The micro company taxation regime in Latvia
changed starting with January 1, 2016, for legal entities that operate in selected business fields. While the same tax rate continues to apply, it is not available for businesses operating in all fields. It is expected that this micro tax rate will drop starting with 2017. Our lawyers in Latvia
can give you detailed information about these changes and how the regime applies to your business.
The micro company tax
The micro company tax in Latvia will continue to have the same 9% rate in 2016 but changes have been made to the companies that are eligible to this preferential mode of taxation. Companies that operate in fields like tobacco, metal production or processing (metal factories), the construction business or legal services will not be able to apply this lower tax regime.
The micro company tax of 9% applies for companies that operate in business fields other than the ones listed above and which have an annual turnover of less than 7000 EUR. Any company that has a turnover value above 7001 to 100, 000 EUR is subject to the 11% tax rate.
Taxation in Latvia
Corporate taxation in Latvia
is levied based on residence: companies that are considered tax residents (are incorporated in the country) are taxed on their worldwide income whole non-resident companies are only taxed on their income produced in the country. Permanent establishments of foreign companies, such as branches in Latvia
, are also subject to taxation as a resident company although some tax advantages are possible.
The general corporate income tax in Latvia is 15%. Foreign companies that have incorporated a permanent establishment in the country, which is operational for more than 12 months, can apply a simplified taxation regime. Our lawyers can tell you more about how this regime applies on the company’s turnover.
Latvia has signed an important number of double tax treaties. To find out more about how these agreements can help you gain tax reductions please contact our law firm in Latvia