Text consolidated by Valsts valodas centrs (State Language Centre) with amending laws of:
14 January 1994 [shall come into force from 19 January 1994];
27 October 1994 [shall come into force from 5 November 1994];
1 March 1995 [shall come into force from 4 March 1995];
31 May 1995 [shall come into force from 4 July 1995];
29 February 1996 [shall come into force from 27 March 1996];
19 December 1996 [shall come into force from 1 January 1997];
2 October 1997 [shall come into force from 28 October 1997];
20 November 1997 [shall come into force from 19 December 1997];
25 November 1999 [shall come into force from 1 January 2000];
27 January 2000 [shall come into force from 23 February 2000];
30 November 2000 [shall come into force from 1 January 2001];
22 November 2001[shall come into force from 1 January 2002];
21 February 2002 [shall come into force from 1 April 2002];
19 June 2003 [shall come into force from 1 January 2004];
11 December 2003 [shall come into force from 1 January 2004];
20 December 2004 [shall come into force from 1 January 2005];
10 March 2005 [shall come into force from 6 April 2005];
20 October 2005 [shall come into force from 1 January 2006];
8 June 2006 [shall come into force from 4 July 2006];
28 September 2006 [shall come into force from 1 November 2006];
19 December 2006 [shall come into force from 1 January 2007];
19 December 2006 [shall come into force from 16 January 2007];
17 May 2007 [shall come into force from 12 June 2007];
8 November 2007 [shall come into force from 11 December 2007];
24 April 2008 [shall come into force from 27 May 2008];
14 November 2008 [shall come into force from 1 January 2009];
12 December 2008 [shall come into force from 1 January 2009];
16 June 2009 [shall come into force from 1 July 2009];
16 July 2009 [shall come into force from 1 August 2009];
1 December 2009 [shall come into force from 1 January 2010];
13 May 2010 [shall come into force from 9 June 2010];
9 August 2010 [shall come into force from 1 September 2010];
21 October 2010 [shall come into force from 24 November 2010];
28 October 2010 [shall come into force from 1 February 2011];
20 December 2010 [shall come into force from 1 January 2011];
16 June 2011 [shall come into force from 30 June 2011];
8 September 2011 [shall come into force from 27 September 2011];
22 September 2011 [shall come into force from 19 October 2011];
15 December 2011 [shall come into force from 1 January 2012];
8 March 2012 [shall come into force from 17 March 2012];
24 May 2012 [shall come into force from 1 January 2013];
31 May 2012 [shall come into force from 14 June 2012];
15 November 2012 [shall come into force from 1 January 2013]
19 September 2013 [shall come into force from 1 January 2014];
6 November 2013 [shall come into force from 1 January 2014];
28 November 2013 [shall come into force from 30 November 2013];
20 February 2014 [shall come into force from 20 March 2014];
6 March 2014 [shall come into force from 1 June 2014].
If a whole or part of a section has been amended, the date of the amending law appears in square brackets at the end of the section. If a whole section, paragraph or clause has been deleted, the date of the deletion appears in square brackets beside the deleted section, paragraph or clause.
The Supreme Council of
the Republic of Latvia has adopted a Law:
On Personal Income Tax
Chapter I
General Provisions
Section 1. Structure of Personal Income Tax
1. Personal income tax (hereinafter – tax) shall be a tax, which is imposed on income acquired by a natural person, and it shall consist of:
1) salary tax calculated from the income acquired by the employee and paid by the employer;
2) fixed income tax regarding income from economic activity;
3) tax for income from economic activity where it is not the object of the enterprise income tax, and tax from other sources of income;
4) tax for income from capital, including tax from an increase in capital;
5) licence fees for the performance of separate types of economic activities;
6) the parts of the micro-enterprise tax in accordance with the Micro-enterprise Tax Law;
7) seasonal agricultural worker income tax.
2. The tax shall be calculated and paid into the budget in two ways: in advance, also in the form of salary tax, and in accordance with the summary procedures, by drawing up an annual income declaration (hereinafter – declaration), also by way of a fixed income tax, micro-enterprise tax and licence fees.
[31 May 1995; 19 December 1996; 25 November 1999; 8 November 2007; 1 December 2009; 9 August 2010; 6 March 2014]
Section 2. Taxpayers
The tax shall be paid by natural persons (hereinafter – payers):
1) who are domestic taxpayers (hereinafter – also residents) in conformity with the Law On Taxes and Fees and who have obtained income in the Republic of Latvia and/or foreign states during the taxation period (calendar year);
2) who in conformity with the Law On Taxes and Fees are foreign taxpayers (hereinafter – also non-residents) and who have obtained income in the Republic of Latvia during the taxation period;
3) owners of individual undertakings, also farms and fish farms, who has obtained income during the taxation period (calendar year), which is not subject to enterprise income tax;
4) owners of micro-enterprises in accordance with the Micro-enterprise Tax Law.
[31 May 1995; 19 December 2006; 9 August 2010]
Section 3. Taxable Object
1. The tax shall be imposed on the amount of the taxable income of the taxation period (calendar year) of the payer of domestic tax. The object of the salary tax shall be the monthly taxable income of the payer. The part of revenue of a micro-enterprise shall be taxable in accordance with the Micro-enterprise Tax Law.
1.1 The taxable object shall be determined by the Micro-enterprise Tax Law for a person who, in accordance with the Micro-enterprise Tax Law, is the owner of a micro-enterprise or an employee of a micro-enterprise.
