Taxation in Latvia, Latvia Business Income and Rates - Allo' Expat Latvia
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Taxation in Latvia
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Taxation in Latvia

Corporate Tax

Main rate: Flat rate of 15%

Resident companies are taxed on their worldwide income; non-resident companies are taxed only on Latvian-source income. A company is resident if it is established and registered under Latvian law. Corporate tax is imposed at a flat rate of 15%. Dividends paid by a Latvian resident company to non-resident legal entities or individuals are subject to a 10% withholding tax unless reduced under the EC Parent-Subsidiary Directive or the terms of an applicable tax treaty.

Individual Tax

Flat rate of 25%

Resident individuals are taxed on their worldwide income; non-residents are taxed only on Latvian-source income. An individual whose permanent place of residence is in Latvia, or who is in Latvia for 183 days or more in any 12-month period ending or beginning in the tax year, is considered to be resident in that tax year. Tax is charged at a flat rate of 25%. Dividends received are exempt, except where the distributing company is non-resident or is a resident company entitled to tax benefits in the special economic zones or free ports.

Capital Gains

Generally taxed as income

Capital gains of companies are generally taxed as income. Capital losses realised by companies on taxable securities may only be offset against gains on such securities, but other capital losses may be offset against general income. Gains on the sale of publicly traded securities are exempt. Capital gains derived by individuals on personal property, including shares and immovable property, are exempt unless the property was acquired for the purpose of resale or the property was held for less than 12 months.

Indirect Tax

Standard rate: 18% ; Lower rates: 5%, 0%

Value-added tax (VAT) applies to most transactions. The standard rate is 18%, and a lower 5% rate applies to certain services, such as hotel services, veterinary services, and water and waste collection. The export of goods and related services, and supplies and maintenance relating to vessels used by international shipping lines are zero-rated. Exemptions include cultural services, insurance, rent paid for dwellings, some financial services and copyright royalties.

Registration is compulsory for businesses with annual turnover above LVL 10,000 or for individuals or legal persons doing business or acquiring goods within the EU exceeding LVL 7,000 in a calendar year.

Tax Administration and Compliance

Tax year: Corporations: accounting year; Individuals: calendar year

Companies must make monthly advance payments by the 15th day of the month. A tax return is due within four months after the year-end, with any balance of tax due paid within 15 days after the tax return is submitted. The employment income of individuals is taxed by withholding. Individuals deriving business income must make four quarterly advance payments. The tax return is due by April 1st following the year-end, and any final tax is payable within 15 days after submitting the return.

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