Latvia

Basic taxes (briefly)

Personal tax 20-31%
Corporate tax (in detail) Income tax rate is 20%
Capital gains tax. Details included into the corporate tax base
VAT. Details The standard VAT rate is 21%. Reduced rates of 12% and 5% apply to some goods and services
Other taxes Social contributions, Real estate tax
Government fee No
Stamp duty 2% (registration of property)

International tax agreement

Tax treaties entered Albania, Armenia, Austria, Azerbaijan, Belarus, Belgium, Bulgaria, Canada, China, Croatia, Czech Republic, Cyprus, Denmark, Estonia, Finland, Former Yugoslav Republic of Macedonia, France, Georgia, Germany, Greece, Hungary, Iceland, India, Ireland, Israel, Italy, Japan, Kazakhstan, Korea (Republic of), Kuwait, Kyrgyzstan, Lithuania, Luxembourg, Malta, Mexico, Moldova (Republic of), Montenegro, Morocco, Netherlands, Norway, Poland, Portugal, Qatar, Romania, Russian Federation, Serbia, Singapore, Slovakia, Slovenia, Spain, Sweden, Switzerland, Tajikistan, Turkey, Turkmenistan, Uganda, Ukraine, United Arab Emirates, United Kingdom, United States, Uzbekistan
   
Tax Exchange Information Agreement (TEIA) Georgia. Guernsey, Jersey


Show all entries Hide all entries

TAXATION

Individual Taxation

Personal income tax is levied at the following rates:

  • 24 % (including income from professional activity);
  • 10 % for capital income which is not capital gains;
  • 15 % for capital gains.

Tax base includes:

  1. employment income;
  2. income from professional activity;
  3. other income according to the provision 3 of Law on Personal Income Tax.

Tax period is one calendar month in case of employment, in other cases – one calendar year.
Regulating law - Law on Personal Income Tax (01.05.1993).

Corporate Income Tax

Corporate income tax is levied at the following rates:

  • 2%-20 % of taxed income

Since 2011 a tax incentive for big investment projects (7.1 million EUR) was resumed, but only in priority fields.
Tax base includes income from commercial activity with business expenses deducted.
Tax period is 12 months which can differ from calendar year.
Regulating law - Law on Corporate Income Tax (01.02.1995).

Taxation of Small Enterprises

Taxpayers are small companies whose turnover does not exceed 70.000 LVL (99.600 EUR) per year and number of staff is no more than 5 employees.
Tax rate for small enterprises is 9%.
If a small enterprise does not satisfy the above criteria, it pays taxes at an increased rate:

  1. 2 percentage points are added to 9% for each additional employee, in case the number of staff within the quarter exceeds 5 employees;
  2. 20% rate applies to the exceeding part of the turnover, in case annual turnover exceeds 70.000 LVL (99 600 EUR);
  3. 20% rate applies to the part of income exceeding 500 LVL (712 EUR), in case the income of an employee exceeds 500 LVL.

Tax base includes a turnover for a tax year.
Tax period is a calendar year (a small enterprise pays taxes four times a year for each quarter).
Regulating law - Law on Small Enterprises Taxation (09.08.2010).

Capital Gains Tax

Capital gains on the sale of property are calculated as the difference between the net tax value of property and the sales price. Such gains are subject to tax at a standard corporate rate of 15%.
Under the new holding company regime, as from 2013, capital gains derived from the alienation of shares (other than shares in companies located in black list countries and territories) are exempt from corporate income tax (and losses are not deductible). There is no minimum shareholding or holding period to qualify for the exemption and “shares” for these purposes means shares in private or listed entities, etc.

Withholding Tax

Dividends: As from 1 January 2013, there is no withholding tax on dividends regardless of whether the recipient is an EU/EEA resident company or a resident in a third country, unless the recipient company is resident in a black list jurisdiction, in which case a 15% withholding tax applies.
Interest: The withholding tax on interest is abolished as from 1 January 2014.
Royalties: The withholding tax on royalties is abolished as from 1 January 2014.
Branch remittance tax: Latvia does not impose a branch remittance tax.

