EURO INTRODUCTION LAW

On the 31st of January 2013 Parliament passed the Euro introduction Law. It is anticipated that Latvia will join Eurozone in the 1st of January 2014.

What will be the exchange rate?

Latvian lat has been pegged to euro since 2005 at the rate 1 EUR = 0,702804 LVL. The official euro introduction exchange rate will be presumably announced in July 2013, but no substantial differentiations from the current exchange rate are expected.

When converting lats to euros, euros will be rounded till a last cent, taking into account third decimal after a coma – if it is 5 to 9, then the last cent is rounded up.

Parallel circulation of euros and lats

Lats and euros will be in parallel circulation for 2 weeks after date of euro introduction.

An exception will be ATMs that withdraw cash solely in euros and vending machines that will accept solely euros.

In the public transportation payment for tickets will be possible in both lats and euros and the change will be given in the same currency as payment.

When can lats be exchanged for euros?

From the date of euro introduction lats in cash can be exchanged for euros free of charge for 6 months in credit institutions and for at least 3 months in the Latvian Post. Bank of Latvia will exchange lats in cash for euros for an unlimited period of time.

Non-cash lats (money in bank accounts) will be converted into euros in accordance with the official exchange rate. If a person has several accounts in euros and lats, it will be possible to close lat account and transfer money to the euro account free of charge during the first 2 months after euro introduction.

Pricing

Prices for goods and services must be shown in both euros and lats 3 months prior and 6 months after euro introduction. Cabinet of Ministers Rules will regulate concurrent pricing in documents, such as invoices or receipts, intended for customers – natural persons.

Introduction of euro in accountancy

All the accountancy residuals have to be recalculated to euros at the euro introduction date and the accountancy has to be kept in euros from the date of euro introduction.

Annual Reports have to be filled in euros if the respective year ends at the date of euro introduction or afterwards.

Tax and other declarations shall be filled in the currency which was in force at the end of the period to which the declaration refers.

Companies will have to change articles of association

Capital companies will have to file amended articles of association and registers of shareholders within 30 months after euro introduction.

Limited liability companies (‘SIA’) can denominate share capital in round euros only, whereas stock companies (‘A/S’) can denominate share value in euros and cents.

Founders of a new company can denominate share capital and share value in euro already 6 months prior to euro introduction but not earlier than the official exchange rate has been announced.

OTHER NEWS

•     On the 2nd of March 2013 a Double Tax Treaty between Latvia and Mexico came into force.
•     On the 22nd of February amendments to the Cabinet of Ministers Rules Nr. 827 came into force. The amendments provide the employers will have to declare amount of hours employees have factually worked in the previous month, but from the 1st of July 2013 the profession code from the Profession Classificator has to be stated when registering an employee within Tax Administration system.
•     Amendments to the Cabinet of Ministers Rules Nr. 585 have been prepared. If they come in force, board members of micro-enterprises and small companies will be able to keep company’s accountancy, provided that a company has more than one board member or shareholder.
•     The President of Latvia did not pass amendments to the Civil Procedure Law and returned them for Parliament for second review. The amendments implement new 30.4 section to the Civil Procedure Law – “Cases of invalidity of decisions of meeting of capital company shareholders” aiming to combat illegal takeover of companies (raiderism) and enhance legal protection of investors.
•     New Administrative violation process law has been drafted which introduces major changes in the administrative violation regulation: inter alias, a settlement procedure and new penalty execution mechanisms. If the new law will come in force, then the current Latvian Administrative Violations Code will become invalid till 2016.