Press Release: VAT: the European Commission requests Latvia to apply VAT on land for construction

The European Commission has formally requested the Republic of Latvia to stop exempting from VAT transactions involving land for construction. EU VAT rules expressly provide for VAT on supplies of land for construction. The request is communicated in the form of a ‘reasoned opinion’ (second step of the infringement procedure provided for in article 226 of the EC Treaty). If the relevant national legislation is not amended in order to comply with the reasoned opinion, the Commission may decide to refer the matter to the European Court of Justice.