Latvia

Personal deductions

Residents may deduct the following non-business expenses:

• Compulsory NSIC (employee part) paid on income subject to Latvian PIT. NSIC is payable in Latvia and EU/EEA/Organisation for Economic Co-operation and Development (OECD) countries.
• Spending on education and medical services (including dental services and scheduled operations), donations to public benefit organisations, and donations to political parties of up to 50% of the person’s annual taxable income, capped at EUR 600 a year for each family member.
• Contributions to private pension funds and endowment insurance (the policy should mature in at least ten years) at 10% of annual taxable income, capped at EUR 4,000.

A person planning to deduct expenses for completing their children’s interest-related programmes should consider the following factors:

• These expenses do not apply to any income a micro-business owner derives from the micro-business, any borrowing treated as income, any income from capital (other than capital gains), any income from property, seasonal farm workers’ income, or any business income for which so-called 'patent fees' are paid.
• These expenses are not deductible if covered out of funds received from public benefit organisations or as a gift.

Residents and non-residents (who are residents of EU/EEA member states and earn at least 75% of their worldwide income in Latvia) can deduct these expenses from their total taxable income, except for income from capital and capital gains.

Business deductions

If a person is registered as a sole trader, business expenses are fully deductible, provided that appropriate supporting documents are in place.