Taxes in Europe Database v2
Law "On Personal Income Tax".
The amounts of tax shall be included into the budget according to the following allocation:
1) 80% - into the local government budget of the place of residence of the payer; and
2) 20% - into the state basic budget.
Territory of Latvia.
The following income is taxable:
1) benefit in kind - benefits from company car are taxable, if the Company car tax is not paid for it;
2) income of alienation of owner-occupied immovable property - if the ownership is less than 5 years and place of residence less than 1 year;
3) prizes and awards - over EUR 143 domestic or over EUR 1,423 international;
4) capital gains from the alienation of movable property that is related to business activities;
5) scholarships - paid out from source, which is not included in the special rule regarding taxation of scholarships;
6) revenue from donations and gifts - over EUR 1,425 from natural person;
7) revenue from companies gifts;
8) revenue from selling scrap metal
9) unrequited companies loans to member of the council or board member or employee;
10) pension income - pension and insurance compensation, which shall be paid to the insured person, in accordance with the lifetime pension insurance contract.
1) Company car - non-taxable, if the Company car tax is paid.
2) Meal, sport, cultural cheques (entertainment expenses) - 60% of the amount taxable, but the other 40% non-taxable. All amounts are taxable if the income can be personalized.
3) Health insurance - over EUR 426.86 or over 10% from annual taxable income.
4) In accordance with the "Micro-enterprise tax law" the micro-enterprise tax rate is 9% from turnover and it includes state social contributions both for employees and proprietors, business risk state fee as well as personal income tax or corporate income tax depending on legal form of taxpayer. From 2015 after three years of being micro-enterprise, for the part of turnover exceeding EUR 7,000 a year, the tax will be applied at 12%.
1) A lump-sum amount: the basic yearly allowance and additional allowances etc.;
2) In percentage of income: donations, contributions to supplementary pension or health insurance etc.;
3) Based on real expenses: medical and educational expenses etc.
Allowance (alimony) income shall not be included in the annual taxable income.
Tax deduction for contributions to supplementary pension and contributions to life insurance funds are limited to 10% of taxable income.
Tax deduction for social security contributions to state budget.
Tax deduction for performers of economic activities in the amount of real estate tax for immovable property used in economic activity
State mandatory social insurance contributions (employee's share) reducing the personal income tax base
The basic yearly allowance for pensioner EUR 2820.
Losses can be carried-forward within 3 taxation years.
The following income is exempted from income tax:
1) capital gains on immovable property if the ownership is more than 5 years and it is place of residence more than 1 year;
2) income from business or self-employed activities in field of rural tourism or agricultural manufacturing up to turnover of EUR 3,000 per taxation year;
3) the sums of State aid for agriculture or of the European Union aid for agriculture and rural development;
4) alimony obligations;
5) scholarships determined by special rule;
6) income from the alienation of personal property (movable objects such as furniture, clothing and other movable objects belonging to a individual intended for personal use) that is not related to business activities;
7) revenues from donations and gifts up to EUR 1,425 from natural person, other than a close relative;
8) insurance compensation from insurance companies whitch registered in the Republic of Latvia and insurance companies registered in other European Union Member States or European Economic Area states.
The following tax rates apply as from 2015 -23%, 2016 - 22%. .
10% for capital income
15% for capital gains
23% for employment income, income from business, self-employed activities and other income
10% rate applies to income from scrap sales
Income from scrap sale 10%.
Employment income for sailors - coefficient 1.5-2.5 applicable to floor wage.
10% rate applies for the income from renting immovable and movable property, if the payer has not created any economic activity expenditures or they are negligible.
Withholding tax for royalties 23%.
The payroll tax is paid into the budget:• An employer who disburses remuneration for work of the employees using non-cash payments pay the salary tax into the budget on the same day when the payment order for the transferring of the remuneration for work has made to the account of the employee. • The employer shall pay the salary tax calculated and withheld from the remuneration for work of employees employed in urgent, temporary, single-time jobs into the budget on the same day when he or she pays into the budget the salary tax for permanent staff.The payer of the salary tax – a natural person employed by an employer – a foreign tax payer or whose work is remunerated from foreign financial or technical assistance or loans from international financial institutions pay into the budget the tax calculated from the remuneration for work of a calendar month not later than on the 15th date of the month following the month of payment of income. The income tax is withheld from the income paid to a natural person by undertakings (companies), permanent representations of foreign undertakings (non-residents), institutions and organizations, if they are not related through employment relations and that they are not exempted from the imposition of the tax, at the place of the disbursement of the income and paid into the budget not later than on the 5th date of the month following the month of disbursement of the income. (for example, pensions, authors fee (royalty), insurance compensation, etc).
State Revenue Service.