General principles
The Taxes and Duties Act, as amended, determines Latvia’s general taxation principles. Specific taxes are assessed according to one of the special tax laws, such as the VAT Act or the Corporate Income Tax Act. If there is a conflict between the general principles and special rules, the latter prevail.
Under the Taxes and Duties Act, duties are imposed by either the state or municipalities. The state is entitled to impose duties on a number of different items, including vehicles, court applications, notary applications, gambling, changes to identification data, reservation of land in rural areas, dealings in vouchers and bills of exchange, immigration services, business licences/permits, registration of security interests, applications for patents, trademarks, or plant protection certificates. Municipalities have the right to apply reliefs in respect of payments which are payable to local government budgets, in line with business-support principles, including to real estate tax.
Business opportunities
- A low cost base for developing shared service centres
- Dividend, interest and royalty payments are exempt from withholding tax unless paid to tax havens
- Company registration takes 1–3 business days with a € 1 minimum share capital requirement at registration
- For the 2014–2020 funding period, Latvia has been allocated around € 4.51 billion in total Cohesion Policy funding, with the main investment priorities including
- Increasing economic productivity, quality of innovation, research and science
- Sustainable and efficient transportation infrastructure
- Sustainable use of natural and cultural resources
- High employment rate in an inclusive society
- High quality and efficiency of the education system
- Balanced and sustainable territorial development
- Latvia is a signatory to the Convention on Mutual Administrative Assistance in Tax Matters, a multilateral instrument for exchange of information.
State taxes
- Company car tax
- Corporate income tax
- Customs tax
- Electricity tax
- Excise
- Lottery and gambling tax
- Microbusiness tax
- Natural resource tax
- Personal income tax
- Real estate tax
- Social insurance contributions
- Solidarity tax
- Stamp duty
- Value-added tax
- Vehicle operation tax
- Withholding tax (part of corporate income tax law)
On 1 January 2017, a separate law was implemented for startup companies. The following state aid programmes are determined by this law:
- a fixed social tax charge with the employee’s consent
- a support programme for attracting highly qualified workers; and
- a corporate income tax credit and a corporate income tax rebate