Taxes in Latvia

Latvia is an attractive jurisdiction in the context of tax planning. Besides the fact that Latvia employs one of the lowest corporate income tax rates in the European Union, a so-called holding mode has been introduced in 2013, exempting certain kinds of income from taxation completely.

The advertising of Latvian holdings by Swiss colleagues  

Tax rates in Latvia

Basic taxes

corporate income tax 15%
withholding tax on dividends paid (to individuals) 10%
VAT for transactions in Latvia 21%
VAT for transactions in the EU and export 0%
Real estate tax per annum 1,5%

Taxation of Latvian holdings

dividends received 0%
dividends paid (to legal entities) 0%
interest payable 0%
royalties payable 0%
capital gain on the sale of shares 0%
* The tax relief specified herein do not apply to transactions made with offshore companies.

Employment taxes

personal income tax 23%
social insurance payments (23,59% employer and 10,50% employee) 34,09%
State risk duty (payable monthly for each employee) 0,36€
* The minimum monthly salary in Latvia is 360 Euros. 

Microenterprise taxes

income tax from turnover, first 3 years of company's activity 5%
income tax from turnover, starting from the 4th year of company's activity 8%

* Microenterprises are the companies with facilitated taxation scheme, which was developed in order to support startups and small businesses. Such companies pay a unified income tax from a company's turnover, while having an exemption from paying a number other taxes.

This taxation scheme may be employed by the companies, provided that the following conditions are met:
  • yearly turnover does not exceed 100 000 Euros;
  • only individuals are allowed as founders;
  • the number of employees does not exceed 5;
  • the salary of each employee does not exceed 720 Euros.

Useful links

www.vid.gov.lv - LR State revenue service
www.fm.gov.lv - Tax system in Latvia, The Ministry of Finance portal
www.lnka.lv - The Latvian Tax Consultant Association

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