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Latvia

Financial Year – in general 01.01-31.12
Currency – EURO

Corporate Tax Law provides

for the CIT payment at the moment of the distribution of profits (including at the moment of the deemed profit distribution).

Taxpayers

1. Performers of economic activity:

  • domestic undertakings;
  • institutions financed from the state budget, whose income from economic activity is not provided in the state budget;
  • institutions financed from the local government budget, whose income from economic activity is not provided in the local government budget;

2. foreign commercial companies and other persons deriving income in Latvia (hereinafter — non-residents);
3. permanent establishments of non-residents.

Basis of Taxation – rofits gained by a taxpayer are not taxed until it’ s distribution. CIT at a 20% rate is paid from the profits distributed (calculated dividends, payments treated as dividends and deemed dividends) and deemed profit distributions (expenses not related to economic activity etc.).
Taxation period is a calendar month.

Taxation period return is submitted to the State Revenue Service until the 20th date of the following month, if: dividends are calculated; payments treated as dividends are made; deemed dividends are disbursed; expenses not related to economic activity are made; liquidation quota is disbursed.

Other CIT taxable objects occurring during the reporting year shall be included in the taxable base in the last taxation period of the reporting year, and the return shall be submitted to the State Revenue Service until the 20th date following the month, in which the reporting year ends.

Reference
Corporate Income Tax Rate (%) 20% CIT rate is 20% on the gross distributed amount or 20/80 on the net income, namely, base subject to CIT has to be divided by a coefficient 0.8. Whereas, the recipient of dividends – a natural person shall not pay personal income tax from the above-mentioned dividends.
Branch Tax Rate (%) 20%
Withholding Tax Rate:
Dividends – Franked N/A No such option
Dividends – Unfranked N/A
Dividends – Conduit Foreign Income N/A
Interest 20% Only if paid to off-shore or low jurisdiction ( list as per law) any type of person legal or private
Royalties from Intellectual Property 20% Only if paid to off-shore or low jurisdiction ( list as per law) any type of person legal or private
Fund Payments from Managed Investment Trusts N/A
Branch Remittance Tax N/A
Net Operating Losses (Years)
Carry back No
Carry forward Unlimited

Individual Tax Summary

Residence – Taxpayers

  • natural persons – domestic taxpayers or residents;
  • natural persons foreign taxpayers or non-residents;
  • natural persons – owners of individual undertakings, as well as farms and fish farms, for the income of his/her undertaking (as well as a farm or a fish farm), which is not subject to corporate income tax.

Basis of Taxation – Resident taxpayers are generally taxed on worldwide income, with a tax offset for foreign tax paid on foreign income, up to the amount of Latvian tax payable on that income. Foreign residents are taxable only on Latvian source income.

Filing Status – The taxation period is a calendar year.

Personal Income Tax Rates

Taxable Income Tax Payable – Residents Tax Payable – Non Residents
up to 20004 euro 20% 23%
within 20004- 62800 euro 23% 23%
more then 62800 31.4% 31.4%
rental of property in special regime, income from the alienation of a forest growing on the property of a natural person for felling and the alienation of the timber obtained therein, as well as support sums for economic activity restrictions to the forest owners, for whom the forest management is not the type of economic activity , income from scrap sale 10% 10%
income of a non-resident from the alienation of real estate in the Republic of Latvia and income from the alienation of other capital assets in accordance with Article 11.9 of the Law On Personal Income Tax, except for income from the alienation of financial instruments, the circulation of which is regulated by the Financial Instrument Market Law, by withholding tax at the place of disbursement of income 3%

Goods and Services Tax (GST)

Rate 5%-12%-21%
Taxable Transactions Taxable transactions shall be the following transactions carried out inland within the framework of economic activity:
1) supply of goods (including supply of goods in the territory of the European Union and exportation of goods) for consideration;
2) supply of services for consideration;
3) acquisition of goods in the territory of the European Union for consideration.
(2) Any importation of goods shall be taxable unless laid down otherwise in the Law.
(3) Acquisition of a new means of transport in the territory of the European Union carried out by a non-registered taxable person or a non-taxable person shall also be a taxable transaction.
(4) Supplies of new means of transport carried out on an occasional basis, where a new means of transport is dispatched or transported to the customer by the vendor, the customer, or by the third person on behalf of the vendor or the customer, from inland to a destination outside inland but within the territory of the European Union, shall also be a taxable transaction.
Registration 5 working days
Filing and Payment Monthly or quarterly,

Other Taxes Payable

Tax Reference
State Social insurance mandatory contributions Insured persons and their employers shall pay state Social Insurance Mandatory Contributions. If an employee has been insured for all types of social insurance than rate is 35,09% (11% tax rate for employee and 24,09% tax rate for employer). Tax rate differs for those taxpayers who are insured for less types of social insurance (self-employed persons, pensioner, etc. persons).
Real Estate tax Tax rates:
land – 1,5% of the cadastral value;
buildings used for economic activity, engineering structures – 1.5% of the cadastral value;
residential buildings, apartments – 0,2% – 0,6%
0.2% of the cadastral value not exceeding 56 915 euro;
0.4% of the part of the cadastral value exceeding 56 915 euro, but less than 106 715 euro;
0.6% of the cadastral value exceeding 106 715 euro.
An additional 1.5% tax rate is applicable for uncultivated agricultural land, excluding land that has an area less than one hectare.
Special 3% tax rate is applicable for collapsed constructions, constructions degrading the environment or threatening the safety of individuals, if it is determined by the municipality in its binding regulations. The tax base for collapsed object is the highest value of the building or the land, on which the building is located (because the market value for ruins are “0”).
The minimum tax payment for each taxpayer in each local municipality shall be 7 euro.

Excise duty, Electricity tax, Vehicle operating tax, Company car tax, Natural resource tax, On lotteries and gambling fee and tax, Microenterprise tax, Customs duty

Last updated: 30 April 2020

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