Taxes in Latvia in 2026: salary tax and rules for foreigners

Latvia tax rates in 2026: at a glance

Latvia takes more from an ordinary salary than its Baltic neighbours: 25.5% income tax against 22% in Estonia and 20% in Lithuania. Yet profit a company keeps in the business is not taxed at all, just as in Estonia. Corporate tax only appears when dividends are paid.

The big shift came in 2025. The three brackets of 20%, 23% and 31% were replaced by two: 25.5% on income up to EUR 105,300 a year and 33% above it, with an extra 3% on income over EUR 200,000. In exchange, Latvia introduced a flat tax-free allowance: EUR 510 a month in 2025 and EUR 550 in 2026. Latvia has used the euro since 2014, so every amount below is in euros.

Taxes are run by the State Revenue Service (Valsts ieņēmumu dienests, VID). Returns go through its Electronic Declaration System (Elektroniskās deklarēšanas sistēma, EDS), and almost every payment goes to a single tax account (vienotais nodokļu konts).

For a Europe-wide comparison, see our overview of taxes by country.

Compare taxes in 146 countries: relocation taxes 2026

Who is a tax resident of Latvia

It is possible to become a Latvian tax resident without spending a single day in the country: registering a declared place of residence is enough. That is the first of three tests in Section 14 of the Law on Taxes and Fees (likums "Par nodokļiem un nodevām"), and it applies regardless of day count.

Residence under the 183-day test does not start on day 184. It applies retroactively from the date of first arrival in Latvia in that tax year.

Residents pay income tax on worldwide income: salary from a foreign employer, dividends, interest, gains on shares and crypto. Non-residents pay only on Latvian-source income.

A residence permit is not tax residence, but it comes with an address

A residence permit (uzturēšanās atļauja) does not by itself create tax residence. However, under the Declaration of Residence Law (Dzīvesvietas deklarēšanas likums), a foreign national holding a Latvian residence permit must declare a place of residence, and a permit application that includes an address counts as that declaration. In practice, most permit holders therefore meet the first test even if they spend fewer than 183 days a year in Latvia.

For anyone treating a permit as a back-up plan, this means VID can expect a return on worldwide income. If life is centred in a country that has a double tax treaty with Latvia, the treaty rules decide. More on counting days in our guide to the 183-day rule.

When both countries claim residence, a treaty applies tie-breakers in order: permanent home, centre of vital interests, habitual abode, citizenship. Without a treaty, as with Russia since 2024, dual residence is possible.

Tax issues for holders of a Latvian permit through company investment are covered on the Latvia investor residence permit page, and for those with Latvian roots in Latvian citizenship by repatriation.

Latvia tax residency: how to become a resident and count the days

You can become a Latvian tax resident without spending a single day there: declaring a place of residence is enough. The second route is 183 days or more in any 12 months that start or end in the tax year.

The window rolls, so an autumn and a spring in Riga can give residency for two years. A resident pays progressive income tax on worldwide income, a non-resident only on Latvian income. The status is confirmed by a State Revenue Service certificate.

The law does not stop you from confirming the status on your own. But mistakes cost more: a declared address forgotten after leaving. Murblz support removes these risks: we check the address and days, and handle the exit from residency or the certificate. We guarantee professional work and a transparent process, and in most cases a result on the first filing.

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What is the income tax rate in Latvia in 2026

Since 1 January 2025, Latvian salaries are taxed at 25.5% from the first euro above the tax-free allowance, and income above EUR 105,300 a year at 33%. Employers withhold exactly 25.5% every month; the top-up to 33% is settled in the annual return.

The highest earners face a third step: 3% on the part of annual income above EUR 200,000 (Section 15.1 of the Law on Personal Income Tax, likums "Par iedzīvotāju ienākuma nodokli"). The base for this 3% includes dividends from Latvian companies, even though those dividends are not subject to income tax on their own. Royalties under the special regime and micro-enterprise turnover are excluded.

Tax-free allowance and reliefs

The tax-free allowance (neapliekamais minimums) is the part of income that is not taxed. Since 2025 it is the same for everyone, whatever the salary: EUR 550 a month, or EUR 6,600 a year, in 2026. The law already sets EUR 570 a month for 2027.

Reliefs are applied only by the employer holding the employee's electronic tax book (algas nodokļa grāmatiņa) in EDS.

Education and medical expenses are refunded through the annual return: the EUR 600 maximum per person returns EUR 153, or 25.5%.

Inheritance is not subject to income tax, and neither are gifts from a spouse or relatives up to the third degree. Gifts from others are taxed on the part above EUR 1,425 a year.

