As of 1 January 2013 the holding regime has been introduced in Latvia. Such regime provides less tax burden In Latvia from receiving and distributing profits.

Receiving dividends and profit taxation

In line with Latvian legislation dividends received from company which is not registered in blacklisted jurisdictions are not subject of corporate income tax (CIT) in Latvia.  In this respect, for example, if Latvian company receives dividends from Estonian Company, those received dividends will not be subject of CIT in Latvia.

Distribution of dividends to EU Company

In the situation where Latvian Company distributes dividends to company, which is not listed as low tax country, no withholding tax is applied in Latvia.

However, the local legislation of that country should be further evaluated, thus, whether these dividends will not be subject of tax there and/or if dividends further distributed to person who is resident in low tax countries will not be subject to withholding tax there.

Distribution of dividends to natural person in low tax countries

If Latvian company distributes dividends to natural person who is tax resident in low tax countries, such distribution will attract withholding tax in Latvia at the rate of 15%.

Interest payments and royalties

In light with Latvian tax legislation when paying interest payments and royalties to companies established outside Latvia, no withholding tax is applied, if company is not established in low tax country.

The list of low tax countries

• Andorra
• Anguilla
• Antigua & Barbuda
• Alderney
• Aruba
• Bahamas
• Bahrain
• Barbados
• Belize
• Bermuda
• Brunei
• British Virgin Islands
• Cayman Islands
• Cook Islands
• Costa Rica
• Curacao
• Djibouti
• Dominica
• Ecuador
• Gibraltar
• Grenada
• Guam
• Guatemala
• Guernsey
• Honk Kong
• Isle of Man
• Jamaica
• Jersey
• Jordan
• Kenya
• Labuan
• Lebanon
• Liberia
• Lichtenstein
• Macau
• Maldives
• Marshall Islands
• Mauritius
• Monaco
• Montserrat
• Nauru
• New Caledonia
• Niue
• Panama
• Saint Lucia
• Saint Helena
• Saint Pierre and Miquelon
• Saint Vincent and the Grenadines
• Sao Tome and Principe
• Samoa
• San Marino
• Seychelles
• Sint Maarten
• St Kitts and Nevis
• Tahiti
• Tanga
• Turks and Caicos Islands
• Uruguay
• Vanuatu
• Venezuela
• Virgin islands (United States)

Should you wish our assistance in analysing the specific case please feel free to contact our English speaking tax advisors in Latvia, Lithuania, Estonia at info@gencs.eu