A single Latvian e-commerce company selling handmade ceramics generated EUR 340,000 in revenue across Shopify, Etsy, and Amazon in 2025 — and filed VAT returns in zero foreign countries, thanks to the OSS mechanism. Ten years ago, that same business would have needed VAT registrations in up to 27 member states. The rules have simplified. The accounting has not.

Running an online store from Latvia means reconciling payment processor reports that do not match bank statements, tracking inventory that may sit in warehouses across three countries, and calculating VAT at rates you did not set. This guide covers the accounting realities that every Latvian e-commerce operator faces in 2026.

Quick Summary

E-commerce accounting in Latvia requires mastering multi-platform reconciliation, EU VAT simplification systems (OSS/IOSS), and complex cost structures spanning 8-20% marketplace fees plus shipping and returns. The OSS system eliminates foreign VAT registrations for most B2C sales, with quarterly filing and EUR 10,000 cross-border threshold. Multi-location inventory needs consistent valuation methods (FIFO/weighted average) across warehouses. Key challenges include reconciling platform fees (Shopify 1.4%+, Amazon 8-15%), tracking marketplace-collected VAT separately, and managing currency conversions for non-EUR sales. Success requires automation tools, segregated VAT collection, and detailed platform data exports. International expansion through EU single market access makes Latvia attractive for e-commerce entrepreneurs targeting European consumers.

Multi-Platform Sales: Shopify, WooCommerce, and Marketplaces

Most Latvian e-commerce businesses sell through at least two channels. The accounting challenge is not the selling — it is the reconciliation.

Shopify deposits funds after deducting its payment processing fee (typically 1.4% + EUR 0.25 per transaction for European cards). Your bank statement shows a net deposit. Your revenue must be recorded at the gross sale amount, with Shopify fees as a separate expense. If you record only the net deposit as revenue, you are understating turnover — and potentially underreporting VAT.

WooCommerce paired with Stripe or PayPal creates similar issues. Stripe batches payouts and deducts fees. PayPal holds funds, releases them on a schedule, and charges per-transaction fees. Each payment processor has its own reporting format, its own timing for settlements, and its own way of handling refunds and chargebacks.

Marketplace sellers (Amazon, Etsy, eBay) face an additional layer: the marketplace itself may collect and remit VAT on your behalf. Since July 2021, platforms are "deemed suppliers" for goods valued under EUR 150 sold to EU consumers. This means Amazon charges the customer VAT, collects it, and remits it to the relevant tax authority — but the seller must still record the sale correctly in their books.

The practical accounting workflow:

Export transaction-level data from each platform monthly.
Reconcile gross sales, fees, refunds, and chargebacks separately.
Match net deposits to bank statements.
Record marketplace-collected VAT as a separate line — it is not your revenue, and it is not your VAT liability.

A Latvian SIA selling EUR 200,000/year across three platforms can easily have 50+ reconciling items per month. Automation tools (Xero integrations, A2X for Amazon/Shopify) are worth investigating once you pass EUR 100,000 in annual platform sales.

VAT: OSS, IOSS, and When You Still Need Foreign Registrations

The EU's One-Stop Shop (OSS) system, fully operational since 2021, is the single most important VAT simplification for Latvian e-commerce businesses. Here is how it works:

Union OSS covers B2C sales of goods already within the EU (domestic stock shipped cross-border) and all B2C services. Instead of registering for VAT in every country where your customers are located, you register for OSS through Latvia's VID and file a single quarterly return declaring all EU sales, broken down by destination country and applicable rate.

Key thresholds and rules for 2026:

The EUR 10,000 cross-border micro-seller threshold still applies. If your total B2C sales to other EU countries (not Latvia) are below EUR 10,000/year, you can charge Latvian VAT on everything. Above that, you must charge the destination country's VAT rate.
OSS returns are filed quarterly, with payment due by the end of the month following the quarter.
You must keep OSS records for 10 years — longer than the standard 5-year retention period for other accounting documents.

Import One-Stop Shop (IOSS) applies to goods imported from outside the EU with a value not exceeding EUR 150 per consignment. If your Latvian e-commerce business imports products from China and ships directly to EU consumers:

Register for IOSS via VID.
Charge VAT at the destination country's rate at the point of sale.
File monthly IOSS returns.
The goods clear customs without additional VAT collection at the border.

Without IOSS, your customers pay import VAT when the parcel arrives — a terrible customer experience that leads to refused deliveries and chargebacks.

When you still need foreign VAT registrations:

If you store inventory in another EU country (Amazon FBA warehouses, for example), you may need a VAT registration in that country for the movement of goods. OSS does not cover B2B sales or intra-community movements of own stock.
If you sell B2B to businesses in other EU countries, those sales follow the standard reverse-charge rules, not OSS.

For a deeper dive into VAT mechanics, see our comprehensive VAT guide.

Inventory Accounting: FIFO, Weighted Average, and Write-Offs

E-commerce inventory is not like retail inventory. Products sit in your apartment, a Latvian warehouse, an Amazon fulfillment center in Poland, and possibly a 3PL in Germany — simultaneously.

Latvian accounting standards require consistent application of one of these methods:

FIFO (First In, First Out): oldest inventory is sold first. Works well for products with consistent pricing.
Weighted average cost: each unit carries the average cost of all units available. Simpler for high-volume, low-variety sellers.
Specific identification: track individual items by cost. Necessary for high-value goods (electronics, jewelry).

The method you choose must be applied consistently across all locations. You cannot use FIFO for your Latvian warehouse and weighted average for Amazon FBA stock.

Inventory write-offs for damaged, expired, or unsellable goods must be documented with a written-off inventory act (norakstīšanas akts). VID expects:

Date of the write-off decision.
Description and quantity of goods.
Reason (damage, expiry, obsolescence).
Original cost and any recoverable value.

Throwing away EUR 5,000 worth of unsellable stock without documentation? That is a non-deductible expense. With documentation? Fully deductible.

Marketplace Fees, Shipping Costs, and Returns

The cost structure of a typical Latvian e-commerce business looks nothing like a traditional retailer:

Cost of goods sold (COGS): 30–50% of revenue
Marketplace/platform fees: 8–20% (Amazon referral fees alone range from 8–15% depending on category)
Shipping and fulfillment: 8–15%
Payment processing: 1.5–3.5%
Advertising (PPC, social): 5–15%
Returns and refunds: 2–8% of gross revenue

Each of these requires distinct accounting treatment:

Marketplace fees are recorded as selling expenses. Amazon, for instance, provides a detailed settlement report that breaks down referral fees, FBA fees, storage fees, and advertising charges. Record each category separately — your tax advisor will thank you when optimizing deductions.

Shipping costs should be separated into outbound shipping (cost of sales) and return shipping (selling expense or cost of returns). If you offer "free shipping" to customers, the shipping cost is still a real expense that must be recorded.

Returns and refunds reverse the original sale. The accounting entry depends on timing:

Same accounting period: reverse the revenue and cost of sale.
Different period: record as a sales return in the current period. The inventory is re-added at its original cost (or lower recoverable value if damaged).

Cross-Border Sales: Currency, Customs, and Compliance

Selling to customers outside the EU introduces currency risk and customs obligations.

Currency. If you sell in GBP, USD, or other non-EUR currencies, you must convert transactions to EUR at the ECB reference rate on the transaction date (or the last published rate before the transaction). Exchange rate gains and losses are recorded in the profit and loss statement. For businesses with significant non-EUR revenue, monthly revaluation of foreign-currency receivables and payables is required.

Customs and duties. Goods exported from Latvia to non-EU countries (UK post-Brexit, US, Norway) may require customs declarations. Export declarations are filed through Latvia's electronic customs system. The goods are zero-rated for VAT purposes — you charge 0% VAT but must retain proof of export (customs declaration, shipping documentation).

Intrastat reporting. If your dispatches of goods to other EU countries exceed EUR 230,000/year, or arrivals exceed EUR 340,000/year, you must file monthly Intrastat declarations with the Central Statistical Bureau (CSP). This is separate from VAT reporting and catches many growing e-commerce businesses off guard.

