Tax Guide Latvia 2026: What Every Investor Needs to Know

Last updated: 6 September 2026

Latvia taxes most ordinary capital income and realised capital gains at 25.5%. That headline rate does not mean every dividend is taxed again at individual level: dividends are generally exempt where the underlying company profit has already been subject to Latvian corporate income tax or a comparable foreign corporate tax, subject to statutory exclusions.

Latvia also offers a valuable investment-account regime. Within a properly designated account, eligible investment income and transactions can generally be reinvested without immediate Latvian personal income tax. Tax arises when cumulative withdrawals exceed cumulative contributions. This can simplify reporting and materially improve tax deferral for long-term investors.

Employment income is taxed progressively at 25.5% and 33%, with an additional 3% charge on high annual income. Latvian companies generally pay corporate tax only when profits are distributed or treated as distributed.

Tax Overview — Key Numbers at a Glance

Tax Type	2026 Rate or Threshold	Notes
Personal income tax	25.5% / 33%	33% applies above €105,300 annual income
Additional high-income tax	3%	On relevant annual income above €200,000
Fixed non-taxable minimum	€550/month	€6,600 annually for eligible income
Capital gains	25.5%	Transitional 20% treatment can apply to specified pre-2025 transactions
Interest and taxable capital income	25.5%	Unless exempt or covered by the investment-account regime
Dividends	Often 0%; otherwise 25.5%	Usually exempt when underlying profit was appropriately subject to corporate tax
Alternative 2026 domestic dividend regime	15% CIT + 6% PIT	Optional for qualifying companies owned directly and solely by individuals
Employee social insurance	10.50%	Standard rate
Employer social insurance	23.59%	Standard rate
Social insurance ceiling	€105,300/year	Excess remains subject to solidarity-tax mechanics
Minimum wage	€780/month	From 1 January 2026
Corporate income tax	20% on grossed-up distributed base	Commonly described as 20/80 or 25% of the net distribution
Standard VAT	21%	Reduced rates include 12% and 5%
Immovable property tax	0.2%–3%	Municipality and property classification determine the rate
Inheritance tax	None as a separate tax	Probate/notarial fees and other rules can still apply
Gift tax	PIT may apply	Close-family exemptions and €1,425 annual exemption for other individual gifts
Net wealth tax	None	Property tax remains applicable
Tax year	Calendar year	Individuals
Annual return	Usually 1 March–1 June	1 April–1 July for specified higher-income cases
Tax authority	State Revenue Service (VID/SRS)	Electronic Declaration System (EDS)

Tax Residency in Latvia

Under Latvia’s Personal Income Tax law, an individual is generally treated as Latvian tax resident if at least one of these tests is met:

• their declared place of residence is in Latvia;
• they stay in Latvia for 183 days or more in any 12-month period beginning or ending in the tax year; or
• they are a Latvian citizen employed abroad by the Latvian government.

The day-count test can span two calendar years. Treaty residence may differ from domestic residence where another country also claims the individual. Latvia’s tax treaties normally use permanent home, centre of vital interests, habitual abode and nationality tie-breakers.

Residents generally report worldwide income, including foreign salary, business profits, interest, dividends and taxable investment gains. Non-residents are generally taxed only on specified Latvian-source income.

Moving abroad does not by itself end residence if the Latvian statutory conditions remain. Individuals should update their declared residence and give VID evidence of foreign residence where required.

Personal Income Tax

Unless a special rate applies, employment and business income use the progressive annual scale:

Annual taxable income	2026 rate
Up to €105,300	25.5%
Above €105,300	33%

The 33% rate applies only to the portion above the threshold. Payroll uses a 25.5% monthly wage-tax rate, with the annual return reconciling the result.

An additional 3% tax applies to the part of relevant annual income above €200,000. Its base is broader than ordinary taxable salary and can include taxable employment, business and capital income as well as specified exempt dividends. High earners should therefore not assume that an exempt dividend is irrelevant to the 3% calculation.

