Tax Policy

Tax

Rate

Personal income tax

20%-31,4%

Corporate income tax

20%

Dividends

0%

Royalties

0%

Value added tax

21%

Social tax (employer)

24,09%

Social tax (employee)

11%

Income Tax

Latvian tax regulation distinguishes two types of income tax - personal income tax from 20% up to 31,4% and corporate income tax of 20%.

Corporate income tax is paid by corporate entities only on distributed profits which provides all corporate reinvestments at 0% income tax rate.

The taxation system provides a major advantage for holding regimes on dividend and royalty payments which are taxed at a 0% rate.

 

Value Added Tax (VAT)

Since 01.07.2012 the rate of value added tax is 21% which applies to majority of sales of goods and services.

The Latvian VAT act also sets out a reduced rate of 12% to specific goods and services. Export is granted with a 0% rate.

It the sales turnover exceeds more than EUR 40 000 during a twelve-month period, a company must be registered as a VAT payer.

 

Labour costs

Due to the amendments in the Latvian Commerical Law there is a requirement to have at least one employee on official payroll in every Latvian company. Company director can be employed in the company.

Minimum gross wage of Latvia is EUR 430.

The employer is liable for the partial social security payment of 24,09% and also for entreprenurial risk duty of EUR 0,36 regardless of the amount of the wage payment.

 

Remuneration taxes

The employee shall withhold the following taxes from the employees gross wage:

  • Employee's social security tax at a rate of 11%.

  • Income tax rate at a rate of 20%-31,4% (As from 2018 income tax is calculated progressively)

If the monthly taxable income doest not exceed EUR 440, the non-taxable monthly minimum is EUR 200.

 

Other applicable taxes

Land tax; Tax on immovable property; Vehicle Operating Tax; Company Car Tax; Lottery and Gambling Tax; Excise duties such as alcohol, tobacco, oil products, coffee and non-alcoholic drinks; Electricity Tax.

For detailed information please contact us via info@gatetobaltics.com, by telephone +371 673 98611 or fill in our contact form.