Date de publication : 06-10-1907
The following information are for the sole purpose of providing a general overview of the local taxation of the Corporate tax aspects of the country. In any case, it can not replace a tax advice, or be considered as an official information.
Yes we tax in Latvia
New tax reform: No specific information
New tax treaties:
- Protocol of the tax treaty between Latvia and Singapore is signed.
Local tax advisors
No specific information on the local tax advisors.
The definition of Permanent Establishment follows the wording of article 5 of the OECD Model:
- Dependent agent who habitually concludes contracts in the name of a non-resident company (except is the activity is limited to purchase of goods);
- Fixed place of business, building site, construction, assembly or installation and any related supervisory activity, for a period of 30 days.
Resident companies are taxed on their worldwide income.
The definition of resident company for tax purposes, corresponds to the definition of the OECD Model Convention. As per article 4 of the OECD Model Tax Convention, a person is treated as resident of a contracting state if he is liable to tax in such a country by virtue of his domicile, residence or place of management or any other similar criterion.
Entities are considered to be resident for tax purposes in Latvia if their place of management & control is in Latvia.
Note: the definitions of permanent establishment and place of residence are subject to the relevant provisions of any applicable double tax treaty, if any.
Corporate Income Tax
The general CIT tax rate is 15%.
Non-taxable income includes the following:
- Domestic and foreign dividends
Non-deductible expenses includes the following:
- Dividends benefiting from the participation exemption
- Interest in excess of the thin-capitalization threshold
- Fines and penalties
Carry forward : Yes indefinitely, but some restrictions may apply
Carry back: No
Companies should submit the tax return annually.
Annual tax returns are established by the company on a self-assessment system.
Companies shall pay monthly advance payments before the 15th day of each month.
Whithholding Taxes (payment to foreign companies)
The local tax rates in Latvia are the following, subject to the provisions of an applicable double tax treaty, if any.
There is no WHT on the profits paid from a branch to its foreign head office.
The general rate of WHT on dividends is 0%.
The general rate of WHT on interest is 0%.
The general rate of WHT on Royalties is 0%.
The general rate of WHT on management fees is 10%.
The general rate of WHT on technical services is 0%.
Capital gains are taxed as general income under the regular CIT.
Standard VAT tax rate is 21%
Reduced tax rate is 12% (among others, medical supplies, educational literature, newspapers,…);
Zero-rated supplies include, subject to certain conditions:
- exports of goods and services;
- intra-Community supplies of goods;
- supplies of international transport of passengers in EU member states;
Exempt supplies include, subject to certain conditions:
- Financial services
- Insurance services;
- Training and education
- Postal services
Note: exempt transactions differ from zero-rated transactions in that the input VAT associated with exempt transactions is not deductible.
EU taxable companies may claim a VAT refund to their own tax authorities through on the basis of the 13th EU Directive.
Certain non-resident companies (which are not required to register and incur Latvia VAT in the course of their business activities in Latvia) may apply for a refund.
Refunds are subject to the reciprocity principle, which means that Latvia only refunds VAT to foreign companies in countries that offer similar refunds to Latvia companies.
No other specific information of VAT in Latvia.
The general statute of limitation is 3 years starting at the end of the year in which the tax return had to be filed.
There is no foreign exchange control in Latvia. Income and capital can be freely repatriated.
There are thin capitalization rules in Latvia. The interests derived from loans between related parties may not be deductible in case where interest exceeds some ratios.
Do not hesitate to share your experience in Latvia with us in the comments below. Any comments are welcome !
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