Latvia offers a transparent and competitive tax system for residents, expatriates, investors, and businesses. Whether you live in the country full-time, earn Latvian-source income, or are planning a move, understanding taxes in Latvia is essential for staying compliant and managing your finances effectively.
Taxes in Latvia: Key Insights
- Residents pay tax on worldwide income; non-residents only on Latvian-source income. Residency usually requires more than 183 days in Latvia.
- Personal income tax: 25.5% up to €105,300, 33% for €105,301–€200,000, 3% surcharge above €200,000.
- Corporate tax: 20% on distributed profits; small businesses ≤€40,000 revenue may opt for 25% Microenterprise Tax.
- Freelancers and remote workers: Deduct up to 80% of expenses; tax-exempt with correct documentation for foreign employment.
- Real estate and capital gains: Property tax 0.2–1.5%; transfer tax 3.75%; capital gains generally 20%, exemptions apply.
- VAT and crypto: Standard VAT 21%, reduced 5–12%; crypto gains taxed 20%, losses offset gains; corporate trading taxed separately.
Who pays tax in Latvia?
Latvia taxes individuals based on tax residency status.
- Tax residents are taxed on their worldwide income
- Non-residents are taxed only on Latvian-source income
You are generally considered a Latvian tax resident if you:
- Spend 183 days or more in Latvia during any 12-month period, or
- Maintain a permanent place of residence or centre of vital interests in Latvia
Staying in Latvia for up to 182 days does not normally trigger Latvia tax residency, unless other ties apply.
Personal Income Tax in Latvia
Latvia applies a progressive personal income tax (PIT) system.
| Annual taxable income | PIT rate |
|---|---|
| Up to €105,300 | 25.5% |
| €105,301–€200,000 | 33% |
| Above €200,000 | Additional 3% surcharge |
Dividends are taxed at this rate unless corporate income tax (CIT) has already been paid (see Dividends section). The 3% surcharge applies only to income above €200,000 and is calculated when filing your annual tax return.
Key Points:
- What’s taxable: salary, capital gains, royalties, and certain dividends.
- Exempt income: employee benefits, gifts, and certain real estate income.
- Cryptocurrency: gains are taxed like capital gains; losses can offset gains.
- Royalties: non–self-employed individuals pay 25% withholding tax; this rule continues until 2027.
Capital Gains Tax in Latvia
Capital gains in Latvia are generally taxed at 20%.
Exemptions include:
- Sale of a primary residence owned and occupied for at least 12 months.
- Property held for 60 months or more if proceeds are reinvested in Latvian real estate.
Latvia Dividend Tax and Other Personal Income
Dividends have special rules in Latvia. Here’s what you need to know:
Standard PIT on Dividends
- 25.5% PIT if the company hasn’t already paid corporate income tax (CIT).
- No PIT if CIT has already been applied.
- Applies to Latvian companies, EU/EEA companies, and other entities (excluding tax-haven companies and micro-business tax payers).
- EU/EEA dividends are usually tax-compliant, but authorities may still request confirmation.
Alternative Dividend Regime (from 1 Jan 2026)
- For Latvian companies owned solely by individuals.
- 15% CIT applied at the company level before applying the 0.85 coefficient.
- 6% PIT withheld from dividends paid to individuals.
Additional Notes
- Non-residents may be taxed differently depending on double tax treaties.
- The 3% PIT surcharge still applies to total income above €200,000.
Latvia Corporate Tax Rate
In Latvia, most companies only pay tax when they distribute profits to shareholders. This means if a company keeps its earnings in the business, it usually pays no tax.
- Standard corporate tax: Distributed profits are taxed at a rate of 20%.
- Banks and credit institutions: From 2024, they pay extra surcharges and special contributions if profits grow significantly.
- Simpler option for small companies: From 2026, companies owned only by individuals can pay a lower 15% tax on dividends, with a small 6% personal income tax withheld.
What counts as profit distribution: dividends, certain payments from partnerships or cooperatives, and some expenses or loans to related parties.
Takeaway: Latvia’s system encourages businesses to reinvest profits, paying tax mainly when money leaves the company.
Taxes for Freelancers in Latvia
Freelancers in Latvia are taxed similarly to other residents, but there are some specific rules and options to make compliance simpler and more efficient.
Standard Freelance Taxation
- Freelancers pay personal income tax (PIT) at the same rates as other residents.
- Business-related expenses can be deducted up to 80% of income, provided proper documentation is kept.
Microenterprise Tax (MET)
- Small businesses, self-employed persons, and freelancers with annual revenue up to €40,000 may opt for the Microenterprise Tax (MET).
- This tax is 25% of revenue and includes both social contributions and personal income taxes, simplifying reporting.
Foreign Freelancers and Remote Workers
- Non-resident freelancers can work in Latvia for up to one year under a long-stay visa if employed by a company in an OECD member state.
