Non-Resident Tax Obligations in Latvia

Latvia collected approximately EUR 180 million in withholding taxes from payments to non-residents in 2024 -- a figure that reflects how many foreign individuals and companies earn income from Latvian sources without ever becoming tax residents. If you own shares in a Latvian company, receive fees for services performed in Latvia, or earn rental income from Latvian property, you have Latvian tax obligations. The fact that you live in Berlin, Toronto, or Singapore does not change this.

Here is what non-residents actually owe.

What Gets Taxed

Latvia taxes non-residents only on Latvian-source income. This includes:

• Dividends from Latvian companies: 0% withholding for EU parent companies (under the Parent-Subsidiary Directive, if ownership exceeds 10% for 12+ months), treaty rate for treaty-country residents, 20% default
• Interest and royalties paid by Latvian entities: 0% within EU (Interest and Royalties Directive conditions), treaty rates where applicable, 20% default
• Management and consulting fees for services performed in Latvia: 20% withholding (reduced by treaty)
• Employment income earned in Latvia: progressive PIT rates (25.5%/33%), with the employer responsible for withholding
• Rental income from Latvian real estate: 20% withholding (or 5% on gross if the non-resident opts for simplified taxation)
• Capital gains from selling Latvian real estate: 20% PIT
• Capital gains from selling shares in a Latvian company: generally 20%, but 0% under the participation exemption if conditions are met

Income that has no connection to Latvia -- your German salary, your US portfolio dividends, your UK rental income -- is not taxable in Latvia for non-residents.

The Treaty Override

Latvia's 80+ double tax treaties frequently reduce or eliminate these withholding rates. Before accepting a 20% withholding as final, check whether a treaty applies. In many cases, the effective rate drops to 0-10%.

To claim treaty benefits, the non-resident must provide a certificate of tax residency from their home country to the Latvian payer before the payment is made. Without this certificate, the Latvian company must withhold at the full domestic rate.

Filing Requirements

Non-residents with Latvian-source income may need to:

• Register with VID (the State Revenue Service) to obtain a Latvian taxpayer identification number
• File an annual income declaration if they have income not subject to final withholding (e.g., rental income, capital gains from property sales)
• Claim refunds if too much tax was withheld (for example, if the domestic rate was applied but a treaty provides a lower rate)

For most non-residents receiving only dividends or interest, the withholding is final -- no additional filing required. But if you sell Latvian property, earn rental income, or perform services in Latvia, active filing is necessary.

The annual declaration deadline is June 1 of the following year, the same as for residents.

For guidance on your specific non-resident tax position in Latvia, contact SIA "CORVUS ACCOUNTING & TAX".