VID’s official rate table confirms the 2026 rates and income categories.

Allowances and Deductions

The fixed non-taxable minimum is €550 per month, or €6,600 annually, in 2026. Unlike the previous differentiated allowance, it applies regardless of income level where the taxpayer is eligible. An employer holding the electronic tax booklet can apply it through payroll.

The pensioner non-taxable minimum is €12,000 annually. Where a working pensioner submits the tax booklet to the employer, the rules can split the monthly pensioner allowance between salary and pension.

Relief is also available for dependants. Eligible expenditure can include education, medical treatment, donations, private pension contributions and qualifying life-insurance premiums. Education, medical expenses and donations are generally subject to a combined €600 annual limit and a 50%-of-taxable-income ceiling, while pension and insurance contributions have separate percentage and monetary restrictions.

Non-residents usually have narrower access, although EU/EEA residents earning more than 75% of their total income in Latvia can qualify for specified allowances.

Social Security Contributions

The standard mandatory state social insurance contribution is 34.09% of gross employment income:

Contributor	Standard 2026 rate
Employee	10.50%
Employer	23.59%
Combined	34.09%

The standard annual maximum contribution base remains €105,300 in 2026. Income above that level is still charged through the contribution system but is allocated under solidarity-tax rules, as VSAA’s official contribution guidance explains. It is therefore misleading to describe €105,300 as a point after which all payroll charges simply stop.

The minimum wage is €780 per month. The minimum quarterly contribution base is generally €2,340, although exceptions and aggregation rules apply. VID confirms the standard contribution rates, while VSAA explains the 2026 minimum base.

Salary example

For an employee earning €40,000 annually, standard employee contributions are approximately €4,200. Assuming the full €6,600 non-taxable minimum and no other relief, the indicative PIT base is about €29,200 and PIT about €7,446. Estimated take-home pay is therefore about €28,354, or €2,363 monthly.

The result can change because of dependants, benefits, pension contributions and payroll-booklet choices. Use the Finorum Latvia net salary calculator for an estimate.

Capital Gains on Ordinary Accounts

Realised gains from capital assets are generally taxed at 25.5%. Capital assets include:

• listed and unlisted shares;
• ETF and investment-fund units;
• bonds and other debt instruments;
• derivatives and other financial instruments;
• cryptoassets;
• investment gold and precious metals;
• intellectual property and businesses; and
• taxable real estate.

The gain is normally disposal proceeds less documented acquisition cost and eligible improvement or transaction costs. Latvia has no general long-term holding exemption for securities.

Capital losses from one disposal can generally offset gains from other capital-asset disposals in the same reporting period. Annual reconciliation can allow losses from one quarter to be matched against gains in another quarter of the same year. Unused capital losses do not generally provide an unlimited carry-forward into later years, so timing and the annual adjustment declaration matter.

Specified transactions begun by 31 December 2024 but not completed by that date can retain the old 20% rate during 2025–2027 if the required transition declaration was filed, as reflected in VID’s current rate table.

Estimate a transaction with the Finorum Latvia capital gains tax calculator.

Capital Gains Reporting Deadlines

Latvia uses separate reporting for ordinary capital gains:

Quarterly capital-gain income	Filing deadline	Payment deadline
Exceeds €1,000	15th of the month after the quarter	23rd of the filing month
Does not exceed €1,000	15 January of the following year	23 January

The €1,000 test concerns capital-gain income for the reporting period, not portfolio value. Non-residents can face monthly filing where tax was not withheld. VID’s capital-gains guidance and capital return service give the current deadlines.

These quarterly rules generally concern investments outside the special investment-account regime.

The Latvian Investment Account

The ieguldījumu konts—the investment account defined in Latvia’s Personal Income Tax law—is one of the most important features missing from many summaries of Latvian investor taxation. In a properly designated investment account, eligible sales, interest, dividends and reinvestments do not normally create immediate Latvian tax each time they occur.

