Taxes in Latvia follow a distinctive system for both individuals and businesses. Companies pay corporate income tax when profits are distributed, while retained and reinvested profits are not taxed. For individuals, Latvian tax residents pay a progressive tax on their worldwide income, currently set at 25.5% on income up to €105,300 and 33% above that, with an additional 3% surcharge on income over €200,000. Non-residents are generally taxed only on their Latvian-source income.
At Global Citizen Solutions, we understand that taxes are an important part of any relocation or investment decision. There are a few aspects that our legal expert has noticed overlap among clients. For instance, the distinction between a Latvian residence permit and tax residency, or keeping up with the year-to-year changes to tax rates.
Therefore, this guide covers the main taxes in Latvia, including personal and corporate income tax, VAT, social contributions, property taxes, and the rules that apply to foreigners, freelancers, and property owners.
TAXES IN LATVIA: KEY TAKEAWAYS
Who pays tax in Latvia?
Latvia taxes people based on their tax residency status. Tax residents are taxed on their worldwide income, while non-residents are taxed only on Latvian-source income.
You are considered a Latvian tax resident if you spend 183 days or more in Latvia during any 12-month period, or maintain a permanent place of residence or your center of vital interests in Latvia.
Spending 182 days or fewer in Latvia does not, on its own, normally trigger tax residency. However, other ties to Latvia, such as having a home, family, or economic interests there, can still result in tax residency even if you stay for fewer than 183 days.
A Latvian residence permit does not automatically make you a tax resident
This distinction is particularly important when considering taxes in Latvia for foreigners, as it is also one of the most common misconceptions we see among clients regarding tax residency.
Holding a Latvian residence permit, including one obtained through a Latvian Golden Visa, does not by itself make you a Latvian tax resident.
Instead, tax residence is determined by Latvia’s domestic rules and connecting factors, including:
- Where is your center of vital interests located
- The number of days you spend in Latvia
- Whether you have a permanent home there
Personal Income Tax in Latvia
Latvia applies a progressive personal income tax (PIT) system based on the State Revenue Service (VID).
| Annual taxable income | PIT rate |
|---|---|
| Up to €105,300 | 25.5% |
| €105,301–€200,000 | 33% |
| Above €200,000 | Additional 3% surcharge |
Dividends are taxed at this rate unless corporate income tax (CIT) has already been paid (see Dividends section). The 3% surcharge applies only to income above €200,000 and is calculated when filing your annual tax return.
Non-taxable minimum
For 2026, the State Revenue Service (VID) lists a monthly non-taxable minimum of €550. This means the first €550 of an employee’s monthly income is generally not subject to PIT, provided the relevant conditions are met. The non-taxable minimum also decreases at higher income levels.
Employment and business income
Personal income tax applies to:
- Salary and employment income
- Business income
- Royalties
- Certain dividends
- Royalties: Non-self-employed individuals are subject to a 25% withholding tax.
Some employee benefits, gifts, and specific types of real estate income can be exempt, depending on the applicable conditions.
- Freelancers and self-employed individuals pay personal income tax at the same progressive rates as employees. They can also be able to choose the Micro-enterprise Tax (MET) regime, a simplified tax system for eligible small businesses. Under this regime, a single tax payment covers personal income tax and mandatory social insurance contributions. In 2026, the MET rate is 25% of the business’s turnover, and eligibility depends on meeting the relevant requirements.
- Self-employed individuals can deduct eligible business expenses when properly documented and meet VID’s requirements. The rules for deductions depend on the tax regime and the type of expense.
Tax rules for foreign remote workers and digital nomads
Foreign remote workers and digital nomads may, in some cases, qualify for an exemption from Latvian tax on foreign employment income. This depends on factors such as:
- Proof of foreign employment
- Minimum salary requirements
- Minimum employment or tenure requirements
- The applicable tax treaty
The exemption is not automatic and should be checked on a case-by-case basis with VID or a qualified tax advisor. Latvia ranks 21st in our 2025 Global Digital Nomad report with a total score of 87.25, making it an attractive destination for remote workers. For those seeking long-term options, Latvian citizenship is achievable through naturalization, marriage, or descent.
