Income Tax Treaty between the United States and Latvia

 

Latvia Tax Treaty

Latvia International Tax Compliance Rules

Quick Summary.  A Northern European country, the Republic of Latvia borders Estonia, Belarus, Lithuania, and Russia, as well as the Baltic Sea.  A so-called Baltic state, Latvia’s capital and largest city is Riga.

Founded in 1918, the Republic has been recognized as a sovereign since 1920, and declared def facto restoration of independence in 1991 from the Soviet Union.  Latvia is a parliamentary republic.  Its constitution provides for a unicameral parliament (the Saeima), and a president.  

Latvia consists of 119 administrative divisions.  

Latvia employs a participation exemption taxation regime.  they has adopted Country-by-country reporting.  Amendments to its law “On taxes and duties” have implemented transfer pricing rules that adhere to BEPS Action 13 and the OECD Transfer Pricing Guidelines.  

Effective 2019, Latvian law defines cryptocurrency as a capital asset subject to its capital gains rules.  

Income Tax Treaty between the United States and Latvia

Resident individuals of Latvia are taxed on worldwide income; nonresidents are taxed only on Latvian-source income.

Latvia Tax Treaty.

Common Legal Entities.  Limited liability company (SIA), joint stock company (AS), general and limited partnership and branches.

Tax AuthoritiesState Revenue Service

Tax Treaties.  Latvia is a signatory to 62 tax treaties and a party to the OECD multilateral instrument.

Corporate Income Tax Rate.  20%.  Certain items may be subject to a rate of 25%.  Corporate income tax is payable when profits are distributed or deemed distributed.

Individual Tax RateUp to 31.4%.  

Corporate Capital Gains Tax RateCapital gains on sales of property are taxed only when there is a profit distribution. 

Individual Capital Gains Tax Rate20% generally.  

Residence.  An individual is deemed to be a resident in Latvia if he or she has a permanent place of residence in Latvia or is present for 183 days or more in any 12-month period. A company is a tax resident if it is incorporated in Latvia through registration in the Company Register.

Withholding Tax.

            Dividends. 15% generally.

            Interest. 15% generally.

            Royalties. 15% generally.

Transfer Pricing.  Transfer pricing rules generally follow OECD transfer pricing guidelines.

CFC Rules. Latvia employs a controlled foreign company (CFC) regime, which is in accord with the EU Anti-Tax Avoidance Directive.

Inheritance/estate taxNone.

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