Taxes in latvia
Along with tightening of regulations with respect to the offshore companies, entrepreneurs around the world have targeted their attention to the Baltic states with regards to more reliable options for tax optimization.
In accordance with the effective Corporate Income Tax Law shareholder's minimum holding of shares is not required as it happens in Malta, where the shareholder must have at least 10 % of the company shares.
Unlike most countries, the income originated from the sale of the company's shares is not considered as an income in Latvia, if it is owned by the shareholder within one year. This rule is making Latvia an attractive country for holding company structure creation, like Estonia, Cyprus and Malta.
Holding regime provides an exemption from Corporate Income Tax on dividends and capital gains, as well as relieves withholding tax on dividends paid to corporate shareholders. In other words, instead of paying 15 % personal income tax on capital gains after selling the asset, owner can pay 10 % as Corporate Income Tax, while receiving dividends.
General information on tax legislation in Latvia:
|
Minimum capital |
EUR 1 |
|
Corporate Income Tax |
15% |
|
Tax on capital gain |
15% |
|
Double taxation relief |
48 treaties |
|
Dividend tax |
0% (15% rate is applicable to all payments made to the offshore companies) |
|
Interest tax |
0% (15% rate is applicable to all payments made to the offshore companies) |
|
Royalties tax |
0%, excluding those paid to the offshore companies |
|
Capital tax |
No |
|
VAT |
Generally 21% |
|
Tax audit |
Annual report shall be audited, if only two of the following conditions are exceeded: a) total assets of at least EUR 355 718; b) net sales of at least EUR 711 436; c) average number of employees is at least 25 |
|
Transfer pricing rules |
In accordance with OECD regulations (transactions between related parties should be held consistent with market prices and turnover should not exceed EUR 1 million, otherwise additional reporting is required) |
|
Thin capitalization rules |
Are effective, but paying interest to credit institutions in EEA or to the countries, which have a tax treaty with Latvia, capitalization rules are not applicable |
|
Controlled foreign company rules |
No |
|
Advance payment of tax |
Permitted |
Representative Office can carry out the following non-income generating activities.
Latvian LLC (SIA) can be registered with the State Revenue Service as a micro-tax payer if it meets the following criteria... 
Holding company can be used as a key tool for increasing company’s tax efficiency and for more beneficial use of its assets. 
Latvian residence permit allows its holder to stay in Latvia without any term limitations – from 1 to 365 days. 
Taxes in latvia