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Latvia

Financial Year – 1 January – 31 December
Currency – Euro (EUR)

Corporate Tax Summary

Corporate Income Tax (CIT) is due upon the distribution of profits (including deemed profit distribution).

Taxpayers

1. Those carrying out economic activity:

  • Domestic enterprises.
  • 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 (non-residents)
3. Permanent establishments of non-residents

Basis of Taxation – Profits gained by a taxpayer are not taxed until they are distributed or deemed to be distributed. CIT is paid at a rate of 20% on distributed profits (calculated dividends, payments treated as dividends and deemed dividends) and deemed distributions (expenses not related to economic activity etc.). The tax period is a calendar month.

The return for the tax period is submitted to the State Revenue Service before the 20th 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 transactions occurring during the reporting year shall be included in the taxable base for the last tax period of the reporting year and the return submitted to the State Revenue Service before the 20th of the month after which the reporting year ends.

Reference
Corporate Income Tax Rate (%) 20% The CIT rate is 20%. However, it is calculated at 20/80 on the net dividend or distribution. Where the recipient of dividends is a natural person, they shall not pay personal income tax on 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 tax jurisdiction (list as per Cabinet Regulation), any type of person legal or private
Royalties from Intellectual Property 20% Only if paid to off-shore or low tax jurisdiction (list as per Cabinet Regulation), 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 enterprises, as well as farms and fish farms, for the income of his/her enterprise (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 EUR 20,004 20% 23%
EUR 20,004 – 62,800 23% 23%
More than EUR 62,800 31.4% 31.4%
Rental of property in the special regime, income from the disposal of a forest growing on the property of a natural person for felling and the disposal 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 disposal of real estate in the Republic of Latvia and income from the disposal of other capital assets in accordance with Article 11.9 of the Law On Personal Income Tax, except for income from the disposal 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 The following transactions carried out inland within the framework of economic activity:
1) Supply of goods (including the supply of goods in the territory of the European Union and the export of goods) for remuneration.
2) Supply of services for remuneration.
3) Acquisition of goods in the territory of the European Union for remuneration.
(2) Any imports 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.
(4) Domestic 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 a third person on behalf of the vendor or the customer to a foreign destination but within the territory of the European Union.
Registration 5 working days
Filing and Payment Monthly or quarterly

Other Taxes Payable

Tax Reference
Mandatory State Social Insurance Contributions Insured persons and their employers must pay mandatory State Social Insurance Contributions. If an employee is  insured for all types of social insurance, the rate is 35.09% (11% for the employee and 24.09% for the employer). The rate differs for those taxpayers who are insured for less types of social insurance (self-employed persons, pensioners, etc.).
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 EUR 56,915
0.4% of the part of the cadastral value exceeding EUR 56,915 but less than EUR 106,715 euro
0.6% of the cadastral value exceeding EUR 106,715
An additional 1.5% tax rate is applicable for uncultivated agricultural land, excluding land that has an area less than one hectare.
A special 3% tax rate is applicable for collapsed constructions, constructions degrading the environment or threatening the safety of individuals, if determined by the municipality in its binding regulations. The tax base for a collapsed object is the highest value of the building or the land, on which the building is located (because the market value for ruins is “0”).
The minimum tax payment for each taxpayer in each local municipality is EUR 7.

Other taxes: Excise duty, electricity tax, vehicle operating tax, company car tax, natural resource tax, lotteries and gambling fees and tax, microenterprise tax, customs duty

Last updated: 30 April 2020

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