Latvia Tax Calculator 2026

Latvia uses a progressive two-tier system: 25.5% on income up to €105,300 annually, and 33% on income exceeding this threshold. Additionally, a 3% surtax applies to income over €200,000. All taxpayers get a fixed €550 monthly allowance (€6,600/year). For example, on €60,000: after 10.5% social contributions (€6,300) and the €6,600 allowance, €47,100 is taxed at 25.5% = €12,011, an effective income tax rate of 20.0%. Social contributions add another 10.5% employee + 23.59% employer.

Yes, if you spend 183 days or more in Latvia during a 12-month period, you become tax resident and must pay Latvian taxes on worldwide income. Digital nomads working remotely for foreign companies are fully liable. Latvia doesn't have a specific digital nomad visa yet, but foreign remote workers can get 1-year permits if employed by OECD member state companies. If you stay under 183 days, you only pay tax on Latvian-source income.

Employees pay 10.5% mandatory social insurance contributions (NSIC) deducted from gross salary. Employers pay 23.59% on top of gross salary. Total social burden is 34.09%. Contributions are capped at €105,300 annual income. Above this cap, Solidarity Tax applies at the same 34.09% rate. These fund pensions, healthcare, unemployment, maternity benefits. Self-employed pay different rates depending on income level.

Fixed personal allowance of €550/month (€6,600/year) for all taxpayers. Pensioners get €1,000/month (€12,000/year). Working pensioners can split: €500 to pension, €500 to employment. Dependent allowance: €250/month per dependent child or disabled family member. Additional deductions: education expenses (capped at 20% of taxable income), private pension contributions, health insurance premiums, mortgage interest on first home, donations to registered charities. All applied automatically if you submit tax book to employer.

Filing deadline is June 1 (extended to July 1 from 2026). PAYE employees with only one employer and tax book submitted usually don't need to file - employer handles all withholding. Must file if: multiple income sources, self-employment income, foreign income, capital gains, rental income, or claiming additional deductions. Annual declaration submitted electronically through EDS (Electronic Declaration System) at www.vid.gov.lv. Late filing incurs penalties from €15-€700 depending on circumstances.

Cryptocurrency gains taxed as personal income at 25.5% if total annual income (including crypto) doesn't exceed €105,300, otherwise 33%. No separate capital gains rate - integrated into regular income tax. Must report all crypto transactions exceeding €1,000 per transaction. Mining and staking rewards taxed as income at time of receipt. Holding crypto is not taxable event - only realization (sale, exchange). Crypto-to-crypto trades are taxable. Losses can offset gains within same year.

Latvia offers unique 0% corporate tax on undistributed profits - you only pay 20% when distributing dividends or making certain transactions. This makes Latvia very attractive for reinvestment. Microenterprise Tax (MET): flat 25% on revenue up to €40,000 (covers all taxes and social contributions - simplified regime). Free ports and special economic zones offer reduced property taxes. R&D tax incentives available. Startup Law provides tax benefits for qualifying innovative companies.

Dividends taxed at flat 20% for residents and non-residents. This rate applies regardless of your income level. For companies: 20% corporate tax when distributing profits (Latvia's unique system - 0% tax on retained profits). Double taxation treaties may reduce rates for non-residents. If receiving dividends from foreign companies, may need to declare in annual return but foreign tax credits apply. Parent-subsidiary directive applies for EU companies with 10%+ holdings.