If an individual resides
in Latvia for more than 183 days in any calendar
year, they are deemed resident for tax purposes.
A person may be regarded as a tax resident if they
own a home in Latvia as their main residence, regardless
of how many days they spend in Latvia in a year.
Residents of Latvia pay
income tax on income derived from within Latvia
and worldwide. Non-residents pay tax only on income
derived from within Latvia.
EU/EEA citizens may enter
Latvia freely to live and work. No work permit is
required. Those wishing to remain in Latvia for
more than 90 days must obtain a residence permit.
Non-EU/EEA citizens may first require a visa to
enter the country.
Cost
of Residence Document (approx)
Work
Permit Required
Work
Permit Authority
Fees for applying for a residence
permit vary. Additional fees apply with regard to
applications for other family members. Permits can
be obtained via the Office of Citizenship and Migration
Affairs.
A Work Permit is usually issued as
a combined permit with the residence permit. Conditions
will generally be more stringent for non-EU/EEA
citizens.
Individuals can apply at the Office
of Citizenship and Migration Affairs, which also
issues residency permits.
Personal
Income Tax
Corporate
Income Tax
Social
Taxes
Personal Income Tax is levied at
several rates – 26% (from January 2010, increased
from 23% previously) for employment and self-employment
(business) income, 15% on capital gains, and 10%
on income from dividends, interest, private pension
fund contributions, and income from life insurance
contracts. From January 2010, a new ‘patent
fee’ regime (covering personal income tax
and social security liability) has been introduced
for those in certain professions, including craftspeople,
photographers, and housekeepers. Tax of between
LVL30 and LVL120 is payable monthly.
Corporate Income Tax is levied at
a flat rate of 15% on taxable profits and payments
are required to be made in advance. Dividends are
exempt from tax if received from companies within
the EU/EEA, otherwise they face a 10% withholding
tax.
Employers and employees are obliged
by law to make Social Security contributions. The
current rate is 33.09%, of which the employer pays
24.9% and 9% by the employee. Contributions for
pensions are a mandatory 28.3%, of which 20.6% is
payable by the employer and 7.7% by the employee.
Capital
Gains Tax
Property
or Wealth Tax
Stamp
Duty
Capital gains, where they relate
to the sale of shares and other types of securities,
bonds, returns from intellectual property, and to
real estate, are taxed at a rate of 15%, from January
2010. On gains relating to the return of capital
(from example dividend and interest income, and
income from private pension funds and certain life
insurance contracts), a 10% tax is imposed.
There is no Wealth Tax in Latvia.
Real estate tax on residential property is imposed
progressively at 0.1%-0.3%, based on the cadastral
value of the property. For land and other buildings,
the rate is 1.5% of cadastral value, and for uncultivated
land, it increases to 3%. A 2% tax is also imposed
on profits from the sale of a property (excluding
an individual’s main residence).
Stamp duty, capped at LVL30,000,
is imposed on property transactions at 2% of the
higher of the sales price or the cadastral value
of real property.
Other
Taxes
The standard rate of VAT is 21%.
A reduced rate of 10% applies to certain supplies
and services, including medical products and gas
and electricity supplies. There is no Inheritance
Tax in Latvia. Withholding tax is charged on dividends
(at 10%, except for payments to connected EU corporate
recipients, which are exempt, subject to a 10% minimum
shareholding threshold), management fees (at 10%),
interest (at 10%, or 5% on bank interest), royalties
(at 5%, unless the payments are domestic, in which
case they are exempt, or relating to copyright on
books and artworks, in which case the rate is 15%)
and rental receipts (at 5%).
I am facing a dilemma and would like to invite any reader to advise me.
I am a Brit who has lived outside UK since 1993- initially in Belgium (5 years) & subsequently in 4 African countries. After a year outside UK, the UK Inland Revenue confirmed my status as ‘non-resident’ for tax purposes and as I have had no income in UK, I have not completed a UK tax return for many years. I visit UK very rarely, normally for one or two weeks per year.
In May 2011, I was made redundent by my employers, who were downsizing. This coincided with a move to retire in the Netherlands, where I now have official residency (my wife is Dutch). I thought that, at 63 years of age, I would be unlikely to find suitable employment; in fact, I have not tried hard and had resigned myself to permanent (but slightly premature) retirement.
However, to my surprise, I have recently been approached (through a mutual acquaintance) by a company that wishes to use my skills on a project in the Isle of Man. The role, if & when confirmed, would see me working for about 10 days a month in Isle of Man, with about 5-7 additional days per month, working from home. Contract will be for about two years. The firm has asked me to confirm if I would prefer to be paid (and therefore be taxed) in Netherlands or Isle of Man, the idea being that I create a self-employment entity for this employment. I have no data on which to base a response. Given Isle of Man's traditional ‘low tax ‘environment, are there any benefits to declaring an income in IOM? Are there any Isle of Man residency implications? Netherlands takes a tax cut on total world wide income, and, as I have never had any contact with the Dutch authorities, I am reluctant to start such a relationship now. Do I have to declare income in both countries, with a breakdown prorata to the time spent in each jurisdiction? Should I declare income to UK Inland revenue?
If anyone has pertinent advice on these points, I’d be grateful to hear them.
Just wondering if anyone 'on the ground', as it were, might be reading and able to help me...I was considering relocating my hairdressing business from the UK to Ireland before the economy started to go properly belly-up...now, not so much.
Are things as bad as they seem over there, or is it being over-hyped by the media? And is the government still keen to support small business people? Cos if not, I'll look elsewhere...
Hi, I live in South Africa, and along with 2 business partners (one in South Africa and one in Ireland - all South African citizens though) are setting up a company that designs Smart phone applications. As they will be sold on the various platforms (none of which operate out of South Africa)we have to list our company as operating out of Ireland anyway. As such, we have decided to set up our company in the best tax country and are wanting info on whether Jersey or Malta is best? If anyone has some inside info we would really appreciate it!! Thanks!Mary
I am moving full time to France in Jan 2012 where I will be working as a freelance contract engineer to a number of Australian based companies. It is my choice to move to France not a work requirement. I will be renting my house out in Austrlalia and renting a house while I am in France. I hold both EU & Austrlain citizenshiip. I am married with 2 young children. Approx total family income $100k AUD. Do I pay tax in France or Australia or both ? Any help or guidance would be much appreciated.France move
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