As part of adopting the yearly national budget, Parliament passed several key tax amendments in their final reading on 4 December 2024, which are in force but will apply from 1 January 2025. In this article, we look at the most important changes affecting people and businesses, with changes to personal income tax (PIT) and other taxes.

In early 2024, Parliament amended the National Cadastre Act to change how cadastral values of real estate (RE) are set from 1 January 2025. Two cadastral values will be calculated and recorded for each cadastral item on a temporary basis: fiscal and universal. Fiscal value will be equivalent to the current cadastral value and used to assess real estate tax (RET) and other duties. Universal value is to be used in accounting records, financial statements and land rent calculations.

The Ministry of Justice has come up with proposals for amending the Cabinet of Ministers’ Rule No. 1250 of 27 October 2009, “Stamp duty for entering ownership and mortgage rights on the land register”, which could take effect on 1 July 2024. The proposals are designed to enforce the Constitutional Court’s ruling No. 2022-03-01, which provides for extending social and economic protections to individuals who have duly entered into a civil partnership. The proposals have been sent to the Ministry of Finance for approval by 8 February 2024.

In its ruling C26128713, SKC-201/2019 of 28 June 2019, the Supreme Court took a different view on the VAT Act’s condition that the taxable amount should include only taxes payable in relation to a supply of services. The dispute involved a forced lease of land that stipulated a rent plus a compensation of real estate tax (RET). The Supreme Court was assessing whether VAT should be charged on the compensation. First of all, the assessment focused on what items attract RET and who is liable to pay it.

Latvian tax residents are also taking the opportunity to work abroad. A Latvian tax resident meeting certain criteria may become a tax resident in the foreign country where he is employed. Selling real estate (RE) located in Latvia or other assets may raise the question of which country’s personal income tax (PIT) is payable on the profit you make on the transaction.

On 8 October 2021 the Supreme Court announced a ruling on case SKA-301/2021 regarding expenses a person incurs in repaying a mortgage on an inherited real estate (RE), which may be treated as an investment in a functionally similar RE.
 

Parliament adopted amendments to the Taxes and Duties Act in their final reading on 3 April 2019 making it illegal to use cash in real estate (RE) transactions from 1 May 2019. This article explores some of the proposals debated as part of the bill.

Real estate (RE) acquisitions mean considerable spending, which often has the parties looking to cut their costs. A common solution involves understating the acquisition cost, but that may lead to a dispute with the State Revenue Service (SRS) and an extra tax assessment potentially exceeding the upfront saving. This article explores a few things you’d better omit from your contract relating to the acquisition cost of RE.

The obligation to pay real estate tax (RET) falls on a person that is recognised as RET payer at the beginning of the year. The RET Act also imposes a 1.5% surcharge on any farmland that is left unfarmed. Who stands to pay the surcharge if such land is sold early in the year and the Rural Support Service (RSS) finds at the year end it has not been farmed properly?

We have seen Latvian and foreign corporate and private investors enquiring about ways of buying real estate (RE) in Latvia. A few years ago we saw investors mainly from CIS countries, but their profile has recently diversified to include China and Japan as well as the CIS and Nordic countries. Major RE brokers have experienced similar trends. Such investments may have various aims, but mainly these are RE leases held with a view to appreciation and sale to receive the expected return on investment. This article explores the main tax issues an RE investor wants to analyse before buying RE in Latvia.