Taxes in Latvia for companies

Last updated: 2026-09-17

The taxes applicable to a company in Latvia depend on specific circumstances:

whether the company has employees → IIN + VSAOI;
whether the company is registered as a VAT payer → VAT;
whether profit is distributed → corporate income tax (UIN);
whether the company owns real estate, has vehicles, or imports from countries outside the EU → relevant taxes.

Main company taxes in 2026

Tax	When it applies	Rate / amount
VAT (PVN)	On sales (if the company is registered as a VAT payer), purchases and imports	21% (standard) 12%, 5%, 0% (reduced)
Corporate income tax (UIN)	When profit is distributed (to dividends) or conditionally distributed. Reinvested profit = 0%	Effective rate 25%. From 2026, an alternative regime for dividends is available: 15% UIN + 6% IIN (only if all shareholders are individuals).
Personal income tax (IIN)	On wages and other income of individuals	25.5% up to €105,300 per year 33% above this amount + 3% above €200,000
Social insurance contributions (VSAOI)	Mainly on employees' wages and on the income of self-employed persons	For wages, the standard rate is 34.09%
Micro-enterprise tax (MUN)	Only when a special tax regime is selected (individuals)	25% of turnover
Real estate tax (NĪN)	When real estate is owned	0.2%–1.5% of cadastral value
Customs duty	When importing goods from countries outside the EU	According to the applicable customs tariff
Natural resources tax (DRN)	For extraction/use of resources, pollution, waste and packaging	Depends on the taxable object
Vehicle tax + UVTN	When the company has registered vehicles and passenger cars	Depends on the type of vehicle: €15–60/month per passenger car

Taxes that arise in typical situations

Situation	Taxes that will almost certainly apply
There are employees	IIN + VSAOI
A VAT payer sells goods / provides services	VAT
Profit is distributed	Corporate income tax (UIN)
The company owns real estate	Real estate tax (NĪN)
Imports from countries outside the EU	VAT + customs duty and possibly excise tax
Transactions with foreign counterparties	VAT: most often 0% (exports, intra-EU supplies to VAT-registered persons). 21% — if the supply is made in the EU to a person without a VAT number. Payments to non-residents: an individual — usually IIN; a legal entity — UIN only in an offshore jurisdiction or for certain services.
Small business under a special tax regime	MUN (instead of the usual IIN/VSAOI for the owner)

Taxes on employees

When a company has employees, it is required to calculate, withhold and pay:

IIN (personal income tax) — withheld from the employee's wages;
VSAOI (social insurance contributions) — the employee's part is withheld from wages, while the employer pays an additional part.

Separate rules apply to board members (when the company's turnover reaches the certain threshold and contributions are not paid for other employees on at least the minimum wage), as well as to payments made outside an employment contract.

Minimum social insurance contributions also apply: if the mandatory contribution base for a quarter is less than three minimum monthly wages, the difference must be paid up to this minimum.

Detailed calculation of wages and taxes →

Taxes on property and specific goods

These taxes do not depend on profit:

real estate tax — when the company owns real estate;
excise duty — on certain goods (alcohol, fuel, tobacco, etc.);
vehicle taxes and UVTN — when the company has vehicles.

These taxes depend on the specific property or goods, so they do not apply to all businesses.

How taxes are reflected in accounting

Taxes are part of the company's regular accounting. When processing business transactions, it is necessary to determine their tax implications, correctly record the transactions in the accounting records, calculate the relevant taxes and prepare tax returns.

For example:

supplier invoice → recording input VAT;
payroll calculation → calculation of IIN and VSAOI;
sale → determining the taxable base and VAT rate;
profit distribution → calculation of UIN.

Example of a small company (2026)

Conditions

SIA employs one employee who has no dependents.
The employee has submitted the tax book to the SIA.
The employee's gross salary is €1,500 per month.
The SIA is registered as a VAT payer.
The company's monthly VAT-taxable sales amount: €4,000 + €840 VAT.
Purchases for which the SIA is entitled to deduct input VAT: €1,000 + €210 VAT.
The SIA has no real estate and no operations involving the import of goods from countries outside the EU.
The SIA distributed €2,000 of profit as dividends.

Tax calculation

Taxes on wages

10.50% VSAOI is withheld from the employee's gross salary — €157.50.
IIN is also withheld from the employee's salary at a rate of 25.5%. Taking into account the withheld VSAOI and the non-taxable minimum of €550, IIN amounts to €202.09: (1,500 − 157.50 − 550) × 25.5%.
The employer additionally pays 23.59% VSAOI on the gross salary, amounting to €353.85.
In addition, the employer pays the mandatory business risk fee for the employee — €0.36.
Thus, the total amount of IIN, VSAOI and the business risk fee paid to the state in connection with this salary is €713.80.
The employee receives a net salary of €1,140.41.

VAT

During the month, the SIA charged €840 VAT on sales. Deductible input VAT on purchases amounts to €210. Therefore, the VAT payable is €630 (840 − 210).

UIN

When profit is distributed as dividends, the SIA must calculate corporate income tax (UIN).

This example uses the standard calculation method: the amount of distributed profit is divided by a coefficient of 0.8, and the resulting tax base is subject to a 20% tax rate.

€2,000 ÷ 0.8 = €2,500 — tax base.

€2,500 × 20% = €500 — UIN.

Thus, the SIA must pay €500 UIN in connection with the distribution of €2,000 of profit as dividends.

Legislation and the current nature of tax information

Tax rules in Latvia are established by laws and other regulatory acts. Directly applicable European Union regulations are also relevant to taxation, particularly in the area of customs regulation.

Laws establish the main taxation rules, while the Cabinet of ministers regulations establish and detail certain procedures, document requirements and procedures for submitting tax returns.

When disputed or ambiguous issues arise, court decisions, where applicable, should be examined. It is also important to consider the position of the State Revenue Service (VID), which issues explanations and methodological guidance on various matters.

Tax rates, thresholds, calculation procedures and other rules may change. Therefore, the information provided should be considered in relation to the period to which a particular transaction relates.