Taxable income arises when cumulative amounts withdrawn from the investment-account system exceed cumulative amounts contributed. The excess is taxed at 25.5%. This allows capital and returns to be reinvested before tax and avoids transaction-by-transaction quarterly gain declarations while funds remain within the system.

Example: if an investor contributes €20,000 and the account grows to €27,000, withdrawals up to the tracked contribution amount are generally not investment-account income. Once cumulative withdrawals exceed cumulative contributions, the excess becomes taxable, subject to adjustments required by law.

Registration matters

Latvian providers covered by the Account Register rules generally report the account. If the provider is foreign and has no Latvian branch, the investor must notify VID and grant the account investment-account status no later than the end of the tax year in which it was opened. The notice identifies the provider and every account number forming part of the system.

An ordinary brokerage account is not treated as an investment account merely because it is used only for investing. Cash flows between brokerage subaccounts, cards and linked bank accounts must be mapped correctly. Moving to a new broker legal entity or receiving new account numbers can be treated as closing and opening accounts unless the transfer requirements are handled properly.

Cryptoassets, direct company interests and some other assets do not automatically qualify as permitted financial instruments. Investors should verify product eligibility before routing trades through the account.

ETFs and Investment Funds

Outside a registered investment account, a realised gain on an ETF or fund unit is generally taxed at 25.5%. Distributions are treated according to their legal character, commonly as dividends or other capital income. There is no general annual deemed-disposal system taxing unrealised appreciation in an accumulating ETF.

UCITS status does not create a blanket Latvian exemption. Domestic and foreign funds normally follow the broader capital rules. Accumulating funds can defer cash distributions, while the investment-account regime can defer tax on eligible realised activity until excess withdrawal.

Keep acquisition confirmations, fees, distributions and fund-reorganisation records. A merger, liquidation or transfer between accounts may have consequences even without a conventional cash sale.

Dividends

The claim that every dividend is taxed at 25.5% is incorrect. VID’s official capital-income material distinguishes taxable capital income from qualifying exempt dividends. A dividend is generally exempt from Latvian PIT where the distributing company has paid Latvian corporate income tax on the underlying profit or the dividend comes from a foreign company whose profit was subject to corporate income tax or whose dividend was subject to withholding tax.

The exemption generally applies to Latvian, EU/EEA and other foreign companies but not to payments from blacklisted low-tax jurisdictions. Evidence of the foreign tax position is essential. Dividends from micro-enterprise-tax profits require separate treatment.

If the exemption conditions are not met, 25.5% PIT can apply. Even exempt dividends are included in the base for the additional 3% tax where total relevant annual income exceeds €200,000.

Optional domestic regime from 2026

A qualifying Latvian company directly and solely owned by individuals may elect an alternative distribution system: 15% corporate income tax applies to distributed profit and the shareholder pays 6% PIT on the dividend. The change is documented in VID’s 2026 tax-change material. This exists alongside the standard corporate regime and is not the default rate for every company.

Foreign dividends must be reported where required even if exempt. Retain corporate-tax or withholding evidence rather than relying only on the broker’s cash statement.

Interest Income

Interest and comparable capital income are generally taxed at 25.5%. Latvian payers normally withhold where required; foreign bank and bond interest may need to be self-reported.

Within a qualifying investment account, interest on eligible instruments can generally remain within the deferred account calculation. Interest credited outside the system is not deferred merely because the money is later transferred into an investment account.

Foreign tax credits depend on domestic law, the treaty, and proof of tax paid. A credit cannot generally exceed the Latvian tax attributable to the same income.

Cryptocurrency Tax

For a private investor, cryptoasset disposal gains are generally taxed at 25.5% as capital gains; VID expressly includes virtual currency in its capital-assets guidance. A disposal can include sale for fiat money, payment for goods or services, and an exchange that produces a legally realised gain.

The taxable gain is sale proceeds less documented acquisition cost. Mining, staking, lending and frequent organised activity may be treated as economic activity rather than passive capital gain.

