Latvia, Legislation, Markets and Companies, Taxation

According to the newspaper, the dealership does not pay value added tax on the automobiles it brings to Latvia, furthermore, through a complex scheme involving a number of associated companies abroad and fictitious companies in Latvia, sometimes the amount of VAT applicable - yet never paid by the company - is compensated to the dealership.

Neatkariga received the report from an anonymous source and forwarded it to the Road Traffic Safety Directorate and State Revenue Service, the latter saying that it would start investigation.

The dealership sells premium cars, but VAT applicable to each automobile sale deal - at least EUR 10,000 per sale - goes into the pockets of those who run the scheme, not to the budget. The total amount may be hundreds of thousands of euros.

The scheme involves shipment of automobiles to Latvia from Estonia, registration of automobiles in the name of fictitious companies in Lithuania and multiple re-registrations with dummy companies registered in Moldovan, Belarusian, Tajikistan citizens' names, until a given automobile is finally registered by the intended owner.