Withholding Tax in Latvia: 0% Standard, 20% Only for Tax Havens

A Latvian SIA pays a EUR 100,000 dividend to its parent company in Germany, the United States, or Singapore — and in every case Latvia withholds nothing. Since the 2018 corporate income tax reform, Latvia applies 0% withholding tax on dividends, interest, and royalties paid to non-resident companies, with or without a tax treaty. For an EU country, that is rare.

The reason is structural: Latvia taxes profit only at distribution, through the 20/80 UIN mechanism paid by the Latvian company itself. Once that company-level tax is settled, nothing extra is collected from the foreign recipient — treaty rate tables and EU directive thresholds are irrelevant for outbound Latvian dividends, interest, and royalties.

Three exceptions remain: payments to blacklisted tax havens (20% on practically everything), management and consulting fees (20% unless a treaty reduces it), and Latvian real estate (3% on sale proceeds, 5% on rent).

Quick Summary

Latvia charges no withholding tax on dividends, interest, or royalties paid to non-resident companies — the rate is 0% with or without a tax treaty, because profit is already taxed at the Latvian company level under the 20/80 UIN model. The exceptions: payments to blacklisted tax-haven jurisdictions carry 20% withholding on essentially all payment types; management and consulting fees carry 20%, usually reducible to 0% with a tax residency certificate under a double tax treaty; the sale of Latvian real estate by a non-resident (including shares in real-estate companies) triggers 3% withholding on gross proceeds, and rent for Latvian property 5%.

Withholding Rates at a Glance

Payment to a non-resident company	Standard rate	Blacklist rate	Notes
Dividends	0%	20%	Profit taxed via UIN 20/80 at company level
Interest	0%	20%	No treaty or certificate needed
Royalties	0%	20%	No treaty or certificate needed
Management and consulting fees	20%	20%	Treaty plus residency certificate usually gives 0%
Sale of Latvian real estate (incl. real-estate company shares)	3% of gross	20%	Withheld by the Latvian payer
Rent for property in Latvia	5% of gross	20%	Withheld by the Latvian tenant

The Tax-Haven Blacklist

The 20% rate applies only when the recipient sits in a listed low-tax or tax-free jurisdiction. The list is set by Cabinet of Ministers regulation, aligned with the EU list of non-cooperative jurisdictions, and currently includes Anguilla, Panama, the Russian Federation, Vanuatu, Vietnam, and several other territories.

For these jurisdictions, 20% is withheld from dividends, interest, royalties, management fees, and most other payments. Treaty relief may in limited cases override the blacklist rate for genuine business payments — a question that needs professional review before the money moves.

Management and Consulting Fees: The Main Trap

Fees for management and consulting services paid to a non-resident carry 20% withholding under domestic law. Almost all of Latvia's double tax treaties reduce this to 0% — but only if the Latvian payer holds a valid tax residency certificate for the recipient before the payment is made.

Request the certificate early, process it through VID in the approved form, and track its validity: an expired certificate means the full 20% applies again.

Real Estate: The 3% and 5% Rules

Latvian property keeps its taxing rights local. When a non-resident sells real estate located in Latvia, the Latvian payer withholds 3% of the gross sale price. The same rule covers shares in a company whose assets are predominantly Latvian real estate — selling the company instead of the building changes nothing.

A Latvian tenant paying a non-resident for property in Latvia withholds 5% of the gross rent — more detail in our guide to non-resident taxation in Latvia.

Compliance: What the Latvian Payer Must Do

Withholding is the payer's problem, not the recipient's. For each cross-border payment, the Latvian company must:

1. Check the recipient's jurisdiction against the current blacklist regulation
2. Collect a valid tax residency certificate where treaty relief is claimed
3. Withhold the correct amount where required and pay it over to VID
4. Report payments to non-residents to VID monthly through EDS — certain payments are reported even when nothing is withheld

If tax should have been withheld and was not, VID collects it from the Latvian company with late-payment charges — payments to related parties and offshore jurisdictions get the closest scrutiny.

FAQ

Does Latvia withhold tax on dividends paid abroad?

No. Since the 2018 corporate tax reform, Latvia applies 0% withholding tax on dividends paid to non-resident companies, regardless of the recipient's country and whether a tax treaty exists. Profit is taxed instead at the Latvian company level under the 20/80 UIN model. The only exception is dividends paid to companies in blacklisted tax havens, which face 20% withholding. No certificates or ownership thresholds are needed for the standard 0%.

Which countries are on Latvia's tax-haven blacklist?

The blacklist is set by Cabinet regulation and mirrors the EU list of non-cooperative jurisdictions. It currently includes Anguilla, Panama, the Russian Federation, Vanuatu, Guam, American Samoa, Palau, the Turks and Caicos Islands, the US Virgin Islands, and Vietnam, among others. Payments to these jurisdictions face 20% withholding on dividends, interest, royalties, management fees, and most other payments. Verify the current regulation before each payment — the list changes with the EU list.

How can we pay management fees to our parent company without the 20% withholding?

Obtain a tax residency certificate for the parent company before the payment and process it through VID in the approved form. Nearly all of Latvia's double tax treaties then reduce the withholding on management and consulting fees to 0%. Without a valid certificate — or with an expired one — the Latvian subsidiary must withhold the full 20% from every invoice until the document is in place.

What is withheld when a non-resident sells real estate in Latvia?

The Latvian payer withholds 3% of the gross sale proceeds — calculated on the full price, not the seller's gain. The same 3% applies when a non-resident sells shares in a company whose assets are predominantly Latvian real estate, so a share sale does not remove the withholding. Rent paid to a non-resident for Latvian property carries a separate 5% withholding on the gross rent.

Get Your Cross-Border Payments Right the First Time

SIA "CORVUS ACCOUNTING & TAX" checks blacklist status, prepares residency certificates, and handles monthly non-resident reporting to VID for international groups with Latvian subsidiaries.

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