Entering calculated amount of royalty before taxes deduction and choosing kind of royalty, you can calculate personal income tax and royalty after
deduction of taxes.
Year
Amount of royalty
payment of taxes
The work was created within employment relations (employment contract)
The recipient of the author`s remuneration is not Latvian tax resident
The calculator is intended for calculating personal income tax if:
the recipient of the royalty is an author (an individual who has created a work protected by copyright);
the author is not registered as a self-employed person;
the royalty is not paid by a collective management organisation.
In such cases, a 25% tax is withheld from the royalty. The tax is withheld by the royalty payer if the royalty is paid by:
a commercial company (SIA, AS) or individual merchant;
an individual enterprise, including a farm or fishing farm;
a cooperative society;
a permanent establishment of a non-resident;
an institution, organisation, association or foundation;
an individual registered as a self-employed person.
If the royalty is paid by an individual who is not registered as a self-employed person, the payer does not withhold the 25% tax. In this case, the recipient of the royalty (author) calculates and pays the tax themselves.
The calculator is intended for case if economic activities not registered and annual income is less than 25 000 euro, and royalty contract concluded during Year, 2021, and receiver of royalty is Latvian tax resident.
If economic activities not registered and annual income increases 25 000 euro, then personal income tax rate is 40%.
Have no rights to apply conventional/nominal expenses. Personal income tax need to calculate from whole amount of royalty.
If royalty receiver has registered economic activities, then royalty payer does not withhold taxes from payable amount.
According to part 13, article 6 of law of Social contribution, natural person, which permanent residence is Republic of Latvia and which receives royalty (royalty and related rights), excluding heir of copyright or other legal successor of copyright, and has reached the age if entitlement to public old-age pension, or have I or II group disability, is not compulsory socially insured person (so no obligation to pay social contribution payments from royalty).
According to part 14, article 6 of law of Social contribution, person, which is employee and also simultaneously receives royalties (copyright and related compensation), has rights to choose: not to pay social contribution payments from royalties or pay social contribution payments from royalties according to rate and terms related to self employed persons. Such choice person can make only one time per quarter until date, that is stated for self employed persons for payments of social contribution payments.
Starting from 1st January, 2018 from the law "About state social security" is excluded part 14 of article 6, which in certain cases allowed not to pay state mandatory social security payments (SMSSP) from royalty.
Starting with 1st January, 2018 from all royalties must pay SMSSP.
According to law "About state social security" article 23.1, payer of royalty from own funds pays SMSSP 5% from amount of royalty. So, additionally to royalty, payer (for example, Ltd) pays also SMSSP 5%.
Receiver of royalty must pay SMSSP according to part 2, article 14 of the law (if monthly income is at least in amount of minimum salary, then receiver of royalty must pay SMSSP from amount that is not less than minimum salary).
At the moment of withholding personal income tax, must apply rate 20% (for residents). But when resident will submit annual declaration then, depending on total amount of income, another tax rate (higher rate) may be applicable.
According to rules of Cabinet of Ministers, tax payers have rights to deduct from royalties scientific, literary and artistic work, invention and industrial samples expenses, concerned with creation, issuance, execution or other usage of the works according to such rates:
40% from sum of royalty:
For creation and publication of a musical work (opera, ballet, operetta, the music scene in other works,
chamber music, symphonic, vocal-symphonic and choral works, works of brass orchestra);
For creation of sculpture, monumental decorative painting, decorative and applied arts design, easel-painting,
theatre arts scene and a variety of technical graphics work;
30% from sum of royalty:
For creation, printing and exhibition of artistic graphic and photographic work, as well as for computer graphics and video’s;
During two first years for creation of discoveries, inventions and industrial samples;
25% from sum of royalty for other musical works;
20% from sum of royalty:
For architectural design creation;
For creation of design project;
15% from sum of royalty for creation of other work not mentioned above.
in amount of 50 % from sum of royalty:
for dramatic and musically dramatic works and their performances;
for choreographic works, pantomimes and their performances;
for musical works with or without text and their performances;
for audiovisual works;
for drawings, paintings, sculptures and graphic works and other works of art;
for applied arts, scenery and scenography works;
for design works;
for photographic works and works executed in a similar manner to a photography
for sketches, plans, projects of buildings and structures, other architectural constructions, urban construction works and garden and park projects and solutions, as well as for fully or partially erected buildings and implemented urban or landscape objects;
par ģeogrāfiskām kartēm, plāniem, skicēm un plastiskiem darbiem, kas attiecas uz ģeogrāfiju, topogrāfiju un citām zinātnēm;
for musical decorations, musical arrangements, screening and similar works;
for discoveries, inventions and industrial designs;
for design projects;
in amount of 25 % from sum of royalty:
for literary works (books, brochures, speeches, computer programs, lectures, invitations, reports, sermons and other similar works) and their performances, including works created, issued, executed or otherwise used in the press and other media;
for scenarios and literary projects of audiovisual works;
for translations, revised works, annotations, reports, summaries, reviews, dramatizes, work collections (encyclopaedias, anthologies, atlases and similar work collections) and databases.
According to part 18 of article 15 of the Law "On Personal Income Tax", at the moment of payment to residents must apply 20% personal income tax rate. Submitting personal income tax declaration, depending on annual income, may be applied 23% and 31.4% rate.
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