Latvia: Business Environment
Exports of goods and related services; intra-Community supply of goods; international transport services; and tourism services provided outside Latvia are zero-rated.
A reduced rate of 5% is applicable until 31 December 2023 on certain foodstuff (including fresh fruit, berries and vegetables).
Latvia applies a reduced VAT rate of 12% on certain categories of goods and services, including mass media and subscriptions thereto; specialized products for infants; medicines and medical devices (those authorized by state pharmaceutical authorities); literature printed especially for schools and universities and original literature; firewood and fuelwood supplied to natural persons; supply of thermal energy to natural persons; public transport services provided in Latvia; accommodation services provided in Latvia.
Latvia | Eastern Europe & Central Asia | United States | Germany | |
Number of Payments of Taxes per Year | 7.0 | 13.9 | 10.6 | 9.0 |
Time Taken For Administrative Formalities (Hours) | 168.5 | 226.2 | 175.0 | 218.0 |
Total Share of Taxes (% of Profit) | 38.1 | 36.5 | 36.6 | 48.8 |
Source: Doing Business, Latest available data.
Personal income tax | Progressive rates from 20% to 31% |
Up to EUR 20,004 | 20% |
EUR 20,004 - 62,800 | 23% |
Above EUR 62,800 | 31% |
Capital gains tax | 20% on qualifying capital gains |
Moreover, individuals may deduct from the income reported on their tax returns:
- Donations to acceptable charitable organisations
- Education and medical expenses (up to 50% of taxable income, capped at EUR 600 per year for expenses on behalf of other family members)
- Contributions to private pension funds (10% of taxable income, capped at EUR 4,000) and to life insurance schemes
- Differential personal allowance (DPA): A lump-sum deduction varying between EUR 0 and EUR 300 a month depending on the annual taxable income: for tax year 2021, the full DPA only applies to individuals with a monthly income up to EUR 1,800, varying according to the level of income. An additional deduction of EUR 250 per month applies for each qualifying dependant.
Find out more about Taxes and Accounting in Latvia on GlobalTrade.net, the Directory for International Trade Service Providers.
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Latest Update: April 2022