Tax rates in Latvia
Latvia offers a stable and structured tax system that affects businesses, employees, investors, and property owners alike. Whether you’re launching a company, expanding into Latvia, or managing your personal finances, understanding the local tax environment is crucial for staying compliant and financially efficient.
Below is a complete overview of the main taxes applicable in Latvia, including corporate and personal income taxes, VAT, social contributions, and other sector-specific taxes.
| Tax Type | Rate | Details |
|---|---|---|
| Value Added Tax (VAT) | Standard: 21% Reduced: 12%, 5%, 0% |
Standard rate applies to most goods/services. Reduced rates apply to food, books, passenger transport, heating, and certain cultural products. |
| Corporate Income Tax (CIT) | 20% on distributed profits (25% effective) |
Applied only on distributed profits. Undistributed profits are not taxed. Encourages reinvestment into the business. |
| Micro-enterprise Tax (MET) | 25% (on turnover) | Available to individual business owners and small entities with annual turnover below €50,000. Includes PIT and social contributions for the owner. |
| Personal Income Tax (PIT) | 25.5% up to €105,300 33% above +3% above €200,000 |
Progressive rates. Applies to total annual income. A 3% surcharge applies to high earners. |
| Dividend Tax | 0% – 25.5% | 0% if paid from already taxed profits. 25.5% applies otherwise. Surcharge may apply to high-income individuals. |
| Social Security Contributions | Employer: 23.59% Employee: 10.5% |
Applies up to a capped annual income level. Self-employed pay 31.07%. |
| Real Property Tax | 0.2% – 3% | Depends on property type, cadastral value, and municipal rates. |
| Solidarity Tax | 25% (on income above contribution cap) | Applies to income exceeding the maximum amount subject to social insurance. |
| Excise Duties | Varies by product | Applied to alcohol, tobacco, fuel, sugary drinks, natural gas, and certain goods based on environmental impact. |
| Gambling Tax | 15% (for lotteries) Higher for others |
Includes re-registration fees for licenses. Rates vary by game type. |
| Vehicle Tax | Varies by engine, emissions, and weight | Includes a 10% increase. Company car tax is also applied based on emissions and engine size. |
| Natural Resource Tax | From €0.9/GJ | Applies to fossil fuels like coal, lignite, and petroleum used in energy production. |
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