- Foreign remote workers may be exempt from Latvian taxes if they provide the following documents:
- Proof of current employment from an OECD member country.
- Employer certificate confirming:
- Six months of prior employment
- Minimum salary of €3,843 per month
- Ability to work remotely
Digital Nomad Considerations
- Latvia ranks 21st in our 2025 Global Digital Nomad report with a total score of 87.25, making it an attractive destination for remote workers.
- For those seeking long-term options, Latvian citizenship is achievable through naturalization, marriage, or descent.
Tip: Keeping clear records of all income and expenses is essential for both residents and foreign freelancers to ensure compliance and maximize available deductions.
Controlled Foreign Companies (CFCs)
CFC rules in Latvia mainly apply to companies rather than individuals. They are designed to prevent tax avoidance by attributing income from foreign subsidiaries or entities in low-tax jurisdictions back to Latvian companies.
Key points:
- If you own a foreign company or have substantial participation in one, some undistributed profits may be subject to Latvian corporate income tax.
- For most personal taxpayers, freelancers, or investors, CFC rules do not apply directly.
- Income from foreign companies, dividends, or capital gains may still be taxable under standard personal income tax rules.
Tip: Individuals concerned about CFC rules should consult a tax advisor, especially if they have ownership in foreign companies or operate across multiple jurisdictions. Working with a dedicated team of Latvia immigration lawyers and tax experts is highly recommended to ensure a full understanding of what you are liable for.
Real Estate Taxes in Latvia
Property tax in Latvia depends on the type and value of the property.
| Property value | Tax rate |
|---|---|
| Up to €56,915 | 0.2% |
| €56,915–€106,715 | 0.4% |
| Above €106,715 | 0.6% |
Land and Commercial Properties
- Taxed at 1.5% of the total value.
Property Transfer Tax
- 3.75% of the higher of the purchase price, cadastral value, or mortgage valuation.
Capital Gains from Property Sales
- 20% on profits from selling property.
Exemptions:
- If the property was your primary residence for at least 12 months.
- If the property was held for more than 5 years, and the proceeds are reinvested into another Latvian property within 12 months. This is important to note for those thinking of investing in real estate through the Latvia Golden Visa to obtain residency.
VAT in Latvia
Value Added Tax (VAT) applies to most goods and services. Standard and reduced rates are as follows:
| Category | VAT rate |
|---|---|
| Standard | 21% |
| Medical products and supplies | 12% |
| Books and press publications | 12% |
| Hotel services | 12% |
| Fresh produce | 5% |
Note: Imports from outside the EU are subject to EU customs duties and VAT.
Crypto Taxes in Latvia
Cryptocurrency is treated as a capital asset for tax purposes in Latvia:
- Profits from crypto are taxed at 20% capital gains tax.
- Losses from crypto trading can offset gains for the same tax year.
- Companies trading crypto may be taxed under corporate income tax rules instead.
Social Security Contributions in Latvia
Employees and employers must both contribute to Latvia’s social system. Social contributions fund healthcare, unemployment benefits, maternity leave, and pensions in Latvia.
| Contributor | Rate |
|---|---|
| Employer | 23.59% |
| Employee | 10.50% |
| Total | 34.09% |
Important to note: Income above the government-set ceiling is subject to Solidarity Tax.
Steps to Paying Taxes in Latvia
| Step | Action | Details |
|---|---|---|
| Step 1 | Register with the State Revenue Service (VID) | Employees are usually registered automatically. Freelancers, self-employed individuals, and non-residents earning Latvian-source income must register as individual taxpayers or individual merchants. |
| Step 2 | Determine your tax obligations | Understand what you need to pay: Personal Income Tax (PIT), Corporate Income Tax (CIT), social insurance contributions, and property/capital gains taxes. Residents are taxed on worldwide income; non-residents only on Latvian-sourced income. |
| Step 3 | Keep accurate financial records | Track all income, expenses, deductions, and capital gains. Essential for filing accurate returns and claiming allowances. |
| Step 4 | File tax returns | Employees may need an annual self-assessment. Freelancers/self-employed file annual returns. Companies file CIT returns on distributed profits. Typical PIT return deadline is June 1 of the following year. |
| Step 5 | Make tax payments | Pay online via the VID portal. |
| Step 6 | Claim refunds if applicable | Overpaid taxes or excess withholding can be refunded after filing. Proper records ensure accuracy and simplify audits. |
| Step 7 | Stay compliant to avoid penalties | Late filing or payments may incur interest and fines. Keep deadlines and records up to date. |
Latvia Double Tax Treaties
As of 2026, Latvia has double tax treaties (DTTs) with 63 countries to prevent double taxation and fiscal evasion concerning taxes on income and capital. Latvia has signed DTTs with:
- All European Union countries
- USA
- Canada
- Australia
- Switzerland
- Japan
How Can Global Citizen Solutions Help You?
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