Corporate income tax solutions in Latvia
Latvia’s Corporate Income Tax (CIT) regime has been reformed to support growth and reinvestment by taxing only distributed or non–business‐used profits. Our solutions are designed to help you navigate these regulations with expert consulting and accountancy services—ensuring you optimize your tax position while maintaining full compliance.
Our corporate income tax solutions
Our suite of consulting services is designed to support every aspect of your corporate income tax compliance and optimization:
Comprehensive CIT Consulting
Receive tailored advice on distribution strategies, tax planning, and regulatory compliance.
Regulatory complianc
Benefit from expert support in preparing and submitting CIT returns accurately and on time.
Tax planning
Optimize your tax position through careful review of tax credits, reliefs, and reinvestment policies.
Audit & documentation support
Ensure your accounting records and financial statements meet SRS requirements, reducing the risk of audits.
Corporate income tax in Latvia
Latvia’s CIT is governed by the Corporate Income Tax Law, which introduced a deferred taxation model effective from 2018. Under this model:
Deferred taxation
Instead of taxing annual profits, CIT is levied only when profits are distributed (such as dividends) or used for non–business purposes. Retained earnings remain untaxed, encouraging reinvestment in business growth.
Tax rate structure
When distributions occur, the taxable base is grossed up so that a standard rate of 20% is effectively applied. For example, net dividends are “grossed up” (dividing by 0.8) and taxed accordingly, ensuring that shareholders receive post–tax distributions.
Scope of taxpayers
Resident companies, partnerships that prepare annual accounts, and permanent establishments (PE) of non–resident entities are subject to CIT. Conversely, certain small individual enterprises and non–profit organizations (e.g., private pension funds, associations) are exempt from CIT under current rules.
This reformed model is designed to promote reinvestment and minimize cash flow disruption, and our consulting services help you adapt your business strategy to maximize these benefits.
Tax reduction
The current CIT law offers a range of reliefs designed to avoid double taxation and foster an investor-friendly environment:
Foreign tax credit
If your company has paid income tax in a foreign jurisdiction on profits later distributed in Latvia, you can reduce the CIT due by the amount of the foreign tax (subject to limitations).
Participation exemption
Dividends received from qualifying domestic or foreign subsidiaries are, in many cases, exempt from additional taxation, preventing the same profit from being taxed twice.
Capital gains relief
Recent amendments introduced an exemption for capital gains on the sale of shares held for a qualifying period, thus encouraging long-term investments.
Other incentives
Specific sectors, such as agriculture, benefit from additional base reductions on support payments, and charitable donations can lower the taxable amount.
Our expert advisors work with you to structure transactions and distributions to fully utilize these reliefs and credits.
Deadlines
Efficient compliance is critical, and the administration of CIT in Latvia now benefits from simplified, streamlined processes:
Filing requirements
When a taxable event occurs—such as a dividend payment—a CIT return must be submitted. Depending on your operations, this filing is done on a monthly or quarterly basis; if there are no taxable distributions in a month, filing may not be required (except for the final period of the financial year).
Payment deadlines
CIT payments are due by the 20th to 23rd day of the month following the taxable period, aligning with the unified tax account system managed by the State Revenue Service (SRS).
Adjustments and refunds
Any overpayments are automatically credited toward future liabilities, or they can be refunded upon request. Our consultants ensure that you meet all deadlines and manage corrections efficiently.
Get in touch
For expert assistance in managing Latvia’s Corporate Income Tax regime and to ensure your business leverages every available opportunity for tax optimization, contact us today. Our dedicated team is ready to provide personalized guidance, tailored strategies, and ongoing support to help your company thrive under the current CIT system.