Latvia

The special royalties regime is prolonged until the end of 2024. During 2024, for the individuals who are not registered as self-employed persons and payment is treated as royalties, the payer of royalties must apply 25% on the gross royalties via withholding.

The main principles of taxation in 2024 can be divided into the following topics:

• Treatment of paid employees and traders:
  • Progressive personal income tax (PIT) rates are applied as follows:
    • A 20% PIT on income of up to 20,004 euros (EUR) a year.
    • A 23% PIT on EUR 20,004 to EUR 78,100 a year.
    • A 31% PIT on any income over and above EUR 78,100 a year.
  • The employer/trader is required to apply a differential personal allowance (DPA) between EUR 0 and EUR 500, which the State Revenue Service (SRS) has forecast according to the employee’s income in the preceding period. The differential personal allowance is applied proportionally up to the income not exceeding EUR 1,800 on a monthly basis. The person may opt not to apply the differential personal allowance on a monthly basis.

• Income from capital and capital gains:

  • A 0% PIT on dividends from income generated after 2017 on which corporate income tax (CIT) or PIT has been withheld, while a 20% PIT on other dividends. Dividends from tax havens will attract a 20% PIT.
  • A single PIT rate of 20% on all types of capital income and capital gains.
• The National Social Insurance Contributions (NSIC) and Solidarity Tax (ST) rates are split between employer and employee. In 2024, the applicable standard rates are 23.59% (employer part) and 10.5% (employee part).
• The NSIC income cap has increased in 2022 (i.e. from EUR 62,800 in 2021 to EUR 78,100 in 2022 - 2024), with any excess gross taxable income attracting ST.
• The ST on the slice of taxable gross income exceeding EUR 78,100 has been split between the health insurance budget, the PIT budget, and the state pension budget.