Capital Income & Investment Taxation – Latvia

Gains from sale of shares, bonds, crypto taxed as regular income at progressive rates (25.5% or 33% depending on total income). No separate capital gains rate. Losses offset gains within same year only.

Sale of primary residence exempt if owned and lived in 12+ months. Must be registered as primary residence with authorities. Generous exemption encourages home ownership.

Investment properties held over 60 months (5 years): gains exempt if reinvested in another Latvian property within certain timeframe. Otherwise taxed at PIT rates.

Dividends from Latvian companies: 20% withholding tax applied at source. Final tax - no further PIT due. Separate from progressive rates. Lower than top PIT rate (33%).

Dividends from foreign companies: declare in annual return, taxed at 20%. Foreign withholding tax credited. May need to file Form to prove residency for treaty benefits.

EU directive: no withholding on dividends to qualifying EU parent companies (10%+ holding, certain conditions). Corporate shareholders benefit. Promotes cross-border investment.

Interest from Latvian banks: 20% withholding tax at source. Can reclaim if actual PIT rate lower (unlikely for most). Simple system, no annual declaration needed if only source.

Foreign bank/bond interest: include in annual declaration, taxed at progressive PIT rates (25.5%/33%). Foreign tax credited. Report all amounts over €100 in transactions.