Key tax factors for efficient cross-border business and investment involving Latvia.
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Limited Liability company, Joint-stock company.
Limited Liability company - EUR 2,800, joint-stock company – EUR 35,000.
A company is deemed to be a resident if it is incorporated in Latvia. Latvian tax law treats branches as tax resident whether they are formally registered or should have been registered.
Resident companies are taxed on their worldwide income. Non-resident companies are taxed only on their Latvian source income.
The taxable period normally corresponds to the calendar year, but a company may elect to have a taxable period different from the calendar year. Tax returns are filed on an annual basis.
The standard corporate income tax rate is 15 percent.
0 percent tax rate except if dividends are paid to entities registered in listed low tax territories.
0 percent tax rate except if interest paid to entities registered in listed low tax territories.
0 percent tax rate except if royalties are paid to entities registered in listed low tax territories.
Exemption method (100 percent):
All gains are taxable as ordinary income; however, gains and losses derived from the sale of shares (if the company is not a resident of a low tax jurisdiction) are exempt from tax.
If tax losses have been calculated and incurred up to 2007, they can be carried forward for 8 years. Losses correctly calculated and incurred from 2008 onward can now be carried forward for an unlimited period of time. Taxpayers registered in special aided territories can carry forward the losses incurred from 2005 onward for an unlimited period of time.
Proceeds from the sale of real estate company shares in Latvia: 2 percent.
Stamp duties apply on the transfer of immovable property: 2 percent of the purchase price or cadastral value of the property or valuation for mortgage purposes, whichever is higher. The maximum tax payable is EUR 42,686. No other stamp duties apply.
Please see above.
Yes, locally determined.
Supporting documentation is required.
Two methods are applied: (i) debt-equity ratio of 4:1 and (ii) excess of interest rate over 1.57 times the short term interest rate of Bank of Latvia. The excess amount of interest is non-deductible. If both ratios are exceeded, then the higher amount is non-deductible.
No application of rules to loans from Latvian credit institutions and credit institutions registered in EU, EEA, and DTT countries.
150 percent deduction for costs of establishing or acquiring intangible assets resulting in a trademark or patent registration.
Tax rebate for initial long-term investments made within the scope of supported investment projects might be applicable.
Relief available on significant investment.
The standard rate is 21 percent.
KPMG in Latvia
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