Personal Income Tax in Latvia
Expatriates are liable for Latvian taxes depending on their tax residency. Latvian residents are taxable for their worldwide income. Non-Latvian residents are liable for their income derived in Latvia.
Pursuant to the domestic legislation, an individual will be regarded as a resident of Latvia, if:
- the permanent place of residence of that person is Latvia; or
- the person resides in Latvia for 183 days or longer in any given 12-month period commencing or finishing during the taxation year; or
- the person is a citizen of the Republic of Latvia employed abroad by the Latvian government.
As a general rule, persons who do not match to the above-mentioned categories are considered to be non-residents of Latvia for tax purposes.
An individual, who has not been considered to be a resident during the year prior to that when taxation is due, is considered to be a resident from the date they entered Latvia during the taxation year.
An individual, who is not considered to be a resident during a post-taxation year, is not considered to have been a resident for that period of the taxation year after the date that they left Latvia, provided that during that period the person had closer ties with another country than with Latvia.
Closer ties with another country may be demonstrated by ownership of property in that country, contributions to that country’s social security system, or the fact that the expatriate’s family is residing abroad.
An actual presence test is used to ascertain how many days an individual has been in Latvia. When the test is applied, the following days are included in the calculation as full days: days of partial presence (less than 24 hours), days of entry and departure, Saturdays and Sundays, public holidays, days of annual leave, and periods of illness, except when the illness has prevented the departure of the person.
On the other hand, certain periods are not included when determining residency. These are periods of less than 24 hours spent in transit in the course of a trip between two points outside Latvia.
Eva Narovska, attorney at law of the Gencs Valters Law Firm in Riga.
Practising in fields of Finance Law in Latvia, Estonia, Lithuania.
T: +371 67 24 00 90
F: +371 67 24 00 91