The normal capital-gains filing thresholds and dates apply. Investors should retain exchange statements, wallet addresses, euro conversion evidence, fees and records identifying transfers between their own wallets. The investment-account regime should not be assumed to cover cryptoassets.

From 2026, expanded EU and international information-exchange rules increase the data cryptoasset service providers collect for future reporting to tax authorities.

Reporting Foreign Investments

Latvian residents report worldwide taxable income through VID’s Electronic Declaration System. Automatic exchange of financial-account data does not calculate the investor’s Latvian tax.

A good annual file includes:

• account-opening and investment-account registration evidence;
• total contributions and withdrawals by account;
• broker statements and trade confirmations;
• acquisition costs and transaction fees;
• dividend and interest statements;
• foreign corporate-tax or withholding evidence;
• currency conversion records; and
• annual capital-loss reconciliation.

Foreign income is increasingly pre-filled, but taxpayers remain responsible for classification, exemptions and corrections.

Rental Income and Property Tax

Rental activity can be taxed under the general registered business regime or a simplified notified regime.

Under notified, non-registered property activity, the taxpayer informs VID within five working days after concluding the contract and pays 10% on gross rental revenue, generally deducting only the related immovable property tax. The €550 allowance, dependant relief and ordinary expense deductions do not apply, but mandatory self-employed social contributions are generally avoided.

The general business regime permits eligible expense deductions but taxes net profit under progressive PIT and can trigger social insurance. The better choice depends on financing, repairs and operating costs.

Immovable property tax

Municipalities levy annual immovable property tax, generally from 0.2% to 3% of cadastral value. Residential use, declaration status, neglected buildings and local reliefs can change the rate.

Property sale

A taxable real-estate gain is generally charged at 25.5%. VID maintains detailed official guidance on property-sale gains and acquisition cost. Important exemptions can apply, including where property has been owned for more than 60 months and registered as the person’s residence for at least 12 consecutive months, where it was the person’s only real estate for the prescribed period, or where proceeds from the only property are reinvested in a functionally similar Latvian property within the statutory time window. Conditions and dates must be checked carefully.

Use the Finorum rental property calculator for cash-flow modelling.

Gifts, Inheritance and Wealth

Latvia has no separate inheritance tax. Inherited assets are generally not personal taxable income, although probate, notarial, registration and property-related fees may apply.

Gifts between spouses, registered partners and relatives up to the third degree are generally exempt from PIT. Gifts from other individuals have an annual €1,425 exemption, with excess value generally entering progressive PIT. Targeted exemptions can apply for education or medical expenses paid directly, and gifts from an employer follow separate rules.

Latvia has no general net wealth tax. Annual municipal property tax still applies to real estate, and income or gains from assets remain taxable.

Self-Employed Individuals

Registered economic-activity profit is combined with other progressive income and taxed at 25.5% and 33%, plus the additional 3% where applicable. Eligible business expenses can be deducted, but minimum taxable-income restrictions and documentation rules can apply.

In 2026, a self-employed person whose monthly profit reaches €780 generally pays the full self-employed contribution rate—commonly 31.07%—on a chosen base of at least €780, plus a 10% pension contribution on profit above that chosen base. VSAA’s 2026 update confirms the threshold and contribution structure. Lower-income months use the 10% pension mechanism, subject to minimum-contribution and forecast rules.

The micro-enterprise tax regime taxes turnover rather than profit and should not be assumed cheaper for a high-expense activity. VAT registration is generally required after the statutory €50,000 domestic turnover threshold, while receiving specified services from a foreign online platform can trigger registration earlier.

Corporate Tax

Latvia’s standard corporate income tax model taxes profit when distributed or deemed distributed rather than as it is retained.

The standard rate is 20% applied to a grossed-up base. A €100 net dividend generally corresponds to a €125 tax base and €25 corporate tax—an effective 25% of the amount distributed to shareholders. Covered deemed distributions include certain non-business expenses, related-party items and loans.