VAT

Value added tax (VAT), which is levied on the sale of goods, the supply of services and imports, is based on the EU directives. The standard rate is 21%, with a reduced rate of 12% applicable to certain goods and services. Certain exports and related supplies are zero-rated and some supplies (e.g. medical services, rentals of apartments, and banking and insurance services) are exempt.
A Latvian company may register for VAT immediately after it is registered with the Commercial Register. A company is obliged to register if the total value of its VAT-taxable transactions reaches or exceeds LVL 35,000 during the preceding 12 months. Foreign entities (from the EU or elsewhere) that carry out VAT-taxable transactions in Latvia must register for VAT purposes before commencing transactions, irrespective of the amount of the transactions, unless the reverse- charge method applies.
If input VAT exceeds output VAT, the VAT payer may request a refund. Subject to certain conditions, a refund may also be granted to a foreign entity that has paid Latvian VAT on goods or services purchased in Latvia.
The tax period is the calendar month, with some exceptions. VAT payers must submit the VAT return within 15 days after the end of the tax period.
Latvia allows for the establishment of a VAT group, which may consist of companies that are members of the same concern and Latvian branches of foreign companies, provided the company in question is also a member of the same concern as the other members of the VAT group. Once an election is made to set up a VAT group, the group must be maintained for at least 12 months. A VAT group is considered a single taxable person with its own VAT registration, with one member of the group filing the group’s VAT returns. Transactions between members of a VAT group are outside the scope of VAT.

Stamp Duty

Stamp duty is levied on the registration of property by a legal entity. The rate is 2% of the higher of the sales price or cadastral value, capped at LVL 30,000. Different rules apply to reorganizations and contributions in kind.

Government Fee

There is no government fee in Latvia.

Other Taxes and Duties

Social Security Contributions levied at a rate of 35.09%, from which 24.09% are paid by the employer and 11% - by the employee.
Lottery and Gaming Tax levied at a rate of 10% to 15% depending on the type of the game.
Energy Consumption Tax levied on energy consumption delivered to the end-user at a rate of 0.71 LVL for megawatt-hour (1 euro).
Natural Resources Tax levied on extract of natural resources, air and water pollution, etc.
Excise Duties levied on alcoholic and non-alcoholic beverages, coffee, tobacco and oil products.
Transport Vehicles Tax levied on motor cars and motorcycles before registration at the Traffic Security Department, as well as exploitation of transport vehicles.
Real Property Tax levied on real property located in Latvia at a rate of 0.2%-1.5% of cadastral value.

Foreign Exchange Control

There is no foreign exchange control in Latvia.

ACCOUNTS

Financial Statements

All Latvian companies are required to keep accounting records and file financial statements.

Annual Return

Latvian companies are obliged to prepare annual return, which should be filed to Commercial Registry and Tax Department before April 30 of each year.
If a company does not satisfy any two of the following conditions, its annual return should be audited:

  • balance sheet – 250.000 LVL (356 000 EUR);
  • net turnover – 500.000 LVL (711 500 EUR);
  • average number of staff in accounting year - 25

Other companies are exempt from audit.

Tax Returns

Small and medium-sized companies must file a tax return within four months after the end of the financial year and large companies must file within seven months.
Advance payments of corporate income tax must be made on a monthly basis by the 15th of the month based on the profits of the previous year. The final payment of tax must be made within 15 days of filing the annual return.
Interest and penalties apply for failure to file a timely or for filing an incorrect return. A company may file an amended return or an adjustment to a tax assessment within three years after the required payment date.

    Taxes of Latvia

    Min. rate for corporate tax 20%
    Capital gains tax Regular rate
    VAT 21%
    Withholding tax 0%
    Exchange control No
    RU EN