Salary tax in Latvia: social contributions and a worked example

From a EUR 2,000 salary in Latvia, about EUR 1,474 reaches the employee, while the company pays almost EUR 2,472 for that job. The gap goes into two streams, income tax and social contributions (VSAOI), and the contributions weigh more than the tax.

Contributions are charged on salary up to EUR 105,300 a year. Income above that is subject to the solidarity tax (solidaritātes nodoklis) of 25% under its own law. During the year the employer keeps withholding the full 34.09%, and VID refunds the excess over 25% by 1 September of the following year.

Employers also pay two smaller charges. One is the business risk state duty (uzņēmējdarbības riska valsts nodeva): EUR 0.36 a month per employee. The other is the minimum contribution rule: employers pay contributions on at least the minimum wage, EUR 780 a month or EUR 2,340 a quarter, even for a part-time employee. There are exceptions, such as pensioners and full-time students under 24.

Worked example: EUR 2,000 gross salary a month

Example calculation for a resident without dependants, tax book held by this employer, 2026.

The tax wedge in this example is about 40%: of the EUR 2,472 the company spends, the employee receives EUR 1,474. With one dependant, the base falls by another EUR 250 and net pay rises to EUR 1,537.55.

The average-wage line matches official statistics: according to the Central Statistical Bureau (Centrālā statistikas pārvalde, CSP), the average gross wage in Q2 2026 was EUR 1,886 and the average net wage EUR 1,401.

Corporate tax and dividends in Latvia

A Latvian company can earn profit for years without paying any corporate tax, as long as it does not take the money out. Since 1 January 2018, corporate income tax (UIN) is charged only on distributions: dividends and expenses the law treats as hidden profit distributions.

The rate is 20%, but it applies to the pre-tax amount, not the dividend: the payout is divided by a coefficient of 0.8. In practice, from EUR 100 of profit the owner receives EUR 80 in dividends and EUR 20 goes to the budget. Relative to the dividend, that is 25%. An individual pays no further income tax on such dividends.

What counts as a profit distribution

Corporate tax is not triggered by dividends alone. The base also includes non-business expenses, bad debts, interest above the permitted limit, loans to related parties and transfer pricing adjustments (pricing in deals between related companies).

New dividend regime from 2026

On 3 December 2025, the Saeima, Latvia's parliament, adopted amendments that from 1 January 2026 give a choice to companies whose shareholders are all individuals. Instead of the standard scheme, they can pay 15% corporate tax (base divided by 0.85) and withhold 6% income tax from the dividend.

For the owner, the difference is 10 cents per EUR 100. The point of the reform lies elsewhere: according to the Saeima, part of the tax now goes to the municipality where the investor lives or the company is registered. The new regime brings no cash gain, and it is unavailable if even one shareholder is a legal entity.

Banks face tougher rules: since 2024 they pay 20% on profit every year, regardless of distribution.

Latvia and its neighbours: rates compared

Estonia's model resembles Latvia's: 22% on distributed profit, on a 22/78 base. Lithuania taxes profit as it is earned, at 17% from 2026. If the plan is to keep profit in the company and reinvest, Latvia and Estonia come out ahead. Murblz specialists can register a company in Latvia: see company registration in Latvia.

What is the VAT rate in Latvia and when to register

Latvia's standard VAT rate is 21%, 3 percentage points below Estonia's after its rise to 24% in July 2025. The headline change of 2026 is food: from 1 July, bread, milk, fresh poultry and eggs moved from 21% to 12%.

Since 1 January 2026, the 5% rate on books and press depends on language. Russian-language publications no longer qualify and are taxed at 21%, while Ukrainian ones, in the language of an EU candidate country, stay at 5%.

The 12% rate on bread, milk, poultry and eggs is a trial running until 30 June 2027. Frozen poultry and UHT or condensed milk are excluded.

When VAT registration is required

The threshold is EUR 50,000 of turnover per calendar year. Since 2025 it is counted from 1 January to 31 December rather than over a rolling 12 months, and it includes some exempt supplies: insurance, financial services, sales of real estate and residential letting.

The last three rows are a common trap for freelancers: invoicing a client in Germany requires registration even with a turnover of a few thousand euros.

VAT returns are due by the 20th after the reporting period, with payment by the 23rd. A micro-enterprise taxpayer who registers for VAT loses the regime from the following year.

