Corporate income tax in Latvia
In Latvia corporate income tax is paid by domestic companies – residents, non-residents and permanent representative offices of non-residents that perform economic activity in the country.
Taxable objects in Latvia
Corporate income tax in Latvia is applied to the profit or loss, which is calculated according to the taxpayer’s financial accounting data and adjusted according to the Corporate Income Tax Law.
In general, all types of income are included in the taxable income consisting of:
- income earned in Latvia or abroad (for residents);
- certain types of income earned in Latvia and listed in the Corporate Income Tax Law (for non-residents);
- income earned in Latvia from performing commercial activities (for permanent representative offices of non-residents).
Tax rate and taxation on dividends in Latvia
The flat corporate income tax rate in Latvia is 15% of the taxable income. Payments of dividends between domestic companies are not subject to corporate income tax. Dividends paid to a legal entity – a resident of a European Union member state or a resident of the European Economic Area – are exempt from taxation. Dividends paid to a legal entity outside the European Union or the European Economic Area, are subject to a 10% tax payable at the time of their payment. Dividends paid to low-tax countries are subject to 15% or 30% tax in case of emergency dividends.
Taxation of income of non-residents
Corporate income tax in Latvia is applied to the following payments to legal entities – non-residents, if they do not have a permanent representative office in Latvia, in accordance with tax rates stipulated in the Corporate Income Tax Law:
- management and consulting services – 10%;
- income from investments in a partnership – 15%;
- interest, if the persons paying and receiving the interest are interconnected – 5 or 10%;
- income from intellectual property – 10% or 15%;
- compensation for the use of property located in Latvia– 5%;
- compensation for expropriation of property located in Latvia– 2%;
- payments to persons located in low-tax or tax-free countries or territories – 15%.
To find out more about corporate income tax in Latvia, please contact our lawyers at firstname.lastname@example.org.
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