Accounting, Payroll, Tax & Legal since 1989

Taxation in Latvia

Leinonen offers a full tax consulting assistance: advisory on value added tax, payroll taxes, corporate income tax, tax optimization and structuring matters.

We prepare binding rulings to the State Revenue Service on behalf of client, also if required we represent the client within the State Revenue Service in tax disputes.

We provide tax compliance services. We offer registration services such as VAT, foreign employer/employee registration.

Leinonen will make sure that the taxation is performed according to the tax regulation requirements. We offer you a broad shoulder to lean on in the overly complicated tax jungle.
Our tax adviser team has more than ten years extensive professional experience in tax advisory business.


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FAQ

  • Before inland goods are purchased or delivered in the territory of the EU
  • Before VAT taxable services are provided inland and according to the provisions of the VAT law taxpayer is responsible for VAT payment in the state budget.
  • Before the taxpayer not registered inland or person that is not a taxpayer is delivered goods to which excise tax is applied in the Republic of Latvia regardless of the value of the delivered excise goods.
  • Resale transactions are concluded and goods are received in Latvia and the total value of the deliveries without VAT in the calendar year amounts to or exceeds EUR 10,000. Registration has to be performed no later than within 30 days after reaching or exceeding the threshold.
  • Before goods are delivered to a non-registered taxpayer or person that is not a taxpayer and these goods are assembled or installed inland.

Before VAT taxable transactions are concluded and taxpayer is responsible for VAT payment to the state budget.

Yes, registration of VAT group is possible. Pre-conditions of VAT group are available in the Leinonen article: https://leinonen.eu/lv-lv/jaunumi/pvn-grupas-registracija 

The State Revenue Service (SRS) makes decision on VAT registration or rejection to register with the VAT register within 5 working days after submission of VAT registration application to the SRS. However, in practice, SRS, after receipt of VAT registration application, requires the taxpayer to submit additional information. Therefore, VAT registration can be performed within 7 working days.

VAT standard rate is 21%, the reduced VAT rate is 12% and 5%.

  • The amount of 60% of VAT for goods purchased and services received for representation needs cannot be deducted as input tax.
  • VAT amount for representation vehicles cannot be deducted as input tax, purchase, lease and import of a passenger car in which the number of seats, excluding the driver’s seat, does not exceed eight seats, or a lorry with a weight of up to 3000 kilograms. This restriction does not apply to cases when the respective vehicle is used to provide VAT taxable transactions (for example, to provide security services or transportation of goods).

Yes, input tax adjustment has to be performed, if the purchase or manufacturing value of a fixed asset without VAT amounts to or exceeds EUR 70,000. Input tax adjustment period if 5 years, including the year when the fixed asset was purchased or manufactured.

10 years starting the taxation year when the immovable property was purchased or commissioned.

20% of the calculated CIT taxable base that is adjusted before application of CIT rate dividing by the coefficient 0.8.  

CIT is applied to tax base that includes CIT taxable objects:
1) Distributed profit;
2) Conditionally distributed profit (for example, expenses not related to economic activity, doubtful debts if certain conditions apply, interest payments, in certain cases, loans to related parties, etc.).

  • Calendar month
  • Quarter (if the taxpayer, in line with Section 8 of the Law on Accounting, is entitled to register supporting documents quarterly).

  • From compensation for management and consulting services: 20% of the compensation amount;
  • From compensation for repossession of immovable property located in Latvia (including repossession of shares, if more than 50% of the value of such asset includes immovable property located in Latvia or investment of immovable property in share equity): 3% of the compensation amount;
  • From all payments and dividends paid to any person that is located, is incorporated or established in low tax or off-shore country or territory: 20% of the compensation amount.

    Except for payment for deliveries of goods and publicly traded securities of the European Union or European Economic Area, if the transactions were concluded at arm’s length;


  • For rent or lease of immovable property located in Latvia: 5% of the compensation amount.

The countries of Tax Convention can apply reduced income tax rates or release.

More information in the Leinonen article: https://leinonen.eu/lv-lv/jaunumi/parskats-par-veiktajiem-maksajumiem-nerezidentiem 

In Latvia, progressive PIT rates are applied to the income of private individuals. Annual taxable income (in 2020) the following rates are applied:

  • Annual income up to EUR 20,004: 20%;
  • Annual income from EUR 20,004 to EUR 62,800: 23%;
  • Part of annual income that exceeds EUR 62,800: 31%.


The following rates are applied to the annual income:

  • 20% to monthly income up to EUR 1,667;
  • 23% to the part of monthly income exceeding EUR 1,667.

PIT 20 %. The procedure of PIT payment differs depending on the status of income payer and receiver.

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