If you plan to do business in Latvia, we offer you to acquaint with major taxes and tax rates, which must be paid in this country.
1. Micro-enterprise Tax
The micro-enterprise tax rate is 9% from the turnover of a micro-enterprise, if the micro-enterprise complies with the criteria required for it. If the micro-enterprise does not comply with the criteria required for it, it pays the micro-enterprise tax at a higher rate:
1) two percentage points for each additional employed employee are added to the 9% tax rate, if the number of employees of a micro-enterprise during a quarter is more than five;
2) the rate in the amount of 20% is applied to the exceeded turnover part, if the micro-enterprise turnover exceeds 70000.00 LVL;
3 If the micro-enterprise employee’s income exceeds 500 LVL per month, the additional tax rate in the amount of 20% is applied to the income part which exceeds 500 LVL.
2. Corporate Income Tax
Taxable income of the taxpayer – income received from business activity, from which the costs are deducted, related to business activity. The tax rate is 15 % of taxable income; 2–15 % for non-residents.
3. Personal Income Tax
Tax rate – 24 % (including income from business activity);
Tax rate – 10 % for capital income, which is not increase of capital;
Tax rate – 15 % for increase of capital.
1) income derived from employment relations;
2) income from business activity,
3) other income, accordingly to Art. 3 of the Latvian „Law on Personal Income Tax”.
4. National Insurance
Mandatory contribution rate is:
Tax rate – 35.09%, if the employer is insured for all types of social insurance, of which pay:
Tax rate – 24.09% – employer,
Tax rate – 11% – employee.
Tax rate – 30.13% for individuals who are entitled to a retirement pension, of which pay:
20.68% – employer,
9.45% – employee.
5. Value Added Tax
Tax rate – 21%
Taxation period is one calendar month, if the value of taxable transactions in pre-taxation year or during the tax year exceeds 35000.00 LVL
There are different tax rates for different categories of goods – see the Latvian „Law on Value Added Tax” from 29.11.2012.
6. Excise Tax
6.1. The excise tax on alcoholic beverages. Different tax rates – see the Law.
6.2. The excise tax on soft drinks. Different tax rates – see the Law.
6.3. The excise tax on coffee. Tax rate – 100.00 LVL – for 100 kg of coffee.
6.4. The excise tax on tobacco products. Different tax rates – see the Law.
6.5. The excise tax on petroleum products. Different tax rates – see the Law.
6.6. The excise tax on natural gas:
6.6.1. Tax rate – 12.00 LVL for 1000 m3 – for use as fuel.
6.6.2. Tax rate – 70.00 LVL for 1000 m3 – for use as petrol.
7. Real Estate Tax
Tax rate – 1.5 % of the cadastral value of the property:
1) land;
2) buildings or their parts, except buildings and their parts, referred in Article 3, paragraph 2 of the first part of the Law;
3) the engineering constructions.
Tax rate is 0.2 % of the cadastral value not exceeding 40000.00 LVL; for domestic buildings, regardless of whether they are divided on the apartment property or no.
Tax rate is 0.4 % of the cadastral value exceeding 40000.00 LVL, but not exceeding 75000.00 LVL; for parts of domestic buildings.
Tax rate is 0.6 % of the cadastral value exceeding 75000.00 LVL.
As well as a group of rooms, functional use of which is related with accommodations (garages, parking lots, basements, warehouses and household premises), if they are not used for business activity.
Interest rate of the real estate tax in the amount of 1,5% of the cadastral value of the property is applied for buildings or their parts, except taxable real property facilities mentioned in Article 3, paragraph 2 of the first part and in the part 1.2 of Article 3, utility buildings of domestic buildings and garage owners of cooperative societies, associations of garage owners and physical persons (except the garages for heavy equipment and agricultural machinery), if they are not used for business activity.
Additional rate is 1.5 % of the cadastral value of the property.
It is applied for: undeveloped agricultural land, except in cases when land area does not exceed one hectare or if the statutory acts provide restrictions of agricultural activity for this land.
8. Tax on Cars and Motorcycles
Tax on cars and motorcycles. Different tax rates – see the Law.
9. Tax on Natural Resources
Different tax rates – see the Law.
10. The Lottery and Gambling Tax and Duties.
Different tax rates – see the Law.
11. Electricity Tax
Electricity tax. Tax rate is 0.71 LVL per megawatt/hour since 01.01.2010.
Electricity delivered to the end customer.
Electricity delivered for own consumption.
12. The Vehicle Operation Tax and Company Car Tax
The company car tax is paid in accordance with the engine capacity in the following amount:
12.1. Tax rate – 19.00 LVL per month – under 2000 ñm3;
12.2. Tax rate – 30.00 LVL per month – from 2001 to 2500 ñm3;
12.3. Tax rate – 40.00 LVL per month – over 2500 ñm3
There are many nuances in the taxation of the Republic of Latvia that you need to know in order not to violate the law, as well as not to overpay taxes. Please contact the specialists of Business Consulting Group, who will help you to plan taxes in such a way so that would be the most profitable for your company!