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Tax reform for natural persons in Latvia

As of 1 January 2018, changes concerning the taxation of natural persons shall enter into force in Latvia. These amendments provide for the introduction of Personal Income Tax (PIT) rates depending on the earnings of a natural person. For those people whose gross salary is less than €20,000 per annum the tax rate will be 20%, and for those earning €20,000 to €55,000 per year it will be 23%. At the same time, the tax rate will be 31.4% for persons earning more than €55,000 per annum.

The rate of Personal Capital Gains Tax would be 20% instead of the existing 10% and 15%.

The tax-free minimum amount will be increased from the current €115 to €200, but this applies only to those earning less than €1000 per month. If the gross wage is more than €1000 per month, the tax-free minimum amount will be 0%. By 2020, the tax-free minimum amount is expected to grow up to €250.

The tax-free minimum amount for pensions will be increased to €250 (in 2017, the tax-free minimum amount for pensions was €235).

Tax reforms will also affect minimum wages throughout the country: Starting from 1 January 2018, it will amount to €430 instead of existing €380.

The Solidarity Tax will be transformed to provide funds for the social insurance and health care system. 10.5% of the tax will be received by the Self-Government Office at the employee's declared residence address. 1% of the Solidarity Tax will be allocated to the health care system, and 6% will be granted to social contributions for the taxpayer's pension fund.

Lottery and gambling tax rates will be also increased by 30%. As of the next year's January, royalties and business activities will be also charged with compulsory national social insurance contributions of 5%.

The professional team of L2B Management will be happy to provide you with legal support in tax matters!

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