A new social security agreement came into force in March 2021—the agreement on social security between the Government of the Republic of Latvia and the States of Guernsey affecting pensions. This article explores why the agreement was concluded, what problems it solves, and how it affects Latvian nationals living in Guernsey.
This article explores the corporate income tax (CIT) and personal income tax (PIT) treatment of financial transactions between a Latvian company and its owner (an individual) in two examples:
The autumn sees the State Revenue Service (SRS) sending requests to taxpayers for information on transactions making up their bank account turnover and discrepancies with the information available to the SRS. This article explores the process and practical communication with the SRS (more details in “Bank account turnover out of line with tax filings”).
There are a variety of available legal instruments for leaving a person’s estate to beneficiaries (including trusts, which are becoming popular in Latvia). This article explores three common solutions to the problem of inheritance in Latvia: gift, sale, and bequest. The best solution will be different in each situation, so this article aims to provide an overview of how the beneficiary (heir) or the grantor (testator) is taxed under each of these options. This article explores only Latvian tax resident individuals’ dealings with real estate (RE).
The rapid evolution of digital financial services has led to virtual currency (“VC”) being increasingly used in everyday payments. In July 2021 the State Revenue Service issued guidance on the tax and accounting treatment of virtual currency transactions, offering insights into the practical application of laws and regulations to income people earn from VC dealings. This article explores the personal income tax (“PIT”) treatment where an individual buys and sells VC.
This article explores changes to the royalties scheme effective from 1 July 2021 and applicable throughout 2021, as well as other ways in which authors can receive royalties. This article summarises the practicalities and administrative obligations facing the payer of income and the Latvian tax-resident payee.
To pick up where we left off in our earlier article Ways of reducing tax on profit distribution, which discusses how to minimise your corporate income tax (“CIT”) liability when distributing “new” profits, this article explores some personal income tax (“PIT”) relief an individual can take even if the company has already claimed one of the available CIT reliefs according to the current practice.
Having the status of a public benefit organisation (“PBO”) not only demonstrates that the organisation is working for the public good but also motivates the PBO to raise donations and receive various tax and other advantages. Donations are a key source of various PBO public benefit projects, while donors can claim tax advantages. The Ministry of Finance (“MOF”) has issued an informative report on the activities and development of PBOs. This article offers a brief summary and looks at what companies think about this relief and whether it has promoted PBO operations.
Latvian companies often approach foreign organisations or individuals to draw on their expertise and receive advice on matters that are crucial for the Latvian company’s growth. This assistance is best received from a group company in the form of management services or consulting services but the Latvian company may have to hire an unrelated foreign company or personal consultant. This article explores Latvian tax implications (including for the Latvian company) and how to tell whether it is personal income tax (“PIT”) or corporate income tax (“CIT”) that is chargeable primarily.
As the vacation season is approaching, so is the implementation of the controversial minimum income subject to mandatory national social insurance (“NSI”) contributions, which might affect many companies from 1 July 2021. On 24 May, however, the Parliamentary Presidium presented proposals for amending the NSI Act to a committee, urging a deferral of the effective date of the earlier amendments. This article describes the basic principles for applying the minimum NSI income and offers practical examples in case the bill is not approved and the new rules come into force from 1 July.
On 27 May 2021 a meeting of state secretaries heard the announcement of draft rules to be issued by the Cabinet of Ministers, which provide for adopting the minimum and maximum income that is subject to voluntary national social insurance (“NSI”) contributions and to mandatory contributions for self-employed persons. This article explores the new draft rules, which are to replace Cabinet Rule No. 1478 of 17 December 2013.
Effective from 1 January 2018 the Latvian tax system has undergone important changes affecting the taxation of personal income, including dividends. This article examines some of the changes in the tax treatment of dividends from Latvian sources and their impact on Latvian, Estonian and Lithuanian taxpayers.
Idleness benefit and aid for wage subsidy are paid to workers for the period from 9 November 2020 to 30 June 2021. This article summarises key aspects a payroll accountant needs to consider when calculating average earnings for a worker that has received payments as part of state aid for companies affected by the Covid-19 crisis. The annual income tax filing season usually causes workers to scrutinise their income and it becomes important to correctly calculate income for past periods.
