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COUNTRY TRADING PROFILES
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Taxes - Accounting
Tax Rates |
Accounting Rules
Tax Rates
Consumption taxes
- Nature of the tax
-
Value added tax - PVN - Pievienotas Vertibas Nodokli (in Latvian).
- Tax rate
- 22%
- Reduced tax rate
- Latvia apply a reduced VAT rate of 12% on certain categories of goods and services, including foodstuffs, water supplies, medical products, medical equipment for disabled persons, books, newspapers, hotel accommodation…
Educational services, medical services, cultural services, lotteries and gambling, financial services provided by banks and insurance companies, gifts and donations for humanitarian aims are exempt from VAT.
- Other consumption taxes
- Excise duty is imposed on oil products, alcoholic and non-alcoholic beverages, tobacco products and coffee. To get further information on VAT rates according to the type of product, please check the list of VAT rates applied within the European Union. More detailed information on excise duties in the EU is available concerning alcoholic beverages, energy products and electricity, tobacco products, (PDF format)
Corporate taxes
Tax rate
- Capital gains taxation
- Capital gains are taxable as ordinary income.
- Main allowable deductions and tax credit
- Deductions are possible for depreciation; dividends; payment to foreign affiliates; payments to company directors and managers; revenue from sale of real estate in Latvia; rental of real estate etc. For further information about tax deductions in Latvia, please visit VID.
- Other corporate taxes
- Other corporate taxes include: real estate tax, natural resouce tax, lottery and gambling tax, car and motorcycle tax, electricity tax, stamp duty, local duties, social security contributions. For further information about other company taxes, consult VID.
Individual taxes
Tax rate
| Personal income tax |
3 flat rates : 26% for employment income (including on operating activities), 10 % on income from capital that is other than capital gain, 15 % on capital gain. |
- Allowable deductions and tax credit
- Are exempt:
- income from investments in private pension funds and insurance indemnities,
- gain on the sale of personal property.
- Special expatriate tax regime
- Expats are responsible for tax in Latvia according to their residence for tax purposes.
Double taxation treaties
- Countries with whom a double taxation treaty have been signed
- See the list of the conventions signed
- Withholding taxes
- Dividends: 0%, Interest: 5/10%, Royalties: 5/15%
- Bilateral agreement
-
 We can indicate you which local taxes are applied to your product.
Accounting Rules
- Tax year
- The fiscal year begins on 1 January and ends on 31 December of the same year.
- Accounting standards
- Since 1 January 2005, all consolidated accounts must be drawn up in conformity with European accounting standards IAS/IFRS.
- Accounting regulation bodies
-
Ministry of Finance, Acounting Council
- Accounting reports
- A company's accounts must clearly reflect its operations and its financial results and give a precise and faithful picture of its financial situation.
Amounts are given in Latvian currency. The documents are in Latvian. If a member of a company is not a natural person or a legal entitiy of the country (registered company), it is possible, with the agreement of the parties concerned, to use a second language, that the auditors deem to be acceptable. The accounting documents and the supporting documents that accompany them must remain on Latvian territory. Any accounting entry must be supported by an appropriate document. The accounting year spreads over 12 months. It corresponds to the civil year, but the shareholders can choose other dates. Companies that form a group must have identical accounting years. This year can be modified, but the modification must be justified and explained in the notes attached to the annual report. A company's financial statements must include a balance sheet, a profit and loss account, notes to the accounts and an annual report.
- Publication requirements
- In the event that the company exceeds two of the criteria listed below, the annual reports must be audited by a certified auditor or by a firm of certified (sworn) auditors, duly elected by the shareholders:
- Total assets: LVL 250,000 (EUR 356,000);
- Net turnover: LVL 500,000 (EUR 711,000);
- Average number of employees in the reporting year: 25 Moreover, the European Directive of 19 July 2002 obliges all European companies listed on the Stock Exchange to establish their consolidated annual accounts on the basis of IAS/IFRS.
- Professional accountancy bodies
-
LACA
- Certification and auditing
- If two of the indicators below go over the indicated amounts, the annual report must be examined by an auditor or by an officially designated accounting audit body, chosen by the shareholders:
- total capital: LVL 100,000 (EUR 170,000)
- net turnover: LVL 200,000 (EUR 340,000)
- average number of workers during the accounting year: 25.
You can contact an extenal auditor in the list below:
KPMG, Deloitte, Ernst & Young, PricewaterhouseCoopers, Leinonen.
- Accounting news
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LACA News
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Last updates: May 2012
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