Practical Tips for Latvian E-Commerce Accounting

Automate platform-to-accounting data flows as early as possible. Manual entry from Amazon settlement reports is error-prone and unsustainable past 100 orders/month.
Separate personal and business finances from day one. Many Latvian e-commerce businesses start as side projects. The moment you register a SIA, every transaction must flow through the business bank account.
Track inventory by location. This is not optional — it is a legal requirement if you have stock in multiple countries, and it is essential for accurate COGS calculation.
Keep platform screenshots and export data. Marketplaces change their reporting formats, close seller accounts, and make historical data inaccessible. Download everything monthly.
Budget for VAT timing differences. You collect VAT from customers immediately but remit it quarterly (OSS) or monthly (standard Latvian VAT). That cash is not yours — segregate it.

FAQ

How does the OSS system work for international entrepreneurs selling from Latvia to EU customers? OSS (One-Stop Shop) allows Latvian e-commerce businesses to handle all EU B2C VAT through a single quarterly return filed with VID, eliminating the need for VAT registrations in each EU country. Once your cross-border EU sales exceed EUR 10,000 annually, you must charge destination country VAT rates rather than Latvia's 21%. The system covers goods already within the EU and all digital services. For goods imported from outside the EU under EUR 150, use IOSS (monthly filing) to collect destination VAT at point of sale, allowing customs clearance without additional charges to customers.

What are the biggest reconciliation challenges when selling across multiple platforms? Payment processors (Stripe, PayPal) net out their fees from settlements, requiring gross revenue recording with fees as separate expenses. Marketplace platforms like Amazon may collect VAT on your behalf, which must be recorded separately from your revenue and VAT liability. Different platforms have varying settlement timing, fee structures, and reporting formats. Automation becomes essential beyond EUR 100,000 annual platform sales - tools like A2X for Amazon/Shopify integration or Xero connectors prevent manual entry errors. Key is monthly platform data exports before systems change or accounts become inaccessible.

How should inventory be managed when stored across multiple countries (Latvia, Amazon FBA, 3PL)? Latvian law requires consistent inventory valuation methods across all locations - you cannot use FIFO for local warehouse and weighted average for FBA stock. Track inventory by location for accurate COGS calculation and compliance. Note that storing inventory in another EU country may trigger VAT registration requirements there for B2B sales or intra-community stock movements. Document all inventory movements between locations and maintain detailed records. Write-offs require norakstīšanas akts documentation regardless of location. Consider total cost of ownership including storage fees when evaluating multi-location strategies.

What compliance obligations exist for cross-border sales outside the EU? Non-EU exports (UK, US, Norway) require customs declarations through Latvia's electronic system and are zero-rated for VAT with proper export documentation. Currency conversions must use ECB reference rates on transaction dates, with exchange gains/losses recorded in P&L. Intrastat reporting becomes mandatory when EU dispatches exceed EUR 230,000 or arrivals exceed EUR 340,000 annually - filed monthly with CSP separately from VAT. UK sales post-Brexit require special attention to export procedures and potential customer import charges affecting delivery success rates.

What cost structure should international e-commerce entrepreneurs expect in Latvia? Typical Latvian e-commerce costs: COGS 30-50%, marketplace fees 8-20% (Amazon 8-15% referral fees), shipping/fulfillment 8-15%, payment processing 1.5-3.5%, advertising 5-15%, returns 2-8%. These percentages are higher than traditional retail due to platform dependency. Latvia offers competitive advantages through EU market access, OSS simplification, and lower operational costs than Western Europe. Success requires careful cost monitoring as margins are often thin. Platform fee increases can quickly impact profitability, making diversification and direct sales channels important for long-term sustainability.

If your e-commerce accounting has grown beyond spreadsheets and you need a team that understands the difference between an FBA settlement and a Stripe payout, contact us.

E-Commerce Accounting in Latvia: VAT, Platforms, Reporting