CIT Rate Quick Reference: 20% Standard vs 15% Alternative

Latvia has two corporate income tax regimes operating simultaneously in 2026. The rates look simple. The implications are not.

Standard Regime (Default)

Element	Rate
CIT on reinvested profits	0%
CIT on distributed profits	20/80 (effective 25% of gross-up)
PIT on dividends	0%

The 20/80 means: divide the net distribution by 0.8, apply 20%. On a EUR 10,000 dividend, the CIT is EUR 2,500 (10,000 / 0.8 = 12,500 × 20%).

Alternative Regime (Opt-In from 2026)

Element	Rate
CIT on annual profit	15% (distributed or not)
PIT on dividends	6%

No gross-up formula. Profit of EUR 100,000 means EUR 15,000 CIT regardless of distribution. Dividends of EUR 50,000 carry an additional EUR 3,000 PIT.

Key Differences at a Glance

Feature	Standard	Alternative
Tax on retained profits	0%	15%
Tax trigger	Distribution only	Annual profit
Gross-up calculation	Yes (20/80)	No
Shareholder PIT on dividends	0%	6%
Best for	Reinvesting companies	High-distribution companies
Break-even distribution	N/A	~78% of profit
Election	Default	Annual opt-in

When Standard Wins

Distributing less than 78% of profit. The 0% on retained earnings is a genuine zero — no tax accrues on money kept in the business.

When Alternative Wins

Distributing more than 78% of profit. At full distribution on EUR 100,000 profit: standard costs EUR 25,000, alternative costs EUR 20,100. Saving: EUR 4,900.

For detailed analysis with worked examples, see our full alternative CIT regime article.

---

Need a Regime Comparison for Your Company?

CORVUS Accounting & Tax models both regimes against your real numbers. One meeting, one clear recommendation.

Book a consultation →