Taxation

GENERAL PRINCIPLES

The Law on Taxes and Duties, adopted on February 2, 1995, determines Latvia’s general taxation principles. This law is applicable generally, unless specific tax laws such as the Law on Value Added Tax, Law on Corporate Income Tax, or any other provide for different rules. If there is a conflict between general principles and specific rules, the specific rules prevail.

According to the Law on Taxes and Duties, duties are imposed either by the state or the municipality. The state is entitled to impose duties on a number of different items. These include vehicles, court applications, notary applications, gambling, changes of identification data, reservation of land in rural areas, transactions with vouchers and bills of exchange, immigration services, business licenses/permits, registration of security interests, applications for patents, trademarks, or plant protection certificates.

IMPORTANT!!!
With only 7 payments necessary to pay all taxes, Latvia is ranked no.11 out of 183 countries globally in the 2012 Paying Taxes index (Estonia is  no.17 and Lithuania is no.40).

In its annual overview Paying Taxes 2012, PricewaterhouseCoopers has ranked Latvia among those countries that have a relatively low total tax rate. This means that in Latvia your company will spend a smaller proportion of its profits on taxes than in most other countries around the world.

Comparison of the Total Tax Rate in the European Union

VAT Registration

Persons registered in Latvia whose supplied goods and services during a 12-month period exceed EUR 50 000 are liable to register as VAT payers. The said total value of supplied goods and services does not include the value of supplied capital and intangible assets if such supply has been carried out once in 12 months. However, companies are allowed to register as VAT taxable persons and further to apply VAT on supplies performed before the respective threshold is met. Moreover, non-taxable legal and natural persons registered in Latvia who carry out economic activities shall be liable to register as VAT taxable persons in Latvia if they perform intra-Community acquisition of goods or provide services and the total value of the transactions exceeds EUR 10 000 during the year.

Additional information at:

www.vid.gov.lv 
www.fm.gov.lv