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Measures List
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Measure Name
Date when measure came into force
PIT rate reduction 2013/01/01
Reduction of the tax burden 2014/01/01
Maintenance of exemption of taxation 2014/01/01
Anti-avoidance rules 2014/01/01
Results 1 - 4 of 4.

Generic Tax Name Personal income tax
Tax name in the national language Iedzīvotāju ienākuma nodoklis
Tax name in English Personal income tax
Member State LV-Latvia
Tax in force since 1991/01/01
If abolished, date on which the tax ceases to apply
Business version date 2015/01/01
Version date 2015/02/17
This file was last updated on

Type of tax
Direct taxes Personal income tax
Corporate income tax
Other

Indirect taxes VAT
Excise duty (EU harmonised)
Alcoholic beverages
Energy products and electricity
Manufactured tobacco
Other

Social security contribution Employers
Employees
Other
 
Legal base

Law "On Personal Income Tax".

 
Who sets
The tax rate is set by




The tax base is set by




The reliefs are set by




Comments
 
Beneficiary





Comments

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.

 
Geographical Scope

Territory of Latvia.

 
Taxpayers
Domestic-source income of non-residents is Taxed
Not Taxed
Comments

Employment incomes of married couples are Taxed jointly
Taxed separately
Comments


Comments

 

 
Tax object and basis of assessment
As general rule, taxable income under personal income tax includes























Comments

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.


Income considered Domestic income
Worldwide income (subject to double-tax relief)
Comments

Benefits in kind
The following benefits in kind are usually (partially or fully) taxable












Comments


Comments

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%.

 
Deductions, Allowances, Credits, Exemptions
Deduction for professional expenses.
The deduction is:





Comments

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.


Deductions from the tax base
The following items are usually (partially or fully) deductible

















Comments

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


Allowances
The basic yearly allowance for an individual amounts to: 900.00  EUR/National currency
The basic yearly allowance for a couple amounts to:
Additional allowance for 1st child 1,980.00  EUR/National currency
Additional allowance for 2nd child 1,980.00  EUR/National currency
Additional allowance for 3rd child 1,980.00  EUR/National currency
Additional allowance for additional child 1,980.00  EUR/National currency
Additional allowance for old age dependents
Comments

The basic yearly allowance for pensioner EUR 2820.


Credits
The basic yearly credit for an individual amounts to:
The basic yearly credit for a couple amounts to:
Additional credit for 1st child
Additional credit for 2nd child
Additional credit for 3rd child
Additional credit for additional child
Additional credit for old age dependents
There are tax credits for:

















Comments

Losses
Losses can be
Carried-forward for Indefinite
 Years
Carried-back for Indefinite
 Years
Transferred to spouse or partner
Comments

Losses can be carried-forward within 3 taxation years.


Exemptions
The following income is exempted from income tax























Comments

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.



Comments
 
Rate(s) Structure
The following personal income tax rates apply to aggregate annual income (allowances not included)
Bracket 1 From   EUR/Natcur
To   EUR/Natcur
Rate: 23.00 %
Comments

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


Regional taxes
Regional taxes are (rate in capital region) A lump-sum amount:
A percentage of income:
A tax surcharge:
Comments

Local/municipal taxes
Local taxes are (rate in capital city) A lump-sum amount:
A percentage of income:
A tax surcharge:
Comments

Special surcharges
There are special surcharges in the form of:
Surcharge 1 : Name:
A lump-sum amount:
A percentage of income:
A tax surcharge:
Comments

Separate taxation
Separate taxation applies to the following items: Employment income 23.0 %
Income from business or self-employed activities 23.0 %
Income from sport and entertainment activities
Benefits in kind (company car, meal cheques, etc) 23.0 %
Pension income
Owner-occupied immovable property
Dividends 10.0 %
Interests from government bonds
Interests from corporate bonds 10.0 %
Interests from special saving accounts 10.0 %
Interests from deposits 10.0 %
Royalties 23.0 %
Income from renting immovable property 10.0 %
Income from renting movable property 10.0 %
Capital gains on immovable property 15.0 %
Capital gains on movable property 15.0 %
Inheritance
Annuities from life insurance
Prizes and awards
Scholarships
Income from occasional activities
Revenues from donations and gifts
Revenues from lotteries and games activities
Comments

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 taxes
The tax is withheld when paid to residents on: Dividends: 10.00 %
Final Creditable
Interests from governments bonds:
Final Creditable
Interests from corporate bonds: 10.00 %
Final Creditable
Interests from special saving accounts: 10.00 %
Final Creditable
Interests from deposits: 10.00 %
Final Creditable
Comments

Withholding tax for royalties 23%.



Comments
 
Tax due date

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).

 
Tax collector

State Revenue Service.

 
Special features

 
Economic function







Comments
 
Environmental taxes



Comments
 
Tax revenue
ESA95 code d51a

Year
Annual tax revenue (millions)
Currency
Tax revenue as % of GDP
Tax revenue as % of total tax revenue
2012 1,268.21 EUR 5.77
2011 1,131.09 EUR 5.62
2010 1,107.00 EUR 6.23
2009 1,006.07 EUR 5.37
2008 1,458.92 EUR 6.00
2007 1,291.50 EUR 5.71
2006 967.08 EUR 5.61
2005 740.76 EUR 5.40
2004 664.51 EUR 5.70
2003 581.12 EUR 5.55
2002 554.02 EUR 5.46
2001 512.84 EUR 5.48
2000 472.02 EUR 5.49
1999 383.87 EUR 5.45
1998 341.59 EUR 5.33
1997 296.43 EUR 5.16
1996 229.75 EUR 4.89
1995 201.19 EUR 4.87

Comments