Note: Latvia’s minimum wage for 2026 is €780.00 (previously €740).
Capital Income and Capital Gains Tax in Latvia
The rules for capital income and capital gains changed significantly in 2026, so older information, including general references to a 20% tax rate, may no longer be accurate.
The current rules are:
- Capital income and capital gains: The tax rate is 25.5%.
- Transitional 20% rate: A 20% rate applies only to certain transactions that began before 2025. It is not the general rate for 2026.
- Cryptocurrency: Crypto gains are taxed under the same capital-income rules rather than as a separate category. However, the tax treatment can depend on the type of asset and whether the trading is considered a business activity. Companies trading cryptocurrency can instead be subject to corporate income tax (CIT) because the rules can vary.
How are dividends taxed in Latvia?
Dividends are treated differently from other types of capital income:
- 25.5% income tax: This applies to dividends when the paying company has not already paid corporate income tax (CIT) on the profits.
- No personal income tax: Dividends are not subject to PIT when CIT has already been paid at the company level.
- Alternative dividend regime: From 1 January 2026, Latvian companies owned solely by individuals may use this regime. Under this system, the company pays 15% CIT using a 0.85 coefficient, followed by 6% PIT withheld from dividends paid to individuals.
- Non-residents: Different tax rules could apply depending on the relevant double tax treaty.
Latvia Corporate Tax Rate
In Latvia, most companies only pay tax when they distribute profits to shareholders. This means if a company keeps its earnings in the business, it usually pays no tax.
- Standard corporate tax: Distributed profits are taxed at a rate of 20%.
- Banks and credit institutions: From 2024, they pay extra surcharges and special contributions if profits grow significantly.
- Alternative regime (from 2026): Companies owned only by individuals can choose an alternative dividend tax system. The company pays 15% corporate income tax (CIT) using a 0.85 coefficient, and a further 6% personal income tax (PIT) is withheld when dividends are paid to individuals.
- Simpler option for small companies: From 2026, companies owned only by individuals can pay a lower 15% tax on dividends, with a small 6% personal income tax withheld.
What counts as profit distribution: dividends, certain payments from partnerships or cooperatives, and some expenses or loans to related parties.
Controlled Foreign Companies (CFCs)
CFC rules in Latvia mainly apply to companies rather than individuals. They are designed to prevent tax avoidance by attributing income from foreign subsidiaries or entities in low-tax jurisdictions back to Latvian companies.
Key points:
- If you own a foreign company or have substantial participation in one, some undistributed profits may be subject to Latvian corporate income tax.
- For most personal taxpayers, freelancers, or investors, CFC rules do not apply directly.
- Income from foreign companies, dividends, or capital gains may still be taxable under standard personal income tax rules.
Tip: Individuals concerned about CFC rules should consult a tax advisor, especially if they have ownership in foreign companies or operate across multiple jurisdictions. Working with a dedicated team of Latvia immigration lawyers and tax experts is highly recommended to ensure a full understanding of what you are liable for.
Real Estate Taxes in Latvia
Property taxes in Latvia include annual real estate tax, costs paid when registering a property purchase, and capital gains tax when a property is sold for a profit. Exact rates and costs can vary, so check the current figures with the State Revenue Service (VID), your municipality, or the Land Register before completing a transaction.
Annual Real Estate Tax
Municipalities set real estate tax rates within a legal range of 0.2% to 3% of the property’s cadastral value. Most properties are taxed at between 0.2% and 1.5%.
| Property type | Typical rate |
|---|---|
| Residential | 0.2%–0.6% of cadastral value (progressive) |
| Land / commercial / industrial | 1.5% (standard) |
| Unused agricultural land | 3% |
| Poorly maintained buildings | Can exceed 1.5%, up to 3% |
Property purchase and registration costs
Latvia does not have a separate ad valorem property transfer tax. Instead, buyers pay a Land Register state fee (stamp duty).