Dividends paid from profit already subjected to this tax are generally exempt for an individual shareholder. From 2026, qualifying directly individual-owned companies may elect the alternative 15% corporate plus 6% shareholder PIT system described above.

VAT, payroll contributions, property tax and sectoral levies remain separate. Company investing should not be judged solely by tax deferral because extraction, administration and deemed-distribution rules matter.

Foreign Income and Double-Tax Treaties

Residents generally report foreign income even when retained abroad. Latvia’s treaties may limit source-country withholding or allow a Latvian foreign tax credit; VID provides official treaty and relief guidance. The credit is normally limited to Latvian tax on the same income and requires official evidence.

Foreign salary can also involve social-security coordination under EU/EEA rules or bilateral agreements. Remote work performed from Latvia may create Latvian payroll obligations for a foreign employer.

Filing and Payment

The individual tax year is the calendar year. A mandatory annual return is generally filed from 1 March to 1 June of the following year. Taxpayers with annual income above €105,300 and solidarity-tax cases generally file from 1 April to 1 July, as confirmed by VID’s annual-return guidance.

Voluntary returns for refunds may be submitted for the current filing year and the preceding three years. Separate capital-gains declarations follow the quarterly or 15 January schedule explained above.

Tax shown on the annual return is normally due by 23 June, or 23 July for the extended filing category, with instalment rules where the amount exceeds the statutory threshold. Check the assessment in EDS because filing and payment dates differ by return type.

Tax Advantages and Disadvantages

Advantages

• Registered investment accounts allow tax deferral until withdrawals exceed contributions.
• Corporate profit is generally untaxed while retained and reinvested.
• Many dividends are exempt after appropriate corporate-level tax.
• No separate inheritance tax or general net wealth tax.
• Fixed €550 monthly non-taxable minimum.
• Eurozone membership and electronic filing through EDS.

Disadvantages

• Ordinary capital gains and interest face 25.5% tax.
• Quarterly capital-gain reporting can apply outside investment accounts.
• The additional 3% tax has a broad base and can include exempt dividends.
• Foreign investment accounts require timely designation to obtain deferral.
• Self-employed contribution rules are more complex than a single headline rate.
• Municipal property-tax rates vary substantially.

Who May Find Latvia Suitable?

Latvia can suit long-term investors able to use a compliant investment account, entrepreneurs who retain and reinvest company profit, and residents receiving dividends that satisfy the corporate-tax exemption.

It is less attractive for investors earning substantial interest or realising frequent gains outside an investment account. The result depends heavily on account registration, dividend documentation and whether income enters the high-income surcharge base.

Related Finorum Guides and Calculators

• Investing in Latvia
• Latvia net salary calculator
• Latvia capital gains tax calculator
• ETF tax calculator
• Dividend tax calculator
• EU tax comparison map
• Cost of living comparison

Disclaimer

This guide is for general informational and educational purposes only. It is not tax, legal, accounting or investment advice. Latvian taxation depends on residence, income classification, account registration, dividend documentation and individual circumstances. Rules and administrative practice can change. Verify the current position with VID or a qualified Latvian tax adviser before filing or making an investment, relocation or business decision.

Sources & References

EU regulations & taxation

• Likumi.lv — Personal Income Tax law
• Vid.gov.lv — capital-assets guidance
• Latvia’s standard corporate income tax model
• Municipalities levy annual immovable property tax
• official treaty and relief guidance
• VID’s 2026 tax-change material
• VID’s current rate table

Additional educational resources

• Eds.vid.gov.lv — Electronic Declaration System
• Vid.gov.lv — capital return service
• official capital-income material
• official guidance on property-sale gains and acquisition cost
• Registered economic-activity profit
• standard contribution rates
• State Revenue Service (VID/SRS)
• VID’s annual-return guidance
• Vsaa.gov.lv — 2026 minimum base
• VSAA’s 2026 update
• VSAA’s official contribution guidance