2. The annual taxable income of the domestic taxpayer (the monthly taxable income of the payer of salary tax) shall be the annual (monthly) income, except the non-taxable income referred to in Section 9 of this Law from which the following shall be subtracted:
1) eligible expenditure laid down in Section 10 of this Law;
2) annual (monthly) non-taxable minimum of the payer;
3) relief laid down in Section 13 of this Law.
2.1 [1 December 2009]
2.2 [1 December 2009]
2.3 [1 December 2009]
3. The taxable income of the foreign taxpayer (non-resident) shall be:
1) employment income, including income from paid employment performed in the Republic of Latvia for an employer who is not a resident of the Republic of Latvia or who does not have a permanent representation office in the Republic of Latvia, or for the work which has been performed outside the Republic of Latvia for an employer of the Republic of Latvia;
2) income from professional activities performed in favour of residents of the Republic of Latvia or of permanent representations of non-residents in or outside the Republic of Latvia;
3) income from the professional activities of artists, sportsmen or trainers in the Republic of Latvia irrespective of whether this income is received by the artist, sportsman or trainer himself or herself or by another legal or natural person;
4) income from the performance of duties in a council or board of directors of a capital company or a co-operative company registered in the Republic of Latvia irrespective of whether the income is received from capital companies or co-operative companies registered in the Republic of Latvia or from other capital companies or co-operative companies, which are not residents of the Republic of Latvia. To such incomes also belong amounts paid out related to work travel and official travel, which exceed the norms laid down in the laws and regulations, which determine the procedures by which expenditures associated with official travel and the work travel of employees shall be compensated;
5) income from a partnership registered in the Republic of Latvia;
6) [1 December 2009];
7) income from the use of an immovable property located in the Republic of Latvia;
71) income from the alienation of an immovable property located in the Republic of Latvia and income from the alienation of other capital assets in accordance with Section 11.9 of this Law, except income from the alienation of financial instruments present in the public circulation, also from the alienation of debt securities of Latvia or another European Union Member State or a European Economic Area State and local governments;
8) income from the use of a movable property in the Republic of Latvia;
9) income from the agricultural production of a personal subsidiary farm, home farm as well as farm and fish farm;
91) income from the alienation of a forest growing on the property of a natural person for felling and the alienation of the timber obtained therein, as well as support sums for economic activity restrictions to the forest owners, for whom the forest management is not the type of economic activity;
92) income from scrap sale;
10) dividends;
101) income equivalent to dividends;
11) interest income and income equivalent thereto, and income related to the interest income, except interest income from the securities of Latvia or another European Union Member State, or a European Economic Area State and local governments;
12) payment for intellectual property:
a) author’s fees (royalty) for the creation of works of science, literature and art, discoveries, inventions and works of industrial models, taking into consideration norms of expenditure which have been determined by the Cabinet in accordance with Section 10, Paragraph one, Clause 4 of this Law,
b) payments for other types of intellectual property in accordance with the rate laid down in Section 3, Paragraph four, Clause 4, Sub-clause a) of the Law On Enterprise Income Tax;
13) insurance compensation which in accordance with the life, health and accident insurance contract entered into by the employer (or another policyholder – legal person) is paid out when the end of the time period provided in the contract has come or when terminating the contract before the time period in the interests of the insured;
14) pensions paid out in accordance with the laws of the Republic of Latvia;
141) income equivalent to pension;
15) supplementary pension capital, which is formed from payments made by the employer into private pension funds in conformity with licensed pension plans and paid out to pension plan participants;
16) [15 December 2011];
17) an increase in the value of immovable property or a part thereof which was obtained upon expiry of the lease contract and which was ensured by the reconstruction, restoration, renovation, improvement or other capital investments performed by the lessee to the leased property, if the referred to increase or part thereof the payer has not compensated to the lessee;
18) the surplus part, which is received by a member of a co-operative society of agricultural services or of a co-operative society of forestry services recognised as corresponding in accordance with the Co-operative Societies Law according to the extent of services of the co-operative society used by him or her;
19) income from the divided profit of a co-operative society of apartment owners, a co-operative society of motor vehicle garage owners, a co-operative society of boat garage owners and a horticultural co-operative society;
20) income from investment of payments in private pension funds;
21) income of hired personnel or income equivalent thereto irrespective of who receives this income on behalf of a natural person;
22) income from life insurance contracts entered into with an accumulation of funds;
23) income from life-long pension insurance contract (with accumulated funded pension capital in conformity with the State Funded Pension Law) which is formed from gratifications granted by an insurer;
24) loans equalised to income;
25) income caused by reduced loan interest payments.
4. In conformity with Paragraph three, Clause 7.1 of this Section, income of a non-resident from the alienation of existing immovable property in Latvia includes also income from capital shares, stocks or other types of alienation of participation in a commercial company established in Latvia or abroad or another person (within the meaning of the Law On Enterprise Income Tax) if in the year of alienation or in the previous year for more than 50 per cent of the value of the assets of such person directly or indirectly (through participation in one or more persons established in Latvia or abroad) establishes or has established the existing immovable property in Latvia. The proportion of the asset value of the immovable property of a person shall be determined, on the basis of the person’s balance sheet data, as of the situation at the beginning of the relevant year. If the proportion of the asset value of the immovable property in the previous year has changed because the alienation of the immovable property has occurred the result of which the person's taxable income has been taken into account, then only the proportion of the balance sheet asset value of the immovable property in the year of alienation shall be taken into account.