DO YOU HAVE TO PAY THE COMPANY LIGHT VEHICLE TAX (CLVT)

According to the provisions of regulatory enactments…

…the company light vehicle tax (CLVT) must be paid for a vehicle registered in the ownership or possession of a company (merchant, branch of a foreign merchant, farm) or used on the basis of an employment or loan agreement.

The purpose of any tax as such is to replenish the state treasury. In this case, it is disguised as fair compensation to the state budget for the benefit of using non-private motor transport, which the user receives privately for their own personal needs.

#1 The tax is paid for a light vehicle:

which is intended for the carriage of passengers and their luggage;
where the number of seats (excluding the driver’s seat) does not exceed eight seats;
which is registered as a passenger car, a light passenger car, or a light multi-purpose vehicle;
a truck with a gross weight of up to 3000 kilograms, which is registered as a van (category N1) and has more than three seats (including the driver’s seat).

The tax is paid for a light vehicle:

which is registered in ownership or possession;
which is used on the basis of an employment contract (regardless of the number of days per month);
which is loaned and used for more than 15 days within one calendar month.

The tax is paid by the vehicle holder!

If a taxable vehicle has both an owner and a holder, then the tax is paid by the vehicle holder.

#2 Payment of the tax

The tax is paid into the state budget:

before the state technical inspection to be performed in the relevant taxation period for the months from the beginning of the relevant taxation period until the month (inclusive) in which the state technical inspection of the vehicle is performed;
the remaining part of the tax for the remaining months of the taxation period and the months of the next taxation period until the state technical inspection is paid into the state budget in the next taxation period before the state technical inspection of the vehicle;
for a vehicle being registered in Latvia for the first time, the tax is paid into the state budget on the day of vehicle registration only for the calendar month in which the vehicle is registered.
If the vehicle is used on the basis of an employment contract or a loan agreement concluded with a person who is not a merchant (including a branch of a foreign merchant or a farm), then the tax during this agreement is paid every month by the 15th day of the following month.

The tax period is a calendar year.

The taxpayer has the right to pay the tax in full for the entire calendar year before the state technical inspection.

#3 Tax refund and overpayment

To receive a tax refund, the taxpayer submits an application for a tax refund to the SRS, indicating the make, model, and registration number of each car for which the tax refund is requested, and the number of months for which the tax refund is requested, as well as information on the reasons for the overpayment. The SRS refunds the tax within 30 days after receiving the application for a tax refund.

If a taxpayer has a tax overpayment, the overpaid tax amount can be directed to cover the tax payment for another vehicle (indicating the registration number of this vehicle) within the taxation period.

#4 Evaluate the frequency of car use

If the company does not need the car every day, but only minimally, then you can safely loan your private car on the basis of a loan agreement for up to 15 days a month and legally not pay the CLVT, but you must remember that you will only be able to fill up fuel at the company’s expense – no repair or maintenance expenses may be attributed.
If the company needs the car every day and it is an objective work tool that must be maintained and repaired, then it is economically more advantageous to pay the CLVT, because you will then not have to worry about taking even your mother-in-law to the market on Sunday and can attribute absolutely all expenses related to the maintenance of the car to the company’s expenses.

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