, the organisation is entitled to receive the deduction of pre-tax as it is stipulated in Chapter 10 of the Law.
Religious organisations registered in Latvia are released from value added tax related to the provision of religious and ritual services (wedding, wedding jubilees, baptism, funeral and other rites). In accordance with the item 19.12 of the Regulations #534 of the Cabinet of Ministers dated July 2005 : "The Procedures of application of the norms of the Law On value added tax" the norms of the Law On value added tax are not applied to the religious organisations. When religious organisations procure goods for provision of religious services (for example, candles, ornamental ribbons, etc.) the full price of such goods (including value added tax, that has been already included in the price) shall be paid to the seller or the value added tax shall be paid to the state budget after the importation and putting into free circulation of such goods. The Law does not envisage refunding this tax to religious organisations not registered to the State Revenue Service (SRS) Registry of value added tax payers.

D 27 septembre 2012    ARingolds Balodis

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