Tax in Latvia

Who is the tax authority?

Latvia's tax system is run by the Valsts ienemumu dienests (VID, State Revenue Service) under the Ministry of Finance. All electronic filings go through the EDS portal (eds.vid.gov.lv). The Latvian Association of Certified Auditors (LZRA) and the Association of Accountants (LNZS) credential the tax and accounting professions.

The legal foundation rests on four main statutes. The Personal Income Tax Law (Iedzivotaju ienakuma nodokla likums) covers individual taxation. The Corporate Income Tax Law 2017 introduced the distributed-profits-only framework effective 1 January 2018. The VAT Law (Pievienotas vertibas nodokla likums) covers indirect tax. The Tax Procedure Law sets enforcement authority.

Latvia applies the EU VAT Directive 2006/112/EC and all EU tax-cooperation directives (DAC1-8, ATAD, Pillar Two Directive) as a full EU member.

What is the tax year and when are returns due?

Latvia's tax year is the calendar year (1 January to 31 December). PIT returns are due between 1 April and 1 July of the following year via EDS; high-income filers get an extended deadline to 1 October.

Who counts as a Latvian tax resident?

An individual is a Latvian tax resident under the Personal Income Tax Law if either rule applies:

• Permanent residence (declared residence) is maintained in Latvia
• Physical presence in Latvia for at least 183 days in any 12-month period

Residents pay tax on worldwide income. Non-residents pay tax only on Latvian-source income, usually at flat schedular rates. Treaty tie-breaker rules apply when dual-residency issues arise.

Deep-dive: see expat and cross-border tax in Latvia for the practical rules around moving in or out mid-year.

What are the personal income tax rates?

Latvia uses three income tax brackets above a tapered personal allowance:

From tax year 2025, Latvia replaced its three-bracket system (20% / 23% / 31%) with two rates and a fixed personal allowance:

Capital gains and capital income (interest and similar returns) are taxed at 25.5% from tax year 2025 (previously a flat 20%). Dividends distributed by a Latvian company that has already paid CIT at the corporate level are generally tax-exempt at the shareholder level. Author and intellectual-property royalty receipts attract a 5% withholding rate.

Social security contributions also apply on top of income tax:

Deep-dive: see self-employed tax in Latvia for how PIT brackets and VSAOI stack up for freelancers.

How does Latvia's corporate tax work?

Latvia adopted the Estonian-model distributed-profits-only corporate income tax (CIT) on 1 January 2018 — becoming the second OECD country after Estonia (which pioneered the model in 2000) to implement it at scale.

Withholding tax on dividends to non-residents is 0% under the distributed-profits model (since CIT has already been paid at the corporate level), with limited exceptions for distributions to low-tax or non-cooperative jurisdictions.

Under Pillar Two (EU Directive 2022/2523), Latvia elected the Article 50 delayed-implementation option — effective 31 December 2029. This creates an interesting interaction: undistributed profits notionally may face top-up tax if the effective rate falls below 15% on an aggregate basis for in-scope groups.

Deep-dive: see small business tax in Latvia for the retain-vs-distribute decision in practice.

What about PVN (VAT) and indirect taxes?

Latvia's value-added tax is called PVN (Pievienotas vertibas nodoklis). The standard rate is 21% under the VAT Law.

PVN registration is mandatory above EUR 50,000 annual turnover. Monthly returns are due by the 20th of the following month. EU reverse-charge, OSS, and IOSS regimes all apply.

Deep-dive: see VAT in Latvia for the full PVN mechanics and B2B cross-border rules.

Currency framework

Meet a Latvia-resident taxpayer

What is the treaty network?

Latvia has approximately 63 active bilateral double-tax agreements. Latvia ratified the OECD Multilateral Instrument (MLI) on 29 September 2017, with modifications entering force from 1 February 2018. The US-Latvia DTA (signed 1998) is notable — relatively rare among the CIS-successor Baltic states to have secured a US treaty in the 1990s, alongside Kazakhstan (1993) and Lithuania (1998).

Treaties with Russia and Belarus are suspended / under review following the 2022 geopolitical context. Consult the VID treaty portal for current status on any specific bilateral.

Deep-dive: see tax treaty relief in Latvia for the bilateral rate schedules.

How are cryptoassets taxed?

Latvia taxes individual cryptoasset disposal gains as income from capital at a flat 20%. Mining and staking income is treated as self-employment or business income at applicable rates.

Deep-dive: see crypto taxation in Latvia for how the MiCA framework applies in practice.

Where does Latvia sit in the Baltic and EU CEE cohort?

Latvia anchors the Baltic trio alongside Estonia (north) and Lithuania (south). In the broader EU Central and Eastern Europe cohort, Latvia's Estonian-model CIT sets it apart from neighbours that use conventional CIT frameworks.

Common penalties and pitfalls

Foreign companies and individuals trip on a handful of recurring traps when operating in Latvia:

Retain or distribute? The core decision flow

Who provides tax compliance services in Latvia?

Tax compliance work in Latvia is handled by licensed accounting and audit firms — from the Big Four offices in Riga to local outsourced-accounting providers. A typical engagement covers registration with the Valsts ienemumu dienests (VID), monthly or quarterly PVN (VAT) returns for registered traders, payroll and VSAOI social-contribution filings, and the annual income declaration, all filed through VID's Electronic Declaration System (EDS). Foreign-owned companies commonly add cross-border items: treaty relief under one of Latvia's roughly 63 double-tax agreements and the distributed-profit CIT timing decision described above.

Fees and scope vary widely, so credentials matter more than branding. The Latvia directory lists the recognised professional bodies and shows how to verify an accountant or auditor before engaging one, and the treaty relief page covers the cross-border rules a compliance provider works with.

When should you talk to a Latvian tax pro?

Some filings are straightforward through EDS. Others get complicated fast:

• You own a Latvian SIA (limited company) and are deciding when to distribute profits
• Your income crosses the 33% rate threshold (EUR 105,300) or the additional-rate threshold (EUR 200,000)
• You have cross-border income from a treaty country
• You receive royalties or intellectual-property income (5% withholding applies)
• You are setting up a tech or financial-services entity in Riga
• You hold cryptoassets and have disposal events to report
• VID has sent a notice of assessment, audit request, or back-tax query
• You are moving in or out of Latvia and need to establish or break residency

You can find vetted Latvia practitioners through the directory below.

This page is general information. It is not personal guidance for your specific situation. Tax rules change. Always check current figures on the VID website or with a licensed Latvian practitioner before filing.