Taxes for sole traders, the self-employed, startups and remote workers

Latvia's simplest tax regime is the micro-enterprise tax: 25% of turnover, with no deduction for expenses and no separate social contributions. It is open only to individuals in business; a limited liability company (sabiedrība ar ierobežotu atbildību, SIA, the Latvian private limited company) cannot use it.

How the micro-enterprise tax works

Of the 25% of turnover, the state counts 80% as social contributions and 20% as income tax. Returns are filed quarterly, by the 15th of the month after the quarter, with payment by the 23rd.

Expenses are not deducted, so the regime pays off only when they are low. It is lost above EUR 50,000 and on VAT registration.

Self-employed and freelancers

A self-employed person (pašnodarbinātais) under the general regime pays income tax on profit, meaning income less documented expenses, at the same 25.5% and 33% rates. Contributions depend on income. If monthly income is at least the minimum wage (EUR 780), the self-employed person pays 31.07% on a base of at least EUR 780, plus 10% for pension insurance on income above the chosen base. Below EUR 780, only the 10% pension contribution applies.

Amendments adopted on 16 April 2026 scrapped minimum contributions for the self-employed retroactively from 1 January 2026.

Startups and remote workers

The Startup Support Law (Jaunuzņēmumu darbības atbalsta likums) allows a company that has received at least EUR 30,000 (EUR 15,000 in some cases) from a qualified venture investor in the previous 24 months to make a fixed payment per employee: contributions calculated on two minimum wages. By our calculation for 2026, that is EUR 1,560 at the 34.09% rate, or EUR 531.80 a month, whatever the actual salary.

A foreign national with a long-stay visa for remote work can opt for a 15% rate on income from an employer, or from their own business, registered in an OECD country, for 365 days after becoming a Latvian resident. The Saeima adopted the amendment on 15 June 2023, and it applies to income earned from 1 January 2023. The visa is closed to Russian citizens: since September 2022 the Immigration Law (Imigrācijas likums) bars issuing it to them. With a second citizenship we check before filing whether Latvia counts every passport; without one, the nomad visa matcher shows countries open to Russians.

What changes in 2027

On 17 September 2026, the Saeima adopted in the final reading a starter micro-enterprise tax (iesācēju mikrouzņēmumu nodoklis): 10% of turnover up to EUR 12,000 a year for those who sell goods or services only to private individuals, hire no staff and run no other business. It takes effect on 1 April 2027. Murblz specialists can open a business account in Latvia: see business accounts in Latvia.

Property, car, inheritance and crypto taxes in Latvia

A single residence registration can cut the tax on a Riga flat several times over, almost sixfold in the example below. If at least one person has declared residence in the home on 1 January, Riga charges 0.2-0.6% of cadastral value; if not, 1.5%.

Real estate tax

Real estate tax (NĪN) is based on cadastral value set by the state, not market price. The municipality sets the rate between 0.2% and 3%; anything above 1.5% applies only to property that is not properly maintained. If a municipality has not published its own rules, the statutory rate for housing applies: 0.2% up to EUR 56,915 of cadastral value, 0.4% on the part from EUR 56,915 to EUR 106,715 and 0.6% above.

The tax is paid in four instalments, by 31 March, 15 May, 15 August and 15 November, or in one payment for the year.

Buying and selling property

There is no purchase tax, but registering ownership in the Land Register (zemesgrāmata), the state property register, carries a state duty.

On a sale, 25.5% tax is due on the gain: sale price minus purchase price and improvements. There is no tax in three cases: the property was owned for more than 60 months and was the seller's declared residence for at least 12 consecutive months up to the sale; or it was owned for more than 60 months and was the seller's only property throughout; or proceeds from selling the only property are reinvested in property with the same function within 12 months before or after the sale. Murblz specialists can help find property in Latvia: see investment property in Latvia.

Car, inheritance and crypto

Vehicle operation tax (transportlīdzekļa ekspluatācijas nodoklis) for cars first registered after 2020 depends on CO2 emissions: from EUR 0 a year at up to 50 g/km to EUR 834 at 401 g/km or more. Companies pay a separate tax on passenger cars (uzņēmumu vieglo transportlīdzekļu nodoklis): EUR 33 a month for a car up to 110 kW, more above that, and EUR 15 for an electric car.

Latvia has no inheritance tax, and inheritance is not subject to income tax. The notary charges a fee for the certificate of inheritance under Cabinet Regulation No. 737: from EUR 39 plus 0.25% of the value above EUR 11,383 for a spouse and heirs who lived with the deceased, up to EUR 87 plus 7.5% of the value above EUR 854 for other heirs outside the four classes of relatives.

Gains on crypto are taxed as capital gains, at 25.5%. Latvia has no wealth tax.

Taxes for non-residents and withholding tax in Latvia

A foreign company can receive dividends, interest and royalties from Latvia without a cent of withholding tax. There is one important exception: if the recipient is registered in a country on Latvia's list of low-tax and no-tax jurisdictions, 20% is withheld, and Russia is on that list.

Non-residents pay tax only on Latvian-source income: local salary, rent, property sales and business income.

Salary of a non-resident

The employer withholds 25.5% from salary for work in Latvia. If the employee stays covered by another country's social insurance, VID explains that 33% applies straight away to the part of monthly salary above EUR 8,775 (one twelfth of EUR 105,300), and such a non-resident need not file a return.

Property sales by non-residents

The procedure depends on the buyer. If a company or a business buys, it withholds 3% of the price and pays it to the budget. If a private individual without a business buys, the non-resident seller calculates 25.5% tax on the gain and files a capital gains return by the 15th of the month after the month the money was received.

Residents of other EU and European Economic Area countries are exempt if they owned the property for more than 60 months and it was their only property for the whole of the last 60 months.

Murblz specialists can open a personal account in Latvia to receive rent or dividends: see personal accounts in Latvia.

Does Latvia have a double tax treaty with Russia

No. The double tax treaty between Latvia and Russia no longer exists: Latvia suspended it in May 2022, Russia denounced it, and the treaty ceased to apply on 1 January 2024. A terminated treaty cannot be revived; a new one would be needed.

What this means in practice

Dual residence is possible. The rules that settled residence disputes for those with homes in both countries are gone. Russia and Latvia each apply their own tests, and both may demand tax on worldwide income.

Payments to Russian companies face 20%. Russia is on Latvia's list of low-tax and no-tax jurisdictions, which follows the EU list. Dividends, interest, royalties and service fees paid to Russian companies are subject to 20% withholding tax.

A Russian company's profit can be taxed in Latvia without any dividend. If a Latvian tax resident directly or indirectly owns at least 25% of a company on that list, a proportional share of its profit is added to the resident's income every year, even if nothing is distributed (Section 17.3 of the Law on Personal Income Tax). The stake must be reported in an annex to the annual return. Murblz specialists handle controlled foreign company filings: see CFC reporting.

Russian tax can be credited, but only with paperwork. The law allows Latvian tax to be reduced by tax paid abroad if this is confirmed by documents from the foreign tax authority showing the income and the tax paid (Section 24). Without a treaty, this is the only protection against double tax.

Which treaties are in force

Latvia's Ministry of Finance lists more than 60 tax treaties in force. They include Ukraine, Kazakhstan, Uzbekistan, Kyrgyzstan, Tajikistan, Turkmenistan, Georgia, Armenia, Azerbaijan, Moldova, Israel, the UAE, the US, the UK and almost every EU country.

The treaty with Belarus formally remains in force, but from 1 June 2024 Belarus unilaterally suspended relief on dividends, interest and capital gains that Latvian residents receive in Belarus.

Deadlines, penalties and what Latvian taxes mean for relocation

The key date in Latvia's tax calendar is the 23rd: almost every tax for the previous month is due by then. Late payment costs 0.05% of the debt per day, about 18% a year (Section 29 of the Law on Taxes and Fees).

An annual return is mandatory for the self-employed, business owners, landlords, recipients of foreign income and anyone whose annual income exceeded EUR 105,300. Others file voluntarily to reclaim tax. VID can generally review a return within three years of the payment deadline.

What Latvian taxes mean for relocation

A good fit for company owners who reinvest profit: while money stays in the business, there is no corporate tax. For pensioners: the tax-free allowance on pensions is EUR 1,000 a month. For remote workers from countries whose citizens can obtain a remote work visa: a year at 15%. For families with children: a EUR 250 allowance per dependant.

A poor fit for high earners: 25.5% from the first euro above the allowance, 33% above EUR 105,300 and another 3% above EUR 200,000. For those who keep income and companies in Russia: there is no treaty, payments to Russian companies face 20%, and a stake of 25% or more in a Russian company turns its profit into Latvian income every year. And for those who want a Latvian residence permit while staying tax resident elsewhere: a declared address brings Latvian taxes with it.

The rules change almost every year, so any figure is worth checking against the current law on likumi.lv and the VID website before a transaction.

Murblz specialists review the tax consequences of a move before any documents are filed and help with company formation abroad; in a dispute with the tax authority, Murblz legal support steps in. Everything about life in the country is on the Latvia page, and the rules for permit holders are in Latvia residence permit by investment in 2026.

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