In 2021, a Latvian online store selling handmade candles to customers across the EU had one VAT registration and one filing obligation. By 2022, after exceeding EUR 10,000 in cross-border B2C sales, the same store theoretically owed VAT in fourteen different countries. The owner — who started the business at her kitchen table — was not prepared for French TVA, German Umsatzsteuer, or Dutch BTW. Nobody with a candle shop should need to be.

This is the problem that the EU's e-commerce VAT package was designed to solve. And for Latvian online sellers, the solution has three components: the One-Stop Shop (OSS), the Import One-Stop Shop (IOSS), and a clear understanding of which rules apply to which transactions.

The EUR 10,000 Threshold: Where Everything Changes

Since July 2021, a single EU-wide threshold governs distance selling to consumers: EUR 10,000 per calendar year, calculated across all EU member states combined. Below this threshold, a Latvian e-commerce business may charge Latvian PVN at 21% on all B2C sales within the EU.

The moment total cross-border B2C sales exceed EUR 10,000, you must charge the VAT rate of the buyer's country. A shipment to a French consumer carries 20% TVA. To Spain, 21% IVA. To Germany, 19% Umsatzsteuer. The rates vary, the rules differ, and the filing obligations multiply.

Without the OSS mechanism, exceeding the threshold would require VAT registration in every EU country where you have customers. For a Latvian store shipping to ten countries, that means ten registrations, ten sets of returns, ten sets of local rules. The administrative cost alone would kill most small e-commerce businesses.

One-Stop Shop (OSS): One Registration, All of Europe

OSS allows a Latvian PVN-registered business to file a single quarterly declaration covering all B2C sales across the EU. You register for OSS through VID's EDS portal — it takes about 15 minutes and does not require a separate registration number. Your existing Latvian PVN number suffices.

How it works in practice:

You sell products to consumers in France, Germany, and Estonia
You charge each customer the VAT rate of their country (20%, 19%, and 22% respectively)
Every quarter, you file an OSS declaration through VID listing all sales by destination country
You pay the total VAT amount to VID
VID distributes the tax to each respective member state

The OSS declaration is separate from your regular PVN declaration. Filing deadline: the last day of the month following the quarter (e.g., Q1 is due by April 30, not the usual April 20 for PVN). Even quarters with zero sales require a nil declaration.

OSS covers: intra-Community distance sales of goods, services supplied to consumers in other EU member states, and certain domestic sales facilitated by electronic interfaces (marketplaces).

OSS does not cover: B2B transactions (these follow reverse charge rules), sales where goods are imported from outside the EU (that is IOSS territory), or supplies of goods with installation or assembly.

A practical note on pricing: many Latvian e-commerce businesses set uniform EU prices inclusive of VAT, absorbing the rate differences as a margin variable. A product priced at EUR 50 inclusive of VAT yields EUR 41.32 in revenue when sold to a German customer (19% VAT) but EUR 40.98 when sold to a Polish customer (23% VAT). For low-margin products, this difference matters. Some businesses adjust prices by country; others accept the variance. Either approach is valid — but model it before launch, not after your first OSS filing reveals unexpected margin erosion.

Import One-Stop Shop (IOSS): Simplifying Non-EU Imports

IOSS applies to a specific but increasingly common scenario: goods imported into the EU from third countries with a value not exceeding EUR 150 per consignment.

Without IOSS, these goods are subject to import VAT at the border. The customer — your buyer — receives a customs notice and must pay VAT before the package is released. This creates friction, delays, and a poor customer experience that drives up return rates.

With IOSS, the process inverts. You charge and collect VAT at the point of sale, applying the rate of the buyer's country. The goods then enter the EU customs-free (from a VAT perspective), because the tax has already been collected and will be remitted through your IOSS filing.

IOSS registration for Latvian businesses happens through VID. If you are established outside the EU, you need an EU-based intermediary — but for Latvian companies, direct registration is straightforward.

Key limitations of IOSS:

Only for consignments valued at EUR 150 or less (excluding VAT)
Does not cover goods subject to excise duties (alcohol, tobacco)
Requires accurate customs declarations referencing your IOSS number
Monthly filing (not quarterly like OSS)

For dropshipping businesses or Latvian companies sourcing products from China, Turkey, or other non-EU suppliers for direct shipment to EU consumers, IOSS is practically essential. Without it, your customers face unpredictable customs charges — and the conversion rate impact is measurable.

Marketplace Rules: When the Platform Collects VAT

If you sell through platforms like Amazon, Etsy, or eBay, the marketplace may be deemed the "deemed supplier" for VAT purposes. In these cases, the platform collects and remits VAT on your behalf. You still need to understand the rules — primarily to ensure you are not double-reporting VAT in your own declarations — but the collection burden shifts to the platform.

The deemed supplier rule applies when:

The marketplace facilitates sales of goods imported from outside the EU with a value up to EUR 150 (regardless of seller location)
The marketplace facilitates sales by non-EU sellers to EU consumers (regardless of value)

For Latvian sellers on EU marketplaces selling domestically sourced goods within the EU, the deemed supplier rule generally does not apply — you remain responsible for VAT collection and reporting.

This creates a peculiar situation where the same Latvian seller may have VAT handled by Amazon for some transactions and self-managed for others. Keeping track requires either excellent bookkeeping or an experienced accountant. Preferably both.

Common E-Commerce VAT Mistakes

Ignoring the EUR 10,000 threshold. Small Latvian shops selling on Etsy or through Instagram often do not realize they have crossed the threshold until well into the following year. The obligation is retroactive to the date of crossing.

Applying Latvian VAT to all EU sales. After exceeding the threshold, continuing to charge 21% to all EU customers creates under-declarations in high-VAT countries and over-declarations in low-VAT countries. Neither VID nor destination tax authorities appreciate the inconsistency.

Filing OSS late or not at all. OSS filing deadlines differ from regular PVN deadlines. Missing an OSS deadline can result in VID deregistering you from the scheme, forcing individual country registrations — precisely the administrative nightmare OSS was designed to prevent.

Selling Online Across the EU? Get Your VAT Right.

OSS, IOSS, marketplace deemed supplier rules, and destination-country rates create a compliance landscape that shifts with every new market you enter. We handle the entire e-commerce VAT stack for Latvian online sellers -- from initial OSS registration through quarterly filing and rate updates.

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E-Commerce VAT in Latvia: OSS, IOSS, and Distance Selling