Tax Incentives

Special Economic Zones

There are five Special Economic Zones (SEZ) in Latvia – Riga Free Port, Ventspils Free Port, Liepaja Special Economic Zone and Rezekne Special Economic Zone and Latgale Special Economic Zone that were established to promote entrepreneurial activities within the regions. All of them offer very favourable business incentives. Some of benefits for companies operating in Free Ports and SEZ include rebate on real estate tax, corporate income tax, withholding tax for dividends, management fees and payments for usage of intellectual property for non-residents and others.

Main benefits for companies operating in Free Ports and SEZ are as follows:

  • 800% rebate on real estate tax (1.5% in Latvia)*
  • 80% rebate on corporate income tax (15% in Latvia)*

* The maximum accumulated amount compensated to the company by these conditions collectively is 35% (45% for medium and 55% for small
enterprises)
of the company’s total ongoing investment of up to 50 million Euros.

** Please note that this example is of informative nature only. Exact tax calculations are provided by respective divisions of State Revenue Service (www.vid.gov.lv).

Corporate income tax rebate for large-scale investment projects

Incentive for large-scale investment projects allows taxpayers to claim tax rebate for initial long-term investment in the following amounts:

  • 25% of total initial long-term investment up to EUR 50 million
  • 15% of the part of the total initial long-term investment exceeding EUR 50 million

Beneficial depreciation ratio for new technological equipment

Taxpayers may calculate tax depreciation from a higher initial value of fixed assets (new technological equipment bought in 2009-2013) and intangible investments (patents and trademarks registered after 1 January 2009) using a coefficient of 1.5 (150%).

Loss carry forward

As of 1st of January 2012, losses that have occurred before 2008 may be carried forward for up to 8 years for tax purposes. Losses that have occurred after 2008 may be carried forward indefinitely. For taxpayers registered in Special Economic Zones or Specially Supported Territories, losses that have occurred before 2005 may be carried forward for up to 10 years, and losses that have occurred since 2005 may be carried forward indefinitely.

Holding Company Regime
 
Once the company is established in Latvia it will be considered as tax resident in Latvia and entitled tax benefits according to holding company regime legislation. Holding company regime however does not apply on transactions with entities and individuals from tax-haven countries and territories. 
 

More information on these incentives can be provided by Investment Promotion Division.
N!B! Note that binding consultations on tax applications may be rendered only by  State Revenue Service.