Currency - euro (EUR)
Foreign exchange control - No
Authorized capital duty - No
Accounting principles / financial reporting - National standards (according to the IAS) and IFRS. The financial report must be prepared annually.
Corporate income tax - a flat rate of 20% on the gross amount of the distribution (effective rate 25%)
VAT - 21%, (reduced rate of 12% or 5% for certain goods/services)
Personal income tax - a progressive rate of 20%, 23%, 31% (For 2022, the rate is 20% on income up to EUR 20,004, 23% on income from EUR 20,005 up to EUR 78,100, and 31% on income over EUR 78,100. Capital gains and other income from the capital are taxed at a flat 20% rate.
Social security contribution for employment income - 34.09%
Free Economic Zones (FEZ) - there are 5 "tax havens" in Latvia and they are located in its largest cities (moreover, 3 of them are non-freezing ports): Riga Free Port, Ventspils Free Port, Liepaja Special Economic Zone, Latgale Special Economic Zone, and Rezekne Special Economic Zone. More information about registering a company in Latvia's FEZ is here.
Tax Authorities - State Revenue Service www.vid.gov.lv
Key business entities:
- limited liability company (SIA),
- joint-stock company (AS),
- general partnership (PS)
- limited partnership (KS),
- a branch of a foreign company.
Taxation period of the company - calendar month and financial year, some returns are to be filed monthly (or in some cases, quarterly) by the 20th of the following month.
Tax Return of individuals - Tax returns must be filed on a quarterly basis (for example, capital gains tax) or annually. For more information about the tax reporting procedure, please see the section "Taxation and the procedure for declaring income and property of individuals."
Penalties - Penalties are charged at a rate of 0.05% per day for late payment of tax. Based on the results of a tax audit, additional penalties ranging from 10% to 300% of the tax amount may be applied.