The calendar year is the taxable period. No matter where they live, anybody in Latvia who earns a living must pay municipal taxes. Permanent residents are subject to global income tax, but foreign nationals who live and work in Latvia are only subject to local earning tax. Employers may deduct income, which they then send to the State Revenue Services each month, or in certain circumstances, a person can pay it themselves.
Tax filings
Individual tax returns must be submitted between the first of March and the first of June of the year following the year of assessment. If a year’s earnings are more than EUR 62,800, the PIT and ST must be recalculated, and the return must be filed between 1 April and 1 July of the following year. Couples cannot submit joint returns. A capital gains return must be submitted quarterly by the 15th day of the month following the quarter in which the relevant earning was obtained if a person’s total quarterly capital gains income exceeds EUR 1,000. A capital gains tax return must be submitted by 15 January of the following year if a person’s total quarterly earnings from capital gains do not exceed EUR 1,000. While it is possible to file tax returns in person at the State Revenue Service office closest to you, most people do it online using the Electronic Declaration System (EDS). A taxpayer in Latvia must receive a personal identity number (PIC) to file taxes.
Paying taxes
According to an individual’s yearly income, the Latvian income tax is progressive. It may go up to 31% from a starting point of 20%. The following details the income-based tax that is due:
- Up to 20,004: 20%
- 20,004 – 62,800: 23%
- Over 62,800: 31.4%
The levies
In addition to paying income tax, people in Latvia must also contribute to social security, which costs roughly 11% of their salary. It is levied at 20% on capital gains such as interest, profits, dividends, and royalties. Non-residents are subject to a 23% fixed rate.
How it is deducted
Employers should deduct it from employees’ paychecks and pay it monthly, eliminating the need for the employee to complete an annual return. A person is required to submit an annual return between March 1 and June 1 of the following year if they obtained income from sources other than employment. The due dates span from 1 April to 1 July if the yearly tax return is more than the personal income tax level. Residents who work with overseas employers must compute and submit advance income tax payments each month. If a taxpayer’s income for the tax period was zero or less than the minimum wage, they are required to pay EUR 50 within 15 days after completing their tax return. Otherwise, they are not required to pay anything. Once the yearly return has been filed, any additional tax must be paid by June 23. Payment may be divided into three equal installments payable by 23 June, 23 July, and 23 August if the extra tax is more than EUR 640. Payment deadlines are extended by one month if the filing deadline is July 1.
Tax obligations
In Latvia, the following categories apply:
Non-residents
Non-residents must pay it on any earnings generated permanently in Latvia as well as other earnings. Examples of such include:
- employment
- Interest
- Earnings derived from sales, dividends, stock, etc.
- Copyright and auxiliary rights are included in royalties
- rental earnings from Latvian real estate
- income from the sales of moveable and immovable property that must be registered in Latvia
Non-Latvian taxpayers
The tax authorities must receive non-Latvian tax residents’ income tax returns each month by the 15th of the following month. If it’s not deducted at the time of payment, foreign taxpayers with capital gains must file a capital gains declaration by the 15th of the following month.
