SRS Income Tax Brackets in Latvia for 2024

With a skilled talent pool, developed infrastructure, and a cost-effective business landscape, Latvia has been creating the optimal environment for innovation and long-term investments in the country. Latvia’s tax system has been recognised as the second most competitive in the world according to the International Tax Competitiveness Index 2023. The tax system in Latvia is administered by the official tax body, the State Revenue Service (Valsts ieņēmumu dienests) (SRS) in Latvia.

The Main Tax Law provides guidance and support in the form of income tax tables for individuals and businesses. Taxpayers must familiarize themselves with these income tax tables and the corresponding income tax brackets and income tax rates, for effective tax planning and to remain compliant with the tax laws of Latvia.

Here you will learn more about:

• headline tax rates
• personal income tax (PIT) rates
• corporate income tax (CIT) rates
• micro-business tax (MBT) rates
• capital gains tax (CGT) rates
• withholding tax rates for residents and non-residents
• value-added tax (VAT) rates

Headline Tax Rates in Latvia

Personal Income Tax (PIT) Brackets for Individuals in Latvia for 2024

The tax base for individuals is annual taxable income and income from business activities. A progressive personal income tax (PIT) rate is applied. An individual who decides to begin commercial activities must register with the SRS as a taxpayer and indicate their area of intended business activities. 

Applicable tax payment regimes include: 

• tax on business income – the PIT rate on this income is calculated as the difference between revenue and expenses and the tax rates are tabulated below
• reduced patent fees for specific activities
• micro-enterprise tax – this includes contributions to MSSIC (Mandatory State Social Insurance Contributions) and PIT
• notified unregistrable commercial activities.

Personal Income Tax Due Dates

Corporate Income Tax (CIT) Rates in Latvia for 2024

All undistributed corporate profits are regarded as exempt from corporate income tax (CIT). This exemption covers active and passive types of income and includes capital gains on the sale of all types of assets. This applies to Latvian-resident companies and non-resident companies with permanent establishments (PEs) registered in Latvia.

The CIT rate is 20% and applies to the taxable base. However, this must be divided by a coefficient of 0.8 before the statutory rate is applied which makes the effective CIT rate 25%. 

Micro-Business Tax (MBT)

Certain individuals who are not registered for value-added tax (VAT) may choose to become micro-business tax (MBT) payers instead. This applies to a sole trader, an individual undertaking, and a farm or fishery operation. 

The MBT rate is set at 25%.

Corporate Income Tax Due Dates

Capital Gains Tax (CGT) in Latvia

The headline Capital Gains Tax (CGT) rates are tabulated below:

Withholding Tax Rates for Residents and Non-Residents in Latvia

In general, withholding tax (WHT) applies to residents and non-residents in Latvia. Certain types of payments are subject to WHT including management and consulting fees, disposal of real estate, rent of real estate, dividends, and interest and royalties.

Payments made to companies which are located in tax havens, of which there are 12 jurisdictions, are subject to WHT. Payments to residents of double taxation treaty (DTT) countries are not subject to WHT provided that the non-resident does not have a PE in Latvia and can provide a residence certificate.

Value-Added Tax Rates in Latvia

The Value-Added Tax rates in Latvia are tabulated below: