What is UVTN and what does it apply to?
The company light vehicle tax, or UVTN, is a tax in Latvia that is paid for certain light vehicles at a company’s disposal. It is regulated by the Vehicle Operation Tax and Company Light Vehicle Tax Law, and its practical application is also explained by the State Revenue Service (VID) and the Road Traffic Safety Directorate (CSDD).
VID explains that UVTN taxpayers are merchants, branches of foreign merchants registered in the commercial register, as well as farms registered in the Register of Enterprises. The tax is related not only to a car owned by the company, but also to certain cases where the vehicle is held by the company, used on the basis of an employment contract, or borrowed from a person who is not a merchant.
In practice, this means something simple: if a company uses a passenger car or a certain category of cargo van, it is necessary to check whether UVTN must be paid for that vehicle or whether an exemption provided by law may apply.
Which vehicles are usually subject to UVTN?
VID indicates that UVTN is paid for a light vehicle that is designed for the transport of passengers and luggage, where the number of seats, excluding the driver’s seat, does not exceed eight, and which is registered as a passenger car, passenger vehicle, or multi-purpose passenger vehicle. It also applies to a cargo vehicle with a gross weight of up to 3000 kg that is registered as a cargo van and has more than three seats, including the driver’s seat.
This is an important point, because companies often mistakenly believe that a “cargo van” automatically means that UVTN does not apply. That is not always the case. The vehicle’s registration category and the number of seats are exactly among the first things that need to be checked.
How is UVTN calculated?
The law determines the amount of UVTN. For vehicles first registered after January 1, 2009, whose registration certificate contains information about the engine’s maximum power, the rate depends on the number of kW. For example, up to 110 kW, the law sets the rate at EUR 33 per month.
This means that UVTN is not a one-time expense, but a regular monthly payment that can amount to a significant sum over the course of a year, especially for companies with multiple vehicles. That is why companies usually look for two things: first, to understand whether the tax applies at all, and second, whether there is a legal basis for an exemption.
When and how is UVTN paid?
VID explains that the tax is paid through CSDD or by bank transfer. Before the technical inspection, the tax is usually paid for the months up to the technical inspection, including the month in which the inspection takes place. If a vehicle is registered in Latvia for the first time in the name of the taxpayer, the tax is paid for the relevant calendar month on the registration date, while the remaining amount for the other months of the tax period must be paid in the next tax period before the technical inspection.
For companies, this means that UVTN is not something that should only be remembered at the end of the year. It is an issue that should be addressed at the moment the vehicle is purchased, taken into possession, or started to be used for company purposes.
In what cases can an exemption apply?
Exemptions from paying UVTN are set out in the law, and VID refers directly to them in its explanations. One of the most important cases in practice is a vehicle declared as being used exclusively for business purposes and equipped with a route control system. However, the law also provides for other exemption cases, for example, certain vehicles intended for short-term rental, demonstration vehicles, and specific situations where registration has been temporarily suspended.
Frequently asked questions
Does every company car automatically have to pay UVTN?
No. It must be assessed whether the specific vehicle falls within the scope of UVTN at all and whether any exemption provided by law applies.
Is it enough for a company to say that the car is used “only for work”?
No. If a company wants to justify an exemption, a statement alone is not enough. What matters is declaration in the CSDD register and documented records, including route control system data, if the vehicle is used exclusively for business purposes.
Does UVTN always not apply to a cargo van?
No. VID clearly states that the tax may also apply to a cargo vehicle up to 3000 kg registered as a cargo van and having more than three seats.
Practical example
A company has one passenger car used by a sales representative. If the car is at the company’s disposal and no exemption has been arranged for it, UVTN will usually be payable. However, if the company declares this car in CSDD as being used exclusively for business purposes, installs a route control system, and maintains proper trip records, a basis for exemption arises.
Most common mistakes
The first mistake is assuming that “everyone does it,” so the company may also choose not to apply UVTN without properly organized records. The second mistake is thinking that GPS by itself automatically grants an exemption. The third mistake is failing to assess the vehicle category and number of seats. The fourth mistake is failing to organize the documents immediately after acquiring the vehicle or taking it into possession. Later, these mistakes usually cost more than timely and proper compliance.
Checklist for the company accountant
Check whether the vehicle falls within the scope of UVTN.
Check whether the company qualifies as a UVTN taxpayer under the law.
Determine whether there is a basis for an exemption under the law.
If an exemption for business use is planned, make sure that the declaration in CSDD has been submitted correctly and on time.
Check whether a route control system has been installed and whether the data is being stored.
Make sure that the trip records comply with the requirements and are available upon request.
Conclusion
UVTN is not just a tax. It is also a matter of order, proof, and the company’s internal control. The sooner a company understands which vehicles are subject to the tax and which may qualify for an exemption, the fewer mistakes, misunderstandings, and unnecessary costs will arise later.
If you would like to understand whether UVTN must be paid for your company’s vehicles or whether there is a basis for an exemption, contact us. We will help you assess your situation, organize the right record-keeping approach, and find the most practical solution.