The fee is commonly around 1.5%–2% of the higher of the purchase price or cadastral value, with legal entities generally paying at the higher end. Buyers may also pay notary fees of around 0.5%–2%.
Information about caps on the Land Register state fee varies between sources, so check the current rate and cap with the Land Register before purchasing.
Capital gains tax on property sales
When you sell a property for a gain, the capital gains tax rate is 25.5%. A transitional 20% rate applies only to certain transactions that began before 2025.
Some exemptions may apply, including:
- Selling a primary residence that has been owned and occupied for the required minimum period.
- Selling a property that has been held for a longer period, often cited as five years (60 months), where the proceeds are reinvested in another Latvian property within the required period.
VAT in Latvia
Latvia’s VAT rules changed significantly in 2026. The previous 5% VAT rate for fresh produce no longer applies, and the reduced rate for books and press publications now depends on the publication’s language.
| Category | VAT rate | Notes |
|---|---|---|
| Standard rate | 21% | Applies to most goods and services by default |
| Medical products, supplies, and heating energy | 12% | |
| Hotel and transport services | 12% | |
| Fresh fruits, vegetables and berries typical to Latvia | 12% | Made permanent from 1 January 2026 (previously a lower rate applied) |
| Essential food items (bread, fresh milk, poultry, eggs) | 12% | Temporary pilot, 1 July 2026 – 30 June 2027, reverting afterward unless extended |
| Books and press publications | 5% | From 1 January 2026, restricted to publications in Latvian, Latgalian, Livonian, or an official EU/EEA/Switzerland/EU-candidate/OECD language; publications in other languages are taxed at the standard 21% |
| Baby food | 5% |
Note: Imports from outside the EU are subject to EU customs duties and VAT.
Social Security Contributions in Latvia
Employees and employers must both contribute to Latvia’s social system. Social contributions fund healthcare, unemployment benefits, maternity leave, and pensions in Latvia.
| Contributor | Rate |
|---|---|
| Employer | 23.59% |
| Employee | 10.50% |
| Total | 34.09% |
Important to note: Income above the government-set ceiling is subject to Solidarity Tax.
Steps to Paying Taxes in Latvia
| Step | Action | Details |
|---|---|---|
| Step 1 | Register with the State Revenue Service (VID) | Employees are usually registered automatically. Freelancers, self-employed individuals, and non-residents earning Latvian-source income must register as individual taxpayers or individual merchants. |
| Step 2 | Determine your tax obligations | Understand what you need to pay: Personal Income Tax (PIT), Corporate Income Tax (CIT), social insurance contributions, and property/capital gains taxes. Residents are taxed on worldwide income; non-residents only on Latvian-sourced income. |
| Step 3 | Keep accurate financial records | Track all income, expenses, deductions, and capital gains. Essential for filing accurate returns and claiming allowances. |
| Step 4 | File tax returns | Employees may need an annual self-assessment. Freelancers/self-employed file annual returns. Companies file CIT returns on distributed profits. Typical PIT return deadline is June 1 of the following year. |
| Step 5 | Make tax payments | Pay online via the VID portal. |
| Step 6 | Claim refunds if applicable | Overpaid taxes or excess withholding can be refunded after filing. Proper records ensure accuracy and simplify audits. |
| Step 7 | Stay compliant to avoid penalties | Late filing or payments may incur interest and fines. Keep deadlines and records up to date. |
Latvia Double Tax Treaties
As of 2026, Latvia has double tax treaties (DTTs) with 63 countries to prevent double taxation and fiscal evasion concerning taxes on income and capital. Latvia has signed DTTs with:
- All European Union countries
- USA
- Canada
- Australia
- Switzerland
- Japan
How Can Global Citizen Solutions Help You?
Global Citizen Solutions is an advisory migration consultancy firm with years of experience delivering bespoke residence and citizenship by investment solutions for international families. With offices worldwide and an experienced, hands-on team, we have helped hundreds of clients worldwide acquire citizenship, residence visas, or homes while diversifying their portfolios with robust investments.
We guide you from start to finish, taking you beyond your citizenship